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Property, plant and equipment

12 Months Ended

Jun. 30, 2021

Investing Activities

20	Property, plant and equipment


		Building	Plant,		Assets
		and	equipment	Mineral	under
	Land	improvements	and vehicles	assets	construction*	Total
for the year ended 30 June	Rm	Rm	Rm	Rm	Rm	Rm
Revised carrying amount at 30 June 2020¹	5 591	11 954	152 255	30 043	27 802	227 645
Additions	18	4	1 063	43	14 894	16 022
to sustain existing operations	18	—	948	43	13 792	14 801
to expand operations	—	4	115	–	1 102	1 221
Net reclassification (to)/from other assets	(2)	56	(750)	20	722	46
Reduction in rehabilitation provisions capitalised (note 33)	—	(4)	(55)	(1 401)	(965)	(2 425)
Establishment of joint operation²	325	1 097	28 079	–	62	29 563
Disposal of business³	(1 399)	(632)	(4 544)	(1)	(31)	(6 607)
Finance costs capitalised	—	—	–	–	880	880
Projects capitalised	73	837	11 918	2 654	(15 952)	(470)
Reclassification from/(to) held for sale (note 12)	98	349	(711)	(981)	(444)	(1 689)
Translation of foreign operations	(775)	(1 457)	(18 327)	98	(573)	(21 034)
Disposals and scrapping	(2)	(19)	(184)	(49)	(203)	(457)
Current year depreciation charge	—	(537)	(11 080)	(3 303)	–	(14 920)
Net impairment of property, plant and equipment (note 10)	(56)	(94)	(28 678)	353	(58)	(28 533)
Carrying amount at 30 June 2021	3 871	11 554	128 986	27 476	26 134	198 021

* Includes intangible assets under construction

1 Refer to note 1 for details.

2 Refer to note 11 for details.

3 Relates mainly to the disposal of our 50% equity interest in Gemini HDPE LLC.

20	Property, plant and equipment continued


		Building	Plant,		Assets
		and	equipment	Mineral	under
	Land	improvements	and vehicles	assets	construction	Total
for the year ended 30 June	Rm	Rm	Rm	Rm	Rm	Rm
Carrying amount at 30 June 2019	4 202	15 434	185 235	28 678	127 764	361 313
Impact of revision (refer note 1)	—	—	(3 731)	—	—	(3 731)
Revised carrying amount at 1 July 2019	4 202	15 434	181 504	28 678	127 764	357 582
Transfer of finance lease assets to right of use assets on initial application of IFRS 16	(6)	(1 475)	(5 936)	—	(71)	(7 488)
Adjusted carrying amount at 1 July 2019	4 196	13 959	175 568	28 678	127 693	350 094
Additions	34	59	1 039	1 230	35 730	38 092
to sustain existing operations	34	42	825	1 230	19 017	21 148
to expand operations	—	17	214	—	16 713	16 944
Net reclassification (to)/from other assets	(11)	(295)	447	(4)	(17)	120
Reduction in rehabilitation provisions capitalised (note 33)	—	—	(23)	(160)	—	(183)
Finance costs capitalised	—	—	—	—	3 520	3 520
Projects capitalised	920	3 035	120 616	3 378	(128 492)	(543)
Reclassification to held for sale (note 12)	(112)	(2 350)	(61 754)	—	(9 497)	(73 713)
Translation of foreign operations	842	2 091	23 761	230	12 876	39 800
Disposals and scrapping	(268)	(6)	(484)	(18)	(655)	(1 431)
Current year depreciation charge (revised)	—	(720)	(15 568)	(3 291)	—	(19 579)
Net impairment of property, plant and equipment (revised) (note 10)	(10)	(3 819)	(91 347)	—	(13 356)	(108 532)
Revised carrying amount at 30 June 2020	5 591	11 954	152 255	30 043	27 802	227 645

20	Property, plant and equipment continued

Up to and including financial year 2019, Sasol recognised lease assets that were classified as finance leases under IAS 17 Leases as part of Property, Plant and Equipment. From financial year 2020 assets recognised under IFRS 16 Leases are disclosed separately in note 18, Leases.


