better together … we deliver Sasol presentation on carbon tax to the Portfolio Committee on Trade and Industry 20 August 2013

22 better together…we deliver Confidential – not for further distribution presentation overview Negative impact of tax on Sasol Sasol background & mitigation progress Conclusion Policy process

33 better together…we deliver Confidential – not for further distribution presentation overview Policy process Negative impact of tax on Sasol Sasol background & mitigation progress Conclusion

44 better together…we deliver Confidential – not for further distribution Sasol has exploration, development, production, marketing and sales operations in 38 countries across the world, employing more than people. Our vision is to grow profitably, sustainably and inclusively, delivering value to stakeholders through technology and the talent of our people in the energy and chemical markets in Southern Africa and worldwide Sasol is a proudly South African based international company

55 better together…we deliver Confidential – not for further distribution Sasol is committed to a strategy of investment in South Africa to 2050 Employment R14bn Sasol Mine Replacement Programme Exploration in SA and region continues R1.5bn Natural Gas Power Generation Unit R14bn Secunda Growth Project R8.4bn FT Wax Expansion Project R1.9bn Ethylene Purification Plant R1.1bn Cobalt Catalyst Plant ●800 jobs created during the construction phase ●52 permanent jobs created ●5,200 jobs created during construction phase ●165 permanent jobs on project completion ●5,000 jobs created during the construction phase ●4,000 permanent jobs retained Reducing carbon footprint Growing production Ensuring long term sustainability Sasol’s stated strategic intent may be impacted due to limited opportunities to further mitigate its carbon emissions Current investment

66 better together…we deliver Confidential – not for further distribution Sasol’s overall position- carbon tax Sasol supports a response to climate change that is based on clear and accurate information and identifies the opportunities and reflects the constraints of a transition to a lower carbon and climate resilient South African economy. Sasol believes that such a proactive response should recognise the following: the structure of the South African economy is inherently energy-intensive and, as such, presents a challenge as it cannot be transformed in the short- to medium-term to a lower carbon economy due to the lack of viable alternative lower carbon energy sources; the developmental needs of South Africa and the resultant demand in energy necessitate the prioritisation of long-term energy security for South Africa; mitigation actions in all industries would need to be introduced over time and will require international financing, technology and skills development support; the impact of policies to limit or tax carbon emissions on South Africa’s current international trade position and competitiveness needs to be better understood; the socio-economic impact of the transition to a lower carbon economy is likely to be significant and, accordingly, a range of trade-offs may be required to achieve the overall national imperatives of economic growth, job creation and poverty alleviation; Sasol does not support the carbon tax in its current form, without a full understanding of its consequences on the economy in the form of aspects such as employment, competitiveness and trade measures

77 better together…we deliver Confidential – not for further distribution reflects the constraints of a transition to a lower carbon and climate resilient South African economy. is based on analysis that uses clear and accurate information will effectively contribute to the reduction of GHG emissions Sasol is committed to engaging in policy development to mitigate climate change... Sasol supports a transition to a low carbon economy that is: a thorough analysis of the potential impacts & alternative options has not been performed does not align with South Africa’s broader mitigation policy; does not sufficiently take account of South Africa’s mitigation and socio-economic challenges Sasol does not support the carbon tax in its current form as:

88 better together…we deliver Confidential – not for further distribution Objective carbon tax needs to be seen in the broader policy context National Climate Change Response White Paper Durban Platform IRP 2010 & IEP Carbon tax International negotiations Environmental policy Energy policy Fiscal policy

99 better together…we deliver Confidential – not for further distribution Sasol has substantially reduced its carbon footprint in SA … Made possible by accommodative regulatory environment

