Chemicals

Overview

South Africa’s chemical industry is diverse, spanning fuel and plastics fabrication and pharmaceuticals. It is a key component of the country’s industrial base. South Africa is a world leader in synthetic coal-based, and natural gas-based, liquid fuels and petrochemicals.

Value proposition

The competitive advantage of the basic chemicals industry derives from the abundance of raw materials due to the country’s strong minerals base. South Africa produces around 600 types of chemical. The chemicals value chain constitutes one of the largest contributors to manufacturing output in the country, and government is keenly aware of the need to develop the sector. The Department of Trade and Industry (the dti) has developed a National Chemicals Strategy to achieve sustainable growth and increase employment and investment across the sector, and has a desk specifically devoted to the chemicals sector.

Opportunities

Opportunities are spread across chemical industry’s two distinct value chains: the technology-intensive upstream, such as liquid fuels, and downstream, such as speciality chemicals and plastic and rubber products.

South Africa exports most of its fluorspar mineral resource in an unbeneficiated form. The grade of flourspar is 97% purity (acid grade). Flourochemicals uses acid grade. Other grades are metspar (>60% purity) and ceramic (>85% purity). South Africa has single largest reserves of all grades of flourspar.

The dti has therefore commissioned market research on opportunities in downstream fluorochemicals, to establish a globally competitive fluorspar beneficiation industrial cluster in South Africa. This is to take advantage of South Africa’s largest single fluorspar reserves globally and to manufacture fluorochemicals that are critical in the production of agrochemicals, pharmaceuticals, semi-conductors for the electronics industry as well as domestic and industrial refrigeration and air-conditioning.

New opportunities may also lie in the well-established plastic industry, which is coal-based and dependent on feedstock from Sasol. Almost 20% of new plastic material is recycled each year, saving 110 000 tons of plastic a year, 8,5% of virgin polymer production a year.

The chemical sector contribution to GDP is 3.4% and contribution to manufacturing is 22.8%.

The downstream plastics sector mainly comprises small firms, due to the relative ease of entry in the industry, and has been growing at an average rate of 3%-5% annually for the past 10 years. Its current contribution to manufacturing GDP is 14.5% – with plastic packaging the largest contributor.

South Africa exports most of its fluorspar mineral resource in an unbeneficiated form. the dti has therefore commissioned market research on opportunities in downstream fluorochemicals, to establish a globally competitive fluorspar beneficiation industrial cluster in South Africa. This is to take advantage of South Africa’s largest single fluorspar reserves globally and to manufacture fluorochemicals that are critical in the production of agrochemicals, pharmaceuticals, semi-conductors for the electronics industry as well as domestic and industrial refrigeration and air-conditioning.

New opportunities may also lie in the well-established plastic industry, which is coal-based and dependent on feedstock from Sasol. Almost 20% of new plastic material is recycled each year, saving 110 000 tons of plastic a year, 8,5% of virgin polymer production a year.

The downstream plastics sector mainly comprises small firms, due to the relative ease of entry in the industry, and has been growing at an average rate of 3%-5% annually for the past 10 years. Its current contribution to manufacturing GDP is 14.5% – with plastic packaging the largest contributor.