VZCZCXRO8563
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #3111/01 2481240
ZNR UUUUU ZZH
R 051240Z SEP 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 1537
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

UNCLAS SECTION 01 OF 02 PRETORIA 003111 
 
SIPDIS 
 
SIPDIS 
 
STATE PLEASE PASS USAID 
STATE PLEASE PASS USGS 
DEPT FOR AF/S, EEB/ESC AND CBA 
DOE FOR SPERL AND PERSON 
 
E.O. 12958: N/A 
TAGS: EPET ENRG EMIN EINV EIND ETRD SF
SUBJECT: South African Sasol Targets Coal-to-Liquid Fuel Plant in 
the United States 
 
¶1. (U) SUMMARY: South African Sasol is seriously considering 
investing in a coal-to-liquid (CTL) facility in the U.S., targeting 
Texas, Montana, Wyoming, Illinois, or North Dakota.  This potential 
project would represent Africa's largest investment in the U.S. if 
realized.  The issue of carbon emissions is an obstacle to 
investment.  End Summary. 
 
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Sasol's Quest 
------------- 
 
¶2. (U) Mineral and Energy Officer and Specialist met August 29 with 
a business group representing Sasol North America and its advisor, 
the Livingston Group.  Livingston is lobbying for investment and 
construction of a Sasol-type coal-to-liquid (CTL) fuel facility in 
the United States.  The purpose of the meeting was to inform the 
Embassy of the status of CTL developments in the United States and 
to solicit potential future Embassy support and advocacy for these 
projects with both the SAG and the USG.  If successful, the project 
could provide an alternative secure supply of petroleum fuels for 
the United States, independent of supply from "difficult" foreign 
sources. 
 
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Sasol's Leading Role 
-------------------- 
 
¶3. (U) Sasol is the global leader in the production of liquid fuels 
and chemicals from coal.  Coal currently supplies some 23 percent of 
South Africa's liquid fuel needs.  This figure could rise to about 
36 percent if currently proposed expansions take place: incremental 
20,000 barrels per day at Secunda and a new 80,000 barrels per day 
plant at a yet-to-be identified location.  Sasol has agreed to build 
an additional facility in SA, reportedly in exchange for the SAG 
dropping a threatened "windfall" tax on recent high profits. 
Sasol's Fischer Tropsch technology, originally obtained from 
Germany, has been refined and improved over the past 60 years and is 
the leading technology in the gasification and reconstitution of 
coal into a variety of liquid fuels and chemicals.  According to 
Sasol and Livingston reps, given the combination of declining global 
oil reserves, current refinery capacity constraints, the U.S' 
dependence on supply from "difficult" sources, and the U.S.' 
significant resources of indigenous coal, CTL technology could 
provide a comfortable level of energy security in the medium to 
longer term.  Sasol has an existing petrochemicals facility in Lake 
Charles, Louisiana. 
 
¶4. (U) Comment:  Sasol's global marketing strategy is to look for 
countries that have a large demand for energy, a shortage of 
petroleum, and an abundance of coal reserves.  The most attractive 
countries according to these criteria are China, India and the U.S. 
End Comment. 
 
¶5. (U) The Sasol and Livingston team stated that five states would 
be possible targets for the investment in converting coal resources 
into liquid fuel products: Texas, Montana, Wyoming, Illinois, or 
North Dakota.  The Illinois deposits are attractive because of their 
proximity to markets, whereas the Montana and Wyoming deposits are 
attractive because of their high grades of coal.  The potential CTL 
plant would require access to one billion tons of coal reserves, be 
designed to produce 80,000 barrels per day of crude equivalent, and 
would cost an estimated $8 to $10 billion.  If Sasol were to build 
the plant, it would represent the largest-ever inward investment 
into the United States from Africa.  Sasol and Livingston asserted 
that this would undoubtedly jump-start the CTL industry in the U.S. 
 
 
---------------------- 
Potential Show Stopper 
---------------------- 
 
¶6. (U) Sasol and Livingston probed potential business and government 
issues such as the SAG's possible attitude to outward investment in 
the United States, competition with China for the first overseas CTL 
plant, and environmental issues related to mining coal and to 
emissions of sulfur and nitrogen oxides, particulate matter, and 
carbon dioxide.  It was agreed that carbon dioxide (greenhouse gas) 
was potentially a "show-stopper", particularly given that Sasol 
currently emits 70 million tons of carbon dioxide a year. 
 
¶7. (U) COMMENT: Sasol's Secunda plant near Johannesburg is the 
largest operating CTL facility in the world and is also "the largest 
single point source of greenhouse gas emissions," according to a 
recent submission to the South African Cabinet by the Department of 
Environmental Affairs and Tourism.  However, Sasol claims that the 
 
PRETORIA 00003111  002 OF 002 
 
 
gas is concentrated at the plant and could relatively easily be 
captured and stored under ground in a suitable geological formation 
such as dolomite.  It could also be used for enhanced oil 
extraction.  Sasol is working on identifying suitable sites and is 
working with international partners on developing the technology 
required for carbon dioxide sequestration.  In this way, Sasol could 
contribute to solving the global problem of carbon dioxide 
emissions, which would also benefit the acceptability of coal-fired 
power stations around the world. 
 
TEITELBAUM