10 better together…we deliver Confidential – not for further distribution...which this was partially facilitated through natural gas imports from Mozambique : Initial investment (R12bn) Ongoing: Exploration in Southern Africa (R3bn in ) 2010: New compressor station at Komatipoort (R1bn) 2012: Expansion of the CPF¹ in Temane to 183 mGJ (R1.8bn) 2013: New 155km Gauteng Network Pipeline (R1.6bn) 2014: New 128km loop line in Mozambique (R2bn) Provision of feedstock alternative to customers facilitated further 2 mt emissions reduction

11 better together…we deliver Confidential – not for further distribution presentation overview Negative impact of tax on Sasol Sasol background & mitigation progress Conclusion Policy process

12 better together…we deliver Confidential – not for further distribution Objective one needs to start with the international negotiations National Climate Change Response White Paper Durban Platform IRP 2010 & IEP Carbon tax agreed at COP 17 in Durban applicable to all countries and will be agreed by 2015 implementation in 2020 including use of new market instruments and economy wide targets International negotiations Environmental policy Energy policy Fiscal policy

13 better together…we deliver Confidential – not for further distribution … and then understand national climate change policy … Governments vision for an effective climate change response Carbon budgeting approach implementation through a multi stakeholder technical working group reporting to the DG cluster Objective National Climate Change Response White Paper Durban Platform IRP 2010 & IEP Carbon tax International negotiations Environmental policy Energy policy Fiscal policy

14 better together…we deliver Confidential – not for further distribution this approach was confirmed by DEA’s carbon budget – carbon tax interface study …before considering how fiscal policy is to play a role … INTERNATIONAL NEGOTIATIONS WHITE PAPER IMPLEMENTATION COP17 ADP agreed COP21 ADP finalised draft policy document Design policy mix (including carbon tax) Draft carbon tax policy document Mitigation Potential analysis Sector / company Carbon budget White Paper Gazetted

15 better together…we deliver Confidential – not for further distribution presentation overview Negative impact of tax on Sasol Sasol background & mitigation progress Conclusion Policy process

16 better together…we deliver Confidential – not for further distribution current carbon tax design will not assist Sasol & industry in meeting the climate change policy objectives Open cycle gas turbines, Secunda Sasol Synfuels, Secunda mitigation options that are technical feasible already included in carbon budget; Sasol will be following an agreed mitigation plan; tax reduces funds available to invest in low carbon feedstock alternatives.

17 better together…we deliver Confidential – not for further distribution....but will impact negatively upon our business Concerns Carbon tax more onerous than other jurisdictions *(R12 – R174) lack of ability to pass cost through – due to trade exposure & regulation multiple carbon prices – IRP, non renewable levy punitive for beneficiation activities escalating price can change investment decisions Tax policy complex and lacking sufficient clarity Competitiveness Impact on investment no economic analysis done on current tax proposals World Bank study highlighted risk of loss of low skill jobs Insufficient Analysis * Depending on exemption and impact of Z factor

18 better together…we deliver Confidential – not for further distribution higher electricity price to fund low carbon build plan ~ R116 /ton non renewable electricity levy ~ R35 /ton costs to meet mitigation plan Carbon tax Multiple carbon cost Air Quality Act clean Fuels Waste Act Other environmental cost current policy environment pointing towards multiple costs for industry & consumers

19 better together…we deliver Confidential – not for further distribution presentation overview Negative impact of tax on Sasol Sasol background & mitigation progress Conclusion Policy process

20 better together…we deliver Confidential – not for further distribution proposed way forward Progress await the outcome of DEA’s carbon budgeting process – achieve alignment design appropriate policy instruments to support carbon budgeting process Create appropriate regulatory & fiscal environment to: encourage achievement of carbon budget balance environmental & socio economic objectives align to international agreements end

21 better together…we deliver Confidential – not for further distribution Economic impacts not adequately considered o analysis insufficient o impact upon competitiveness and jobs o negative impact of multiple carbon prices Lack of alignment with overall mitigation policy Impact upon mitigation likely to be limited Sasol is concerned about the carbon tax policy proposed: in conclusion

better together … we deliver thank –you