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Other chemicals

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As the country has no significant upstream oil reserves and until recently little natural gas, its chemical industry has primarily developed around the gasification of coal. The establishment of a petrochemicals industry can be traced back to the 1950's when the first oil from coal plant was built at Sasolburg. It was, however, only in the sixties and seventies when the possibility of a chemicals industry based on local raw materials rather than imported feedstocks became possible. This followed the establishment of two large synthetic oil-from-coal plants by Sasol at Secunda during the early 1980's to provide strategic self-sufficiency in fuels. The synfuel sector, while serving the South African oil industry as a source of fuels, is now also the major source of chemical feedstocks and intermediates in South Africa. 

The chemical industry has been shaped by the political and regulatory environment which created a philosophy of isolationism and protectionism during the apartheid years. This tended to foster an inward approach and a focus on import replacement in the local market. It also encouraged the building of small-scale plants with capacities geared to local demand, which tended to be uneconomic. Through isolation of the industry from international competition and high raw material prices as a result of import tariffs, locally processed goods have generally been less than competitive in export markets. Now that South Africa is once more fully part of the global community, South African chemical companies are focusing on the need to be internationally competitive and the industry is reshaping itself accordingly. 

Another consequence of the focus on import replacement has been the building of chemical plants at inland locations close to the coal-based synthetic fuels plants which provide feedstocks. This strategy was attractive at the time due to the additional benefit of being sited close to the heavily populated Gauteng area which is the largest domestic market. These plants are generally smaller than world scale and their cost structures are not highly competitive in export markets, partly because of the high transport costs to coastal ports. They are nevertheless, well placed for exports to neighbouring African countries such as Zimbabwe, Namibia and Botswana. 

There is evidence that there is currently a concerted effort to make the chemical industry more competitive. The South African Department of Trade and Industry has convened a number of Petrochemicals, Plastics and Synthetic Fibres workshops to analyse the problems and opportunities of a sector of the South African economy which is considered to have great potential for the future, and to develop a way forward. 

The Chemical and Allied Industries' Association (CAIA), a South African association which forms part of a world wide network of chemical industry associations, seeks to promote the efficiency, productivity and competitiveness of the chemical and allied industries in South Africa. CAIA promotes a proactive relationship with government, particularly the Departments of Trade and Industry, Environmental Affairs, Water Affairs, Education, Labour, Energy and Science and Technology. CAIA has recently concluded a Sector Summit with the government in which the future direction of the chemical industry has been mapped out. These include the transformation of mineral feed-stocks into useful inorganic chemicals and the extension of the petrochemical value matrix. 

Since the mid 1980s, Sasol has been involved in developing and marketing higher-value chemicals for a range of markets. The company has moved into a number of new chemical and related fields, including acrylonitrile and acrylic fibres, polypropylene, higher-value phenolics alpha olefins, alkylamines, as well as higher-value ketones. These developments have resulted in the synfuels production facilities being complimented by the more lucrative production of higher-value chemicals. In 1999, the company began expanding its Xenon and Kryptonite production facilities, the firm planned to supply over half the global demand for xenon gas and a third of the global market of krypton gas.

Industry Structure

South Africa's chemical industry is of substantial economic significance to the country, contributing around 5% to GDP and approximately 23% of its manufacturing sales. The industry is the largest of its kind in Africa. It is highly complex and widely diversified, with end products often being composed of a number of chemicals which have been combined in some way to provide the required properties and characteristics. It can be divided into four broad categories: 

Base chemicals
Intermediate chemicals
Chemical end-products
Speciality end-products

Base chemicals including the petrochemical building blocks, ethylene, propylene, butadiene, benzene, toluene, xylenes, and methanol, which are all important chemical building blocks sourced from the petrochemical industry. Inorganic chemicals such as ammonia, caustic soda, sulphuric acid, chlorine, sulphur, soda ash, bromine, fluorine and phosphorus, to name but a few, are also base chemicals. 

Petrochemicals production in South Africa is largely centred around the Sasol ll and Sasol lll plants at Secunda and the Natref refinery at Sasolburg where Sasol generates various feedstocks and olefins which facilitate the downstream manufacture of polymers and other products. Using the Fischer Tropsch process, Sasol produces about two million tonnes per annum of a range of various olefins for the petrochemical industry. About 0.6 million tonnes of olefins are used by the chemical industry, and the remaining 1.4 million tonnes is used in fuels. A small proportion (about 25,000 tons) is recovered from crude oil refineries. When compared with international petrochemicals plants based on natural gas or ethane, the local synfuels plants tend to be less competitive and reinvestment in the synthetic coal- based technologies would currently be difficult to justify. As a result Sasol has looked to Mozambique and its gas fields for readily available feed-stock. In consequence a gas pipe-line has just been completed and natural gas is now piped through to the Secunda site. 

Some benzene and other aromatics are produced by the Engen refinery in Durban. A modest amount of propylene is produced at the Sapref refinery in Durban where a splitter owned by Safripol is in operation. The Mosref plant generates mixed alcohol and ketone streams which are currently exported. Phosphoric acid is sourced from phosphate rock mined at Phalaborwa by Foskor. 

Intermediate chemicals is a term which can be used to describe a plethora of products such as ammonia, waxes, solvents, phenols, tars, plastics, and rubbers. 

Chemical end-products includes processible plastics, paints, explosives, and fertilisers. 

Speciality chemical end-products tend to be lower volume, higher added-value chemical products. Many pharmaceuticals, agro-chemicals, bio-chemicals, food-, fuel- and plastics - additives fall into this category. 

The base, intermediate chemicals and chemical end products are produced by the larger companies such as Sasol, Omnia, African Explosives Ltd, AECI, NCP Chlorchem, Dow Agrosciences and Safripol. Other players which are active in these categories include Hoechst SA, Afrox, Bayer, Shell Chemicals, BASF, Engen Petroleum, Ineos Silicas SA (Pty) Ltd, ICI, Rohm and Haas, Air Products and Lanxess. Traders and agents are also active in this market. 

There are a number of companies involved in local production or importation of speciality and performance chemicals. Included are AECI, Fine Chemicals Corp (S.A. Druggists), Noriscel, Henkel, Revertex, CH Chemicals and various companies in Protea Chemicals which is now part of the Omnia Group. There is an active trading sector comprising traders and agents who handle the importation and marketing of speciality and fine chemicals. Included are Saarchem, Protea Chemicals, Crest Chemicals, Carst & Walker, Lewis & Everitt and T&C Chemicals.

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