An MBendi Profile: South Africa - History of the Chemical Industry

Historical Overview of the South African Chemical Industry : 1896 - 2010

Conclusion

During its 100 years of existence, the development of the chemical industry has been dominated by three factors: the demand for explosives by the mining industry, the abundance of relatively cheap coal, and the political and regulatory environment in which it operated between 1948 and 1994.

Based in a country with no proven oil reserves, until recently little natural gas and abundant coal resources it is not surprising that the gasification of coal became a major factor in the development of the industry. This was aided and abetted by a political system which increasingly forced the industry to look inwards and to focus on import replacement. It led also to the construction of small-scale plants with production geared to local demand. As a consequence locally-produced commodity chemicals and processed goods have generally been less than competitive in export markets.

For a developing country, South Africa has an unusually large chemical industry and it is of substantial economic significance.In 2010 the industry still contributes 5% to the GDP and 25% of manufacturing sales. The Omnia Group has become a major player in recent times and is today a diversified, specialist chemical services provider with its business interests balanced across the chemical, mining and agricultural markets. The chemicals division, Protea Chemicals, stemmed from the buyout of Protea Chemicals in 2004 and is structured around the seven businesses of Protea Polymers, Protea Bulk Resources, Acol Chemical Holdings, Protea Chemicals Inland/Cape/KZN, Protea Speciality Chemicals, Protea Animal Feeds and Zetachem . The explosives business consists of Bulk Mining Explosives and Protea Mining Chemicals and the agricultural division consists of Omnia Fertiliser and Omnia Specialities and its subsidiary in Australia. A large number of smaller companies are involved with manufacturing a wide range of specialities and in formulating and converting. Many multi-national companies operate in South Africa as manufacturers and/or distributors. Amongst these companies are Air Products, Bayer, BASF, Buckman, du Pont, Huntsman Tioxide, Lanxess, Merck and Rohm and Haas (now part of Dow).

The Chemical and Allied Industries' Association (CAIA), which grew out of the 50 year old Transvaal Chemical Manufacturers' Association, was founded in 1994. CAIA's responsibilities include fostering South Africa's science base, assisting in education and training, seeking ways to promote growth in the chemical and related sectors, consulting with government and other role players, and promoting the industry's commitment to a high standard of health, safety, and environmental performance. CAIA is the South African custodian of Responsible Care.

Now that South Africa is once again part of the international community, the chemical industry is focusing on the need to be internationally competitive and the industry is reshaping itself accordingly. Exports were R49 billion and imports R95 billion in 2009 with the gap declining. Rationalisation in some sectors of the industry as pointed out in this article has been drastic and the process is not yet complete. However, signs that the industry is leaner and more competitive are clearly apparent.