Sasol announcing yesterday that they are going back to their old dividend paying ways

Sasol announcing yesterday that they are going back to their old dividend paying ways. The company cites an improving outlook, a dark recent past and return to the long term track record of rewarding shareholders. In short here are the reasons given for having toned the dividend down. In fact I can remember that the company at the height of the crisis were considering a scrip dividend alternative:

"At the onset of the global economic crisis, Sasol made the decision to conserve cash and strengthen its balance sheet. Following a substantial drop in earnings in the 2009 financial year and a bleak, uncertain economic outlook, the Group decided to reduce the 2009 dividend in line with the reduction in earnings."

They were right, the going was exceptionally tough back then. Remember that oil prices rose sharply, topping out at just over 147 Dollars a barrel in July 2008, only to be completely crushed and bottomed out to around 35 Dollars a barrel in late December 2008, early January 2009. That was extreme and perhaps unprecedented volatility. Well, as Sasol points out, bar for this event happening again, we should expect a healthier dividend flow:

"It is Sasol's intention to maintain and/or grow dividends over time in line with the Group's anticipated sustainable growth in earnings, barring significant economic variables such as fluctuations in the oil price and exchange rates. When deciding on dividends, the Board will also take into consideration several factors including the prevailing circumstances of the company, future investment plans, financial performance and the trading and macro economic environments."

And in case you missed it last week, the Tata slash Sasol project in India is one very such project that will suck an enormous amount of cash. In fact the JV will suck up 10 billion Dollars shared by both parties of course. The project is only expected to be finished by 2018 and within a year be producing 80 thousand barrels of oil equivalent per day. The only problem is that the state of Orissa is kind of isolated geographically, but has large coal reserves, around one fifth of all of India's coal. Currently the province has 37 million inhabitants. Other than very bad occasional cyclones, the best part is that it is in India.