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Assets under construction | 12 Months Ended
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Jun. 30, 2018
Assets under construction |
Assets under construction | 18 Assets under construction
|  | Property |  |  |  |  |  |  |
|  | plant and |  | Other |  | Exploration |  |  |
|  | equipment |  | intangible |  | and |  |  |
|  | under |  | assets under |  | evaluation |  |  |
|  | construction |  | development |  | assets |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
Balance as at 30 June 2017 |  | 129 124 |  | 1 245 |  | 365 |  | 130 734 |
Additions |  | 51 871 |  | 321 |  | 614 |  | 52 806 |
to sustain existing operations |  | 18 889 |  | 238 |  | — |  | 19 127 |
to expand operations |  | 32 982 |  | 83 |  | 614 |  | 33 679 |
Net reclassification from/(to) other assets |  | 42 |  | (33 | ) | — |  | 9 |
Finance costs capitalised |  | 3 568 |  | — |  | — |  | 3 568 |
Net impairment of assets under construction |  | (1 478 | ) | — |  | (312 | ) | (1 790 | )
Reduction in rehabilitation provision capitalised (note 31) |  | (341 | ) | — |  | (131 | ) | (472 | )
Projects capitalised |  | (25 315 | ) | (454 | ) | — |  | (25 769 | )
Translation of foreign operations |  | 7 464 |  | 46 |  | (35 | ) | 7 475 |
Disposals and scrapping |  | (1 152 | ) | — |  | (48 | ) | (1 200 | )
Balance at 30 June 2018 |  | 163 783 |  | 1 125 |  | 453 |  | 165 361 |
|  | Property |  |  |  |  |  |  |
|  | plant and |  | Other |  | Exploration |  |  |
|  | equipment |  | intangible |  | and |  |  |
|  | under |  | assets under |  | evaluation |  |  |
|  | construction |  | development |  | assets |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
Balance as at 30 June 2016 |  | 102 185 |  | 1 470 |  | 356 |  | 104 011 |
Additions |  | 59 771 |  | 313 |  | 228 |  | 60 312 |
to sustain existing operations |  | 16 653 |  | 235 |  | — |  | 16 888 |
to expand operations |  | 43 118 |  | 78 |  | 228 |  | 43 424 |
Net reclassification (to)/from other assets |  | (29 | ) | 29 |  | — |  | — |
Finance costs capitalised |  | 2 764 |  | — |  | — |  | 2 764 |
Net impairment of assets under construction |  | (728 | ) | (176 | ) | (189 | ) | (1 093 | )
Reduction in rehabilitation provision capitalised (note 31) |  | (726 | ) | — |  | (27 | ) | (753 | )
Projects capitalised |  | (23 433 | ) | (240 | ) | — |  | (23 673 | )
Translation of foreign operations |  | (10 575 | ) | (151 | ) | (3 | ) | (10 729 | )
Disposals and scrapping |  | (105 | ) | — |  | — |  | (105 | )
Balance at 30 June 2017 |  | 129 124 |  | 1 245 |  | 365 |  | 130 734 |
|  | 2018 |  | 2017 |
for the year ended 30 June |  | Rm |  | Rm |
Business segmentation |  |  |  |  |
 Mining |  | 2 095 |  | 1 141 |
 Exploration and Production International |  | 6 457 |  | 6 256 |
 Energy |  | 5 993 |  | 9 064 |
 Base Chemicals |  | 75 099 |  | 59 908 |
 Performance Chemicals |  | 75 144 |  | 54 006 |
 Group Functions |  | 573 |  | 359 |
Total operations |  | 165 361 |  | 130 734 |
|  | 2018 |  | 2017 |  | 2016 |
for the year ended at 30 June |  | Rm |  | Rm |  | Rm |
Additions to assets under construction (cash flow) |  |  |  |  |  |  |
Current year additions |  | 52 806 |  | 60 312 |  | 70 849 |
Adjustments for non-cash items |  | (171 | ) | (420 | ) | (1 427 | )
cash flow hedge accounting |  | 1 |  | (2 | ) | (2 | )
movement in environmental provisions capitalised |  | (172 | ) | (418 | ) | (1 425 | )
Per the statement of cash flows |  | 52 635 |  | 59 892 |  | 69 422 |
The group hedges its exposure to foreign currency risk in respect of its significant capital projects by means of forward exchange contracts. Cash flow hedge accounting is applied to these hedging transactions and accordingly, the effective portion of any gain or loss realised on these contracts is adjusted against the underlying item of assets under construction.
