Historical Overview of the South African Chemical Industry : 1896 - 2002

[ Introduction | AECI | SASOL | Dow Sentrachem | Conclusion ]

AECI

Alfred Nobel's discovery of dynamite had made the transportation of nitroglycerine a reality and increasingly large quantities of the explosive were imported into South Africa in the early 1890s. To ensure a regular supply and to improve blasting efficiency, required for mining the hard quartzitic gold-bearing rock of the Witwatersrand, the Nobel Dynamite Trust decided to produce the required explosives locally.

And so it was that on 22 October 1896, President Paul Kruger travelled from Pretoria to the farm Modderfontein, east of Johannesburg, to open De Zuid Africaansche Fabrieken voor Ontplofbare Stoffen. With a name like this, it is not surprising that the factory was called simply "The Dynamite Company." After the Anglo Boer War of 1899-1902, management of the company passed into the hands of the British South Africa Explosives Company, with the Nobel Dynamite Trust retaining a controlling interest.

For some years Cecil John Rhodes, founder of De Beers Consolidated Mines, was concerned about the monopoly on explosives manufacture held by the Dynamite Company. In 1903, one year after his death, the Cape Explosives Works, at Somerset West near Cape Town, started producing dynamite, principally for the De Beers diamond mines around Kimberley. By 1907 this company's annual production of 340 000 cases (each of 50 lb) had exceeded that of Modderfontein (230 000 cases).

In the UK, Kynoch and Company, Nobel's chief competitor, had its eye on the rapidly growing explosives market in South Africa. Arthur Chamberlain, who had taken over from the founder, George Kynoch started negotiations with the Natal government in 1907. In an amazingly short period of time, Kynochs established a third dynamite factory at Umbogintwini, south of Durban, in 1909.

By 1911 the explosives industry was by far the largest manufacturing industry in the country with an investment of over £2 million and more than 3000 employees. But three companies all importing the same raw materials, all making the same product, and all using the same process were finding it difficult to make a profit. Their problems were compounded by the rising price of glycerine; only exports during World War I saved the three companies from bankruptcy.

After the war both Somerset West and Umbogintwini diversified into fertilizer manufacture using locally-manufactured sulphuric acid and phosphatic rock, most of which was imported from Morocco. The benefits of this development were short-lived; over-production of superphosphate in Holland led to dumping in South Africa. The post-war slump only added to the woes of the industry. Rationalisation was the only answer.

African Explosives and Industries

In 1923 Sir Harry McGowan, chairman of Nobel Industries, arranged a merger of their Modderfontein company with that of Kynoch's at Umbogintwini. Getting De Beers to come on board required more protracted negotiations but success was finally achieved in December 1923 when a new company, African Explosives and Industries, was registered. Mr Ross Frames of De Beers was appointed chairman and Sir Harry McGowan deputy chairman. A young Ernest Oppenheimer, chairman of Anglo American Corporation, joined the board to represent the mining industry and retained a close association with the company for the rest of his life.

Two successful mergers in South Africa apparently whet McGowan's appetite for more in the UK. By 1926 he had formed Imperial Chemical Industries from the merger of Nobel Industries, the British Dyestuffs Company, the United Alkali Company, and Brunner, Mond Limited. ICI acquired Nobel Industries' 50% holding in African Explosives and Industries, establishing a partnership which lasted until 1998. This partnership resulted in a steady flow of technical expertise, information and personnel which was to be of incalculable benefit in the development of the local chemical industry.

The great depression of the early 1930s adversely affected the chemical industry but the board of African Explosives and Industries was looking adventurously to the future. A technical mission from ICI was sent to investigate erecting a synthetic ammonia plant at Modderfontein. In 1932, less than two years later and at a cost of £300 000, the ammonia plant went into full production - 5000 tons per annum! With an associated oxidation plant it was possible to produce nitric acid and research started into the substitution of ammonium nitrate for nitroglycerine, ultimately with considerable cost savings to the mines.

The boom in gold mining meant that expansion of the ammonia plant was inevitable. By 1936 annual capacity had been increased to 25 000 tons. In 1938, Modderfontein and Somerset West together produced 2 348 987 cases of explosives, bringing the total production since 1896 to over 30 000 000 cases.

