Chemicals Manufacturers Introduction South Africa's chemical industry is of substantial economic significance to the country, contributing around 5% to GDP and approximately 25% 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 three broad categories: · Base chemicals – feedstocks and commodity chemicals (Primary products) · Intermediate chemicals (Secondary products) · Chemical and speciality end-products (Tertiary products)
Eastern Cape chemical Industry The bulk of the industry in the Eastern Cape is in intermediate and speciality end products for heavy industrial purposes. There is limited base chemical manufacturing and the majority of base chemicals are sourced from Gauteng and the Western Cape to be manufactured into end use products for pest control, industrial cleaning agents, animal feedstock and consumer chemicals such as soaps, cosmetics, toiletries, adhesives. The Coega Development Corporation’s Strategy has identified the provinces chemical market as follows: 1. Commodity organic chemicals: the products include mainly petrochemicals. Currently, the Eastern Cape has no primary feedstock capacity for petrochemicals, although it is fairly close to the PetroSA facility in Mossel Bay. The feedstocks constitute hydrocarbons and animal and plant derivatives.
2. Fine chemicals: the products comprise high value pure chemicals that are typically used in pharmaceuticals and agricultural chemicals.
3. Pure functional and formulated speciality chemicals: used in industrial and non-consumer applications, e.g. paints, mining chemicals, textile specialities, paper chemicals, etc.
4. Bulk formulated chemicals: the products consist of fertilisers, explosives and associated products.
5. Pharmaceuticals: there are four identified companies in the Eastern Cape in this sub-sector. The Eastern Cape’s contribution to national output is around 10%, which is greater than the GDP contribution of the Province. This is mainly due to the Aspen/Pharmacare operations in the area. In terms of feedstock for pharmaceuticals, the Eastern Cape has few resources in close proximity and most feedstock is supplied from other provinces and/or imported. 6. Consumer formulated chemicals: this sub-sector includes all formulated consumer chemicals such as soaps, cosmetics, toiletries, adhesives, etc. The Eastern Cape’s contribution to national output is around 5%.
7. Plastic conversion: this sub-sector includes all plastic products converted from primary plastics. There are 50 identified companies in this sector in the Eastern Cape with an output contribution of around 5% of the national total. In terms of feedstock for plastic conversion, the Eastern Cape has few resources in close proximity and most feedstock is supplied from other provinces and/or imported.
8. Rubber conversion: there are 10 identified companies in the Eastern Cape. The Eastern Cape’s contribution to national output is around 40%. This is largely due to the presence of automotive Original Equipment Manufacturers (OEM’s) in the vicinity. In terms of feedstock for rubber products, the Eastern Cape has some resources in close proximity [e.g. carbon black] but most feedstock is supplied from other Provinces and/or imported
Chemical Transportation Transportation and distribution of chemicals within the province is primarily by road and this has implications on enforcement of hazardous materials (HAZMAT) regulations. The industry experiences high seasonality during the summer months, especially during November and December months with orders increasing by 5-10% more than usual. Reasons cited for the increase includes: · High demand for pest control chemicals as a result of the increase in pests in summer due to the high temperatures, · Stock piling of industrial chemicals prior to closures for the Christmas festive season to ensure sufficient supply during the new year when production will be slow
Logistics and Transport Constraints Most chemical manufactures outsource their transport function and depend on 3PL service providers. The sampled industry players indicated that though ideal for freeing resources and allowing specialised chemical transportation, their dependence on transport service providers has to a large extent limited their control on the transport function. Constraints associated with transportation of chemicals included: · Lack of control in transport scheduling and thus cannot directly influence solutions caused by delays attributed with traffic bottlenecks. · Constraints in their supply chain due them being located at the downstream end. · With supplies originating from Cape Town and Gauteng, they perceive most transport delays to be as a result congestion in those areas with 48hr order times extending to 60/72 hrs. · High transport costs as a component of the whole logistics cost.
|