		Building	Plant,		Assets
		and	equipment	Mineral	under
	Land	improvements	and vehicles	assets	construction	Total
for the year ended 30 June	Rm	Rm	Rm	Rm	Rm	Rm
2021
Cost	4 145	20 462	334 432	47 606	26 134	432 779
Accumulated depreciation and impairment	(274)	(8 908)	(205 446)	(20 130)	—	(234 758)
	3 871	11 554	128 986	27 476	26 134	198 021
2020
Cost	5 844	21 418	325 837	84 822	27 802	465 723
Accumulated depreciation and impairment (revised)	(253)	(9 464)	(173 582)	(54 779)	—	(238 078)
	5 591	11 954	152 255	30 043	27 802	227 645
2019
Cost	4 403	23 034	316 548	74 769	127 764	546 518
Accumulated depreciation and impairment (revised)	(201)	(7 600)	(135 044)	(46 091)	—	(188 936)
	4 202	15 434	181 504	28 678	127 764	357 582


	2021	2020	2019
for the year ended 30 June	Rm	Rm	Rm
Additions to property, plant and equipment (cash flow)
Current year additions	16 022	38 092	55 862
Adjustments for non-cash items	(77)	(2 947)	(81)
movement in environmental provisions capitalised	(77)	(2 947)	(1 924)
movement in long-term debt	—	—	(117)
LCCP investment incentives	—	—	1 960
Per the statement of cash flows	15 945	35 145	55 781

20	Property, plant and equipment continued


	2021	2020
for the year ended 30 June	Rm	Rm
Capital commitments (excluding equity accounted investments)
Capital commitments, excluding capitalised interest, include all projects for which specific board approval has been obtained. Projects still under investigation for which specific board approvals have not yet been obtained are excluded from the following:
Authorised and contracted for	33 196	260 620
Authorised but not yet contracted for	33 297	21 136
Less expenditure to the end of year	(26 605)	(249 806)
	39 888	31 950

to sustain existing operations	25 591	26 305
to expand operations	14 297	5 645
Estimated expenditure
Within one year	21 393	15 578
One to five years	18 495	16 372
	39 888	31 950

Significant capital commitments and expenditure at 30 June comprise mainly of:

Capital commitments

Capital expenditure

2021

2020

2021

2020

Project

Project location

Business segment

Projects to sustain operations

Shutdown and major statutory maintenance

Various

6 439

3 247

2 583

5 221

Environmental projects

Various

3 033

1 007

1 806

2 800

Clean fuels II

Secunda

Fuels

1 483

1 375

237

355

Projects to expand operations

Mozambique exploration and development

Mozambique

Gas

10 786

3 353

234

211

Lake Charles Chemical Project

United States

Chemicals America

798

1 297

684

13 807

20	Property, plant and equipment continued

Areas of judgement:

The depreciation methods, estimated remaining useful lives and residual values are reviewed at least annually. The estimation of the useful lives of property, plant and equipment is based on historic performance as well as expectations about future use and therefore requires a significant degree of judgement to be applied by management.

The following depreciation rates apply in the group:



Buildings and improvements	1 - 17%, units of production over life of related reserve base
Retail convenience centres	3 – 5	%
Plant	2 – 50	%
Equipment	3 – 91	%
Vehicles	5 – 33	%
Mineral assets	Units of production over life of related reserve base
Life-of-mine coal assets	Units of production over life of related reserve base

Accounting policies:

Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Land is not depreciated.

When plant and equipment comprises major components with different useful lives, these components are accounted for as separate items.

Depreciation of mineral assets on producing oil and gas properties is based on the units-of-production method calculated using estimated proved developed reserves.

Life-of-mine coal assets are depreciated using the units-of-production method and is based on proved and probable reserves assigned to that specific mine (accessible reserves) or complex which benefits from the utilisation of those assets. Other coal mining assets are depreciated on the straight-line method over their estimated useful lives.

Depreciation of property acquisition costs, capitalised as part of mineral assets in property, plant and equipment, is based on the units-of-production method calculated using estimated proved reserves.

Property, plant and equipment, other than mineral assets, is depreciated to its estimated residual value on a straight-line basis over its expected useful life.

Assets under construction

Assets under construction include land and expenditure capitalised for work in progress in respect of activities to develop, expand or enhance items of property, plant and equipment. 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.

20	Property, plant and equipment continued

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 of 4,6% (2020 – 4,9)% is calculated as the weighted average of the interest rates applicable to the borrowings of the group that are outstanding during the period, including borrowings made specifically for the purpose of obtaining qualifying assets once the specific qualifying asset is ready for its intended use. The amount of finance expenses capitalised will not exceed the amount of borrowing costs incurred.