February / March 2014

February / March 2014

Sasol EPU5 is seriously impressive

I WAS PRIVILEGED recently to be a guest of Sasol Polymers at the launch of the Sasol group’s new Ethylene Purification Unit (‘EPU5’) at Sasolburg.

For anyone involved in the polymer or chemicals business in South Africa, as well as Africa for that matter, a visit to the Sasol plant is necessary.  I’d never been to the plant before, which is disappointing for a person who’s been in the industry for over 20 years, but perhaps the wait was worthwhile. Together with a group of delegates, I was fortunate to be bussed from ‘Jozi down to the plant on 14 January, giving us the opportunity to look around a bit. Sasol has done impressive things: the plant is massive (even by global standards), it’s clean and tidy and the group appears to have achieved a high degree of transformation. Obviously the Sasol people were on their best behaviour on the day, but it was good to be able to meet and talk with so many of them, plus the Sasol group’s CEO David Constable and Sasol Polymers MD Marinus Sieberhagen were engaging and open to discussion.

And Minister of Trade & Industry Rob Davies hit the right notes too, mentioning – thankfully – that the government is seriously looking at ways to benefit the manufacturing sector. It realizes there is a need to create competitive advantages for manufacturers, he said. Relatively cheap electrical power was previously an advantage in South Africa, but this is no longer the case, he conceded. The State was looking at developing some advantage from the region’s mineral resources, possibly at a price advantage, he added.

By the way, this may not have gone down that well with Sasol, which has just invested R1.9-billion in the EPU5 plant alone!

It’s going to be tough

JUST about everyone is saying that 2014 looks like it’s going to be very tough.

The dismal performance of the rand since late last year has resulted in polymer prices increasing by, in some case, more than 20 percent. Some have suggested that the devalued rand will create opportunities for exports, and to an extent offset the high rate of imports, but the problem for manufacturers are two-fold: input costs go up by a very similar rate, and our customers continue to resist prices increases. Let’s face it, absorbing a 22% polymer price increase is close to impossible … but it’s got to be done.

The other problem with the rapid rate of change is that developing exports takes time.

Nevertheless, although there is and will be an attrition rate, many of the manufacturers in the industry have and are showing resilience and inventiveness. Entrepreneurs, business owners and managers can’t allow the scenario to get them down.

One possible plus at present is the reduced level of labour union activity in our industry. This remains a huge problem in the mining sector, and a return to the problems of 2011/12 would be very unwelcome for us at this point. Obviously young people want to improve themselves, and visualising better income is a reality, but unchecked strike action can undermine businesses and even entire industries.

On the plus side, we look in this issue at several notable achievements by businesses in the local industry. Well done guys!

Let’s try and keep our cool and get the job done this year.

Martin Wells, Publisher