|  | 2018 |  | 2017 |
|  | Rm |  | Rm |
Capital expenditure |  |  |  |  |
Projects to sustain operations comprise of: |  |  |  |  |
Secunda Synfuels Operations |  | 8 608 |  | 8 453 |
Shutdown and major statutory maintenance |  | 3 775 |  | 3 569 |
Renewals |  | 1 481 |  | 1 002 |
Oxygen train 17 (Outside Battery Limits portion) |  | 417 |  | 979 |
Sixth fine ash dam (environmental) |  | 1 353 |  | 637 |
Volatile organic compounds abatement programme (environmental) |  | 137 |  | 655 |
Coal tar filtration east project (safety) |  | 294 |  | 419 |
Other environmental related expenditure |  | 133 |  | 185 |
Other safey related expenditure |  | 362 |  | 377 |
Other sustain |  | 656 |  | 630 |
Mining (Secunda and Sasolburg) |  | 3 720 |  | 2 831 |
Shondoni Colliery to maintain Middelbult Colliery operation |  | 318 |  | 368 |
Impumelelo Colliery to maintain Brandspruit Colliery operation |  | 258 |  | 274 |
Acquisition of mineral rights |  | 650 |  | — |
Refurbishment of equipment |  | 867 |  | 783 |
Mine geographical expansion |  | 449 |  | 372 |
Other safety related expenditure |  | 196 |  | 314 |
Other sustain |  | 982 |  | 720 |
Other (in various locations) |  | 6 797 |  | 5 602 |
Expenditure related to environmental obligations |  | 476 |  | 174 |
Expenditure incurred relating to safety regulations |  | 409 |  | 401 |
Other sustain |  | 5 912 |  | 5 027 |
Capital expenditure cash flow |  | 19 125 |  | 16 886 |
|  |  |  |  |  | 2018 |  | 2017 |
|  |  |  |  |  | Rm |  | Rm |
Capital expenditure |  |  |  |  |  |  |  |  |
Projects to expand operations comprise of: |  | Project location |  | Business segment |  |  |  |  |
Lake Charles Chemicals Project* |  | United States |  | Base and Performance Chemicals |  | 30 100 |  | 36 775 |
China Ethoxylation plant |  | China |  | Performance Chemicals |  | 398 |  | 204 |
Canadian shale gas asset |  | Canada |  | Exploration and Production International |  | 101 |  | 381 |
Fischer-Tropsch wax expansion project |  | Sasolburg |  | Performance Chemicals |  | 109 |  | 606 |
High-density polyethylene plant |  | United States |  | Base Chemicals |  | 265 |  | 1 448 |
Mozambique exploration and development |  | Mozambique |  | Exploration and Production International |  | 1 002 |  | 1 840 |
Loop Line 2 project |  | Mozambique |  | Energy |  | 16 |  | 638 |
Other projects to expand operations |  | Various |  | Various |  | 1 519 |  | 1 114 |
Capital expenditure cash flow |  |  |  |  |  | 33 510 |  | 43 006 |
| * |  | At 30 June 2018 actual capital expenditure (accrual basis) - R30,1 billion (US$2,3 billion) (2017 - R36,8 billion (US$2,7 billion)).