African Explosives and Chemical Industries

Diversification from explosives followed. Fertilizers, paints, veterinary preparations and insecticides were all produced to meet a growing demand. To reflect this diversity the name of the company was changed to African Explosives and Chemical Industries in 1944. Two years later, as if to celebrate the 50th anniversary of the explosives industry, a calcium cyanide plant was erected, again to meet the growing demand from the gold mines.

The next 35 years were characterized by an almost continuous increase in production and diversification. A second ammonia plant was commissioned at Modderfontein in 1955 and, when urea was first produced in 1960, annual capacity for ammonia was increased to 145 000 tons. In 1955 surplus acetylene from a carbide plant at Ballengeich in Natal was transported to Umbogintwini for the production of polyvinyl chloride, the first commodity plastic to be made in South Africa. The associated chlor-alkali plant also supplied chlorine and caustic soda to the South African Industrial Cellulose Corporation (SAICCOR) at Umkomaas. Methanol, formaldehyde and urea-formaldehyde resins were produced at Modderfontein and in 1963 interests in SA Titan Products (now Huntsman-Tioxide SA) and SA Nylon Spinners were acquired.

In 1964 the company opened a fourth manufacturing site, the Midland Factory at Sasolburg. Using feedstocks from SASOL the new factory produced initially calcium cyanide and then polyethylene (1966). PVC, CFCs and chlorinated solvents followed. Adherence to the Montreal Protocol resulted in the manufacture of CFCs being phased out in 1995.

The company name was abbreviated to AE & CI in 1972 and, in 1974, a 300 000 ton per annum coal-based ammonia plant was commissioned at Modderfontein. A further name change to AECI followed in 1976 and the company's dependence on coal as a raw material was emphasised with the commissioning of the Coalplex project at Sasolburg in 1978. A joint venture with Sentrachem, Coalplex consisted of five linked plants: carbide, acetylene, chlorine, VCM and PVC. Coalplex also produced caustic soda and lime hydrate.

During the early 1980s AECI consolidated its position as the major chemical company in South Africa, expanding and diversifying its product range. Acquisition of Chemical Services in 1980 was significant, reflecting an increased emphasis on speciality chemicals. In 1985, after 82 years, explosives manufacture at Somerset West was phased out. A joint-venture soda ash plant was commissioned in Botswana in 1991 and two years later the formation of AECI Bioproducts and AECI Aroma and Fine Chemicals was announced with plants at Umbogintwini and Richards Bay.

In 1993 AECI and SASOL agreed to the formation of a new company, later to be called Polifin. This joint venture produces monomers, polymers, chlor-alkali products, cyanide and peroxides. Restructuring involved closing the costly carbide-acetylene route to VCM and using, instead, ethylene from SASOL. Major restructuring also occurred within the group during the 1990s. Manufacture of nitroglycerine gave way to new generation explosives in 1994 and the Modderfontein complex celebrated its centenary in 1996.

In 1998, SASOL put in a bid to take over AECI but the deal was aborted due to stringent restrictions imposed by the Competitions Board. Further restructuring has occurred involving a move out of ammonia and urea production, the sale of interests in Polifin to Sasol, disposal of 50% of Kynoch (with the balance to come) to Norsk-Hydro in Norway and a joint venture with PPG Industries of Pittsburg to develop the Dulux technical paints business. Proceeds from these sales were applied in the first instance to reducing the Groups' debt.

The restructuring has seen the emergence of five core clusters in explosives, specialities, fine and industrial chemicals and fibres. As a consequence of this restructuring the company has disposed of Huntsman Tioxide, Autoplastics, Goldchem, Alliance Peroxide and Acrylic Products. Kynoch Feeds is now KK Animal Nutrition (Pty) Ltd, part of Kemira, Finland. In January 2001 AECI bought-back 40% of its own shares from Anglo American ending 76 years in which AECI was owned by one or other industrial giant.

In 2006, AECI Ltd is now composed of African Explosives Ltd (AEL), SANS Fibres and Chemical Services the speciality chemicals arm with a portfolio of 20 independent businesses focussed on defined markets. These are: AECI Coatings, Akulu Marchon, Chemical Initiatives, Chemiphos, Chemserve Perlite, Chemserve Systems, Crest Chemicals, Dussek Campbell, ImproChem, Industrial Oleochemical Products, Industrial Urethanes, Lake International Technologies, Performance Masterbatch, Plaaskem, Plastamid, Resinkem, SA Paper Chemicals, SENMIN and Speciality Minerals.

[ Introduction | AECI | SASOL | Dow Sentrachem | Conclusion ]