South Africa: Down On the Bayou, Sasol's Mega-Project Sings the Blues

analysis

Petrochemicals giant Sasol has got itself stuck in mud in the land of po boys, gators and the blues. South African companies often try to reduce exposure to domestic economic and political risk by diversifying overseas, but sometimes the grass is not greener on the other side - especially when it comes to mega-projects.

"I'm goin' down in Louisiana, Baby, behind the sun... Well, you know I just found out, my trouble just begun." So sang US bluesman Muddy Waters in a song that could be an anthem (or a requiem?) for Sasol's fumbling foray into the southern US state.

In recent years, a number of large South African companies have ventured overseas, in part to reduce exposure to domestic political and economic risk and in part to take advantage of new opportunities and markets. There have been notable successes: Sibanye-Stillwater's acquisition of the palladium-rich Stillwater mine in the US state of Montana, which now accounts for about half of the company's value, is one. Flops have included the Woolworths acquisition of David Jones in Australia, following a trail of other retail failures by South African firms down under.

Sasol's ongoing saga in Louisiana is a classic case of a...

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