Between ‘Artificial Economics’ and the ‘Discipline of the Market’: Sasol from Parastatal to Privatisation

Stephen Sparks

Journal of Southern African Studies, 2016, vol. 42, issue 4, 711-724

Abstract: This article explores the history of South Africa’s oil-from-coal project, Sasol, the petro-chemical company central to apartheid South Africa’s response to oil sanctions. Contrary to popular perception, South African interest in synthetic fuel pre-dates anti-apartheid sanctions. Anglovaal, a private mining company, acquired rights to the German Fischer–Tropsch process for converting coal into liquid fuel in the 1930s, and its subsidiary, SATMAR, converted torbanite into petrol and was an important precursor to Sasol. Like Germany, South Africa possessed no indigenous source of oil, and dependence on imports came to be seen as a strategic and economic vulnerability. Afrikaner nationalist reluctance to commit moneys to Anglovaal to build an oil-from-coal plant led to Sasol’s establishment as a parastatal. Even so, this article argues, the project possessed enough ‘Smutsian features’ to attract criticism from Afrikaner nationalists.The low cost of black labour in the early apartheid era was important to the project’s initial financial viability, but the article argues that it was the state’s interventions to regulate the fuel market, discipline the oil multinationals and massively subsidise oil-from-coal which saved the project from obsolescence. Energetic management also mattered: with low oil prices preventing oil-from-coal expansion during the 1960s, Sasol leveraged state support to facilitate diversification into the wider petro-chemical industry. After Sharpeville, Sasol spearheaded South Africa’s increasingly isolationist oil strategy, while, at the same time, Sasol managers became increasingly defensive about their dependence on state support. Sasol’s privatisation in 1979 was, however, precipitated by the need to fund two massive new oil-from-coal plants in the aftermath of the oil shock and Iranian revolution to meet the apartheid state’s strategic priorities. Sasol’s new hybrid identity as a company with private shareholders enjoying public subsidies continues to be controversial.

Date: 2016
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DOI: 10.1080/03057070.2016.1186787

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