Chemistry International
Vol. 21, No. 3
May 1999
News
from Other Societies and Unions
Historical Overview
of the South African Chemical Industry: 1896 - 1998
Introduction
AECI's Predecessors
African Explosives and Industries
African Explosives and Chemical Industries
(AECI)
SASOL's Predecessors
SASOL One
SASOL Two and Three
Sentrachem's Predecessors
National Chemical Products (NCP)
Industrial Development Corporation (IDC)/Federal
Volksbeleggings (FVB)
Sentrachem Group
Conclusion
Sentrachem's Predecessors
In 1967, National Chemical Products (NCP), the Industrial Development
Corporation (IDC), and Federale Volksbeleggings (FVB) pooled their chemical
interests into a single entity, Sentrachem. The origins of some of these
chemical interests, which go back to the 1930s, are outlined below.
National
Chemical Products (NCP)
For many years after the formation of Sentrachem, NCP was the biggest
profit earner of the various divisions and, equally importantly, was
the nursery of many of the parent company's management team. NCP was
established in 1935 by George Irvin, cofounder of the fishing company
Irvin and Johnson, now known as I & J. The original company, called
National Maize Products, built a plant in Germiston to manufacture alcohol
from maize. Rapid increases in the price of maize soon forced a change
to molasses as the raw material, and, in 1940, the name of the company
was changed to National Chemical Products.
The scope of the young company's activities soon widened. Besides alcohol,
much of which was sold to SATMAR as a fuel additive, other products
included methylated and rectified spirits, absolute alcohol, vinegar,
and dry ice. One unsuccessful venture was the manufacture of glycerine
for the government's war effort. In 1943, after two years of development,
the plant was closed down; demand, price, and output were all lower
than anticipated.
In 1940, a synthetic acetone/butyl alcohol plant was built to provide
raw materials for cordite manufacture, also a war-related effort. The
plant design and process were provided by the UK-based Distillers Company.
The latter took a large, but not majority, interest in NCP and made
available a wealth of expertise and know-how for the manufacture of
organic chemicals.
Development away from the original site in Germiston took place in
1944 when NCP acquired the entire shareholding of Umgeni Distilleries
in Durban. This company traced its origins back to the 1860s when a
Mauritian engineer, known only as Phillippe, built a distillery on the
north bank of the Umgeni river.
Some of Phillipe's original buildings are still in use. The acquisition
of Umgeni led to the manufacture of better grades of alcohol and placed
NCP in a favorable geographic position to export some of its production.
More takeovers were to follow; most important of these were Poly-Resin
Products (East London, 1956) and two yeast companies, Natal Organic
Industries (Durban, 1959) and Free State Yeast (Welkom, 1959). Meanwhile,
the Germiston factory had steadily expanded its range of products to
include, by 1960, alcohols, ketones, acids, esters, CO2 gas, mining
froth-flotation reagents, phthalate plasticizers, synthetic resins,
and animal feed supplements.
In 1959, NCP entered into a joint venture with SASOL, called Kolchem,
to manufacture diacetone alcohol, hexylene glycol, pentaeryrithritol,
and detergent alkylate, using feedstocks from SASOL. The latter eventually
sold its interest, and Kolchem joined with Shell Chemical to form Styrochem,
for the manufacture of polystyrene.
Industrial Development Corporation (IDC)/Federale
Volksbeleggings (FVB)
During World War II, the South African government established a
chlor-alkali facility at Chloorkop, between Johannesburg and Pretoria.
Known as Klipfontein Organic Products (KOP), the plant was to produce
phosgene and mustard gas. Thankfully, these gases were never used, and,
after the war, production was focused on DDT and other insecticides.
In 1965, KOP was taken over by a consortium of companies led by the
IDC and FVB.
In 1960, the IDC promoted the Synthetic Rubber Development Company
to investigate the possibility of manufacturing general purpose synthetic
rubbers. A major study resulted in the establishment of the Synthetic
Rubber Company (SRC) for the manufacture of a range of styrene-butadiene
rubbers. Also involved were FVB, three tire companies (Dunlop, Firestone,
and General), and the Polymer Corporation of Canada. Production started
in 1964 with the Polymer Corporation as the licensor of the process.
Sentrachem
Group
When Sentrachem was launched in 1967, its four constituents were
NCP, Kolchem, KOP, and SRC. The new board, which was chaired by Etienne
Rousseau of SASOL and had as one of its members Jack Irvin, son of NCP's
founder George Irvin, initiated an ambitious expansion program.
The first new project was a joint venture with Uniroyal to produce
rubber chemicals. This company, called Karbochem, was soon to absorb
the SRC and by 1992 was a producer of synthetic rubber and rubber lattices;
industrial mining and rubber chemicals; water-based lubricants; and
carbide, acetylene, and carbon black.
This endeavor was followed in 1969 by Safripol, a joint project with
Hoechst SA, designed to produce high-density polyethylene and polypropylene.
A separate company, Plastomark, was set up to handle the marketing of
Safripol's products.
In 1974, another joint venture, this time with the Olin Corporation,
led to the formation of Aquachlor, which produced chlorine-based water
sanitizers. The acquisition of Agricura, a formulator of insecticides
and herbicides, provided an entry into agricultural chemicals. Subsequently
called Agrihold, this company manufactured crop-protection products,
animal feeds, and a range of veterinary products.
Besides being a primary manufacturer, Sentrachem became involved with
downstream converting through a group of companies operating under the
control of Mega Plastics. In 1993, Delta G Scientific was acquired,
signaling a new emphasis on research and development. This strategy
was designed to assist Sentrachem in moving out of commodity chemicals
into high value-added products.
International diversification came in 1995 when Sentrachem announced
the purchase of the entire issued share capital of Hampshire Chemicals
Corporation in the United States. Hampshire was selected for takeover
because its size, products, technologies, and markets complemented those
of companies within the Sentrachem Group.
During the 1990s, a number of factors, ranging from prolonged droughts
through high interest rates to increased international competition,
adversely affected Sentrachem's profitability. These problems, together
with the decline in the value of the rand, left the company in a vulnerable
position. Before rationalization within the Group could be fully implemented,
the Dow Chemical Company, in 1997, successfully acquired control of
Sentrachem. Dow subsequently purchased Hoechst SA's interest in Safripol,
restructured Agrihold into Dow Agrosciences, and is currently developing
plans to establish a regional hub in Johannesburg for its African and
Middle East interests.
Conclusion
Development of the chemical industry during its 100 years of existence
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.
Because South Africa is a country with no proven oil reserves, 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 chemical industry. This scenario was aided and abetted by a political
system that increasingly forced the industry to look inward 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 of substantial economic significance. In 1996, the industry
comprised 5.3% of the GDP and 22% of manufacturing sales. Almost 12.5
million tons of primary and secondary products were manufactured during
1996. The "big three" chemical companies, whose development has been
outlined in this article, were joined in 1993 by a fourth major company,
Polifin, the joint venture between AECI and SASOL. A large number of
smaller companies are involved with manufacturing a wide range of specialities
and in formulating and converting products. Many multinational companies
operate in South Africa as manufacturers and/or distributors, including
Hoechst, Bayer, BASF, Shell, Unilever, Ciba Speciality Chemicals, du
Pont, ICI, CH Chemicals, Cookson, Union Carbide, Monsanto, and Rohm
and Haas.
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, to which there
are now 120 signatories.
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
have increased annually for the past few years, and, in 1996, the industry
became a net exporter of products. Rationalization in some sectors of
the industry has been drastic, and the process is not yet complete;
however, signs that the industry will emerge leaner and more competitive
are clearly apparent.