**Episode Summary**

In this episode of QAV America, Cameron dives deep into the murky, combustible world of Sasol (NYSE: SSL), a South African company built on the back of coal liquefaction technology born in Nazi Germany and refined under apartheid. It’s the kind of “anti-woke” fossil fuel juggernaut value investors might love—or love to hate. With Tony chiming in, they explore Sasol’s origins, tech, environmental baggage (they’re the world’s largest single emitter of CO₂), explosive safety record, and its appeal as a classic ugly-duckling value stock. They also tackle the ethics of ESG investing, ADR headaches, and Sasol’s brutal-but-effective cash-generating machinery.

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**📊 Timestamps + Topics**

– **[00:01:00 ]** Introduction to QAV America and this week’s pick: Sasol (SSL)

– **[00:02:00 ]** History of Sasol: Nazi-era tech and apartheid origins

– **[00:04:00 ]** How coal liquefaction works (Fischer-Tropsch & hydrogenation)

– **[00:07:00 ]** WWII Germany’s reliance on synthetic fuel

– **[00:10:00 ]** Sasol’s Secunda plant: 150,000 barrels/day, world’s #1 CO₂ emitter

– **[00:13:00 ]** Environmental targets and underwhelming progress

– **[00:14:00 ]** The disastrous Lake Charles Chemical Project and $4B overrun

– **[00:15:00 ]** Ethane cracker 101 + LyondellBasell JV

– **[00:16:00 ]** Explosions, deaths, and new CEO (Fleetwood Grobler out, Simon Baloyi in)

– **[00:18:00 ]** Revenue breakdown: energy, chemicals (Africa, America, Eurasia)

– **[00:20:00 ]** Currency complications: ZAR reporting on NYSE

– **[00:22:00 ]** The QAV stance on ESG investing

– **[00:25:00 ]** Sasol’s debt, coal reserves, and South African market dominance

– **[00:27:00 ]** CO₂ taxes kicking in from 2026

– **[00:28:00 ]** Key QAV metrics:

– Price/Op Cash Flow = 1.4x

– F-Score = 6

– Price/Book = 0.39

– QAV Score = 0.51

– **[00:30:00 ]** Value thesis: ugly duckling, monopoly position, tons of cash

– **[00:34:00 ]** US investor challenges with ADRs

– **[00:35:00 ]** Final take: not pretty, but potentially profitable

Cameron: [00:00:00 ] Welcome back to QAV America, Tony, two Australian value investors talking about investing in the US market. That’s just, I put, put that in there for new listeners. How are you, Tony?

Tony Kynaston: I am well, thanks, cam. Yep. Just finished the hour and a half on stocks in Australia, so it’s fun to see you

Cameron: I.

Tony Kynaston: Good to see you

say

Cameron: Well, um, I don’t really have any sort of broad news, as we say every week on this show. It’s in such a state of flux. The US market with tariffs are on, tariffs are off, tariffs are up, tariffs are down. It’s, you know, it, it’s really hard to make any sense of it. And so we don’t try, I mean, we just. Um, for people that are new to QAV, uh, what we try and do is look at the fundamentals of individual businesses and try and find [00:01:00 ] something that is a bargain.

Something that we think is generating good cash flow, but we can buy it at a bargain for one reason or another. And, uh, then on this show, I pick one each week. That is on our US buy list and I talk about it for half an hour, uh, and why it’s on our buy list. And this week I’m doing a company called Sasol, which kind of sound we were just talking about, the Godfather.

Um. On our Australian show, and it’s, there’s a character in, in one of the Godfather films, Joey Saso, I can’t remember.

Tony Kynaston: part three.

Cameron: Is it right? Joey Saso.

Okay.

Tony Kynaston: Yeah. Sza.

Cameron: Oh yeah. Joey Saso. Yeah. Yeah. It’s, uh, well he’s, he plays Vincenzo Corleone, [00:02:00 ] his Sonny Zi.

Tony Kynaston: kills Joey

Cameron: S Joey Sasa. That’s right. Yeah. He’s saying something bad about Michael Corleone.

Yeah. Yeah. Isn’t that uh, yeah. I can’t remember the name of the actor who played him. Anyway, not to get distracted. Sasol. SSL is the ticket code for Sasol. And you were on an Australian show. You were talking about anti woke. ETFs and I said, well, I’m gonna talk about an anti work company in some ways. This, this company is, uh, what a story they’ve got behind them.

Uh, they’re a South African coal liquification. Company and they do other things, but that’s mainly, uh, their background and, and where most of their revenue still comes from. Today, I knew absolutely nothing about coal liquification. Don’t think I’d ever, ever even heard of coal liquification before I started this, but now I [00:03:00 ] know a little bit about it so I can talk to you about it.

But this company, um, was started in the fifties in apartheid South Africa, mostly as a way of securing their energy independence. Because they don’t have a lot of oil in South Africa and they were under economic sanctions and so they were getting, finding it difficult to buy oil. So they needed to figure out how to take what they did have, which was coal, and turn it into petrol and chemicals that could be used for everything that they needed petroleum for.

And so Sasol was founded in a dusty little town called Sasol Berg, which was created in 1954 to provide housing and facilities for Sasol employees. The, um, [00:04:00 ] there’s a couple of different ways to take coal and turn it into liquid petroleum, essentially synthetic gas or synthetic petroleum. And it was first discovered by German chemists in the early 19 hundreds, and the, there’s, the main way of doing it is called the Fisher TRO process.

After the names of the. Two, uh, Germans who developed it Fisher, who was not a Nazi at the time, but became one later, uh, trs, got the hell out of there in the late twenties and ended up in the US But uh, Fisher stuck around. Basically you can take coal and force it to give up its liquid hydrocarbons. Uh, one way is to just make it really, really hot, and the other way is to pulverize it [00:05:00 ] and then put it under huge amounts of pressure.

So without going into too much detail, the first way is what’s called the indirect route, which is the fisure tr method. You gasify the coal. Creating synthetic gas or sin gas as it’s known, you basically heat it up to 1300 degrees Celsius or 2,370 degrees Fahrenheit, which is pretty hot. You ever stood inside, uh, next to a furnace like that?

Tony Kynaston: Ooh, good question. Uh, no. I’ve done firefighter training when I was working at Shell. It gets pretty hot doing that, so, but not a furnace hot.

Cameron: I have stood near furnaces when, in my Microsoft days, um, uh, in Victoria we had some coal industry clients. I can’t remember who they were now, but I remember doing tour of some of their facilities. [00:06:00 ] And I remember being next to a furnace. Actually, no, this wasn’t coal, it was steel. They were melting steel, which is about the same temperature that it takes to gasify coal.

And I remember, you know, being in the room next to the room where the furnace was on, and it was insane. It was like standing close to a sun. It was. The Oh hot. It was absolutely bonkers. Terrific experience. Highly recommend it. If you ever get the chance, stand, stand next to a feel steel furnace. Anyway, so they heat it up, then they clean it, run it over an iron or cobalt based catalyst that stitches the molecules back together in a way that you end up with wax, just these hydrocarbons that are a wax, and then you crack the wax and you end up with diesel and naptha.

And this was a big deal in Nazi Germany. Uh, believe it or not, Hitler struggled to get his hands on [00:07:00 ] enough oil during World War ii, so not a lot of oil wells in Germany. Uh, so it became a huge part of German industry during World War ii, CTL as it’s known, coal to liquid provided 92% of Germany’s air fuel and over 50% of its petroleum supply in the 1940s.

Uh, but then when they lost the war, it sort of got a bad rap because some Germans believed that they lost the war because they couldn’t produce enough. Uh, fuel out of that had nothing to do with the fact that the Americans and the, uh, Russians joined up and they just got summarily defeated and Stalin crushed them at Stalingrad.

But that’s another story. Then the other way of doing it is called, uh, hydrogenation, the direct route it’s called where you pulverize the coal. Mix it with heavy oil and [00:08:00 ] hydrogen under 300 bar for people like me who dunno what that means. Um, I know you’ve been to at least 300 bars in your time, but that’s a different story.

One bar equals atmospheric pressure. So 300 bars is 300 times 14.5 PSI. So 4,350 PSI comparable to the water jet cutting pressure used on stone basically.