Project-related performance guarantees
|  |  |  |  |  | Maximum |  |  |
|  |  |  |  |  | guaranteed |  | Liability |
|  |  |  |  |  | amount |  | recognised |
Project |  | Description |  | Guarantor |  | Rm |  | Rm |
Lake Charles Chemicals Project |  | Completion guarantees and sureties issued in respect of the Lake Charles Chemicals Project. This includes a loan facility of US$3 995 million, of which US$3 995 million has been recognised. |  | Sasol Limited/ Sasol Financing |  | 54 953 |  | 52 155 |
Accounting policies: Assets under construction Assets under construction are non-current assets, which includes land and expenditure capitalised for work in progress in respect of activities to develop, expand or enhance items of property, plant and equipment, intangible assets and exploration assets. The cost of self-constructed assets includes expenditure on materials, direct labour and an allocated proportion of project overheads. Cost also includes the estimated costs of dismantling and removing the assets and site rehabilitation costs to the extent that they relate to the construction of the asset as well as gains or losses on qualifying cash flow hedges attributable to that asset. When regular major inspections are a condition of continuing to operate an item of property, plant and equipment, and plant shutdown costs will be incurred, an estimate of these shutdown costs are included in the carrying value of the asset at initial recognition. Land acquired, as well as costs capitalised for work in progress in respect of activities to develop, expand or enhance items of property, plant and equipment are classified as part of assets under construction. Finance expenses in respect of specific and general borrowings are capitalised against qualifying assets as part of assets under construction. Where funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset, the amount of finance expenses eligible for capitalisation on that asset is the actual finance expenses incurred on the borrowing during the period less any investment income on the temporary investment of those borrowings. Where funds are made available from general borrowings and used for the purpose of acquiring or constructing qualifying assets, the amount of finance expenses eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on these assets. The capitalisation rate is the weighted average of the interest rates applicable to the borrowings of the group that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining qualifying assets. The amount of finance expenses capitalised will not exceed the amount of borrowing costs incurred. Exploration assets Exploration assets comprise capitalised expenditure relating to the exploration for and evaluation of mineral resources (coal, oil and gas). Mineral assets comprise capitalised expenditure relating to producing coal, oil and gas properties, including development costs and previously capitalised exploration assets. Oil and gas The successful efforts method is used to account for natural oil and gas exploration, evaluation and development activities. Property and licence acquisition costs as well as development cost, including expenditure incurred to drill and equip development wells on proved properties, are capitalised as part of assets under construction and transferred to mineral assets in property, plant and equipment when the assets begin producing. On completion of an exploratory well or exploratory-type stratigraphic test well, the entity will be able to determine if there are oil or gas resources. The classification of resources as proved reserves depends on whether development of the property is economically feasible and recoverable in the future, under existing economic and operating conditions, and if any major capital expenditure to develop the property as a result of sufficient quantities of additional proved reserves being identified is justifiable, approved and recoverable. The cost of exploratory wells, through which potential proved reserves may be or have been discovered and the associated exploration costs are capitalised as exploration and evaluation assets in assets under construction. These costs remain capitalised pending the evaluation of results and the determination of whether there are proved reserves. The following conditions must be met for these exploration costs to remain capitalised:
| · |  | Sufficient progress is being made in assessing the oil and gas resources, including assessing the economic and operating viability with regards to developing the property.
| · |  | It has been determined that sufficient oil and gas resources or reserves exist which are economically viable based on a range of technical and commercial considerations to justify the capital expenditure required for the completion of the well as a producing well, either individually or in conjunction with other wells.
Progress in this regard is reassessed at each reporting date and is subject to technical, commercial and management review to ensure sufficient justification for the continued capitalisation of such qualifying exploration and evaluation expenditure as an exploration and evaluation asset as part of assets under construction. If both of the above conditions are not met or if information is obtained that raise substantial doubt about the economic or operating viability, the costs are charged to the income statement. Exploratory wells and exploratory-type stratigraphic test wells can remain suspended on the statement of financial position for several years while additional activity including studies, appraisal, drilling and/or seismic work on the potential oil and gas field is performed or while the optimum development plans and timing are established in the absence of impairment indicators. Coal mining Coal mining exploration and evaluation expenditure is charged to the income statement until completion of a final feasibility study supporting proved and probable coal reserves. Expenditure incurred subsequent to proved and probable coal reserves being identified is capitalised as exploration assets in assets under construction. Expenditure on producing mines or development properties is capitalised when excavation or drilling is incurred to extend reserves or further delineate existing proved and probable coal reserves. All development expenditure incurred after the commencement of production is capitalised to the extent that it gives rise to probable future economic benefits. A unit is considered to be produced once it has been removed from underground and taken to the surface, passed the bunker and has been transported by conveyor over the scale of the shaft head. The calculation is based on proved and probable reserves assigned to that specific mine (accessible reserves) or complex which benefits from the utilisation of those assets. Inaccessible reserves are excluded from the calculation.

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