INTEGRATED REPORT 2011    

Operational Review: Specialty Chemicals

Mark Dytor   Graham Edwards   Mark Kathan   Edwin Ludick   