Sasol Lake Charles

South Africa-based Sasol, a chemical production business and energy sector company, is wrapping up a near-$13 billion expansion of its Lake Charles operation. 

Sasol, a chemical maker building a $12.9 billion cluster of plants in Lake Charles where it began producing ethylene oxide in early June, is already talking about expanding operations in the coming years. 

"The site is now positioned as a growth site," Mike Thomas, senior vice president of North American operations for Sasol in Lake Charles, told state Commerce and Industry Board members at a recent meeting, later noting that the company has only developed about half its property. 

The first goal is to complete construction and "run things for a while and pay down debt," Thomas said.

"In the next several years, we'll go into a phase of growth, but whether it's debottlenecking the existing site or something else we haven't decided yet," he said.

Debottlenecking squeezes more production out of existing plants and equipment by improving processes or revamping or adding new equipment.

There are already plans for seven chemical production facilities in Lake Charles. The ethylene oxide and ethylene glycol production lines are the first two — with both achieving initial operations in the past few months. The company plans to open the five other manufacturing production lines by early 2020. 

So far, the Lake Charles chemical production plants have "quickly shown capability to run at full range," Thomas said. 

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Sasol's economic incentive application for the state's Industrial Ad Valorem Tax Exemption Program, known as ITEP, where companies get a 10-year property tax abatement, was grandfathered in when the program being revamped in June 2018.

Louisiana's Board of Commerce and Industry recently approved Sasol's ITEP application for $10.1 million in property tax relief for the first year in exchange for $633 million in investment inside Calcasieu Parish and 245 new jobs. Sasol's local executive said the company has spent $4.3 billion with businesses in Louisiana.

If Sasol follows through with plans for an expansion, the company would be eligible for no more than 80% of its property tax bill being forgiven for 10 years under new rules. That means local taxing entities would see a boost in property taxes during the first year.

Sasol's executive was asked by a Commerce and Industry Board member whether the company would still be able to turn a profit if it had only been awarded a 10-year property tax abatement of only 80% rather than 100% when it planned the facility that is being built.

"If we had proposed a lesser incentive … I would have to run the numbers, but I can say this, it's much less likely that we would have (invested in Louisiana)," Thomas said.

In Louisiana Sasol already has 1,100 employees in Lake Charles — about 400 of whom worked at an older plant — in addition to 700 new workers. The goal is to hire 100 more soon. The company hired 6,500 construction workers during the plant building phase, and it expects to have about 1,000 contract workers working inside its plant. The company has said the Lake Charles plant is the largest capital investment in its history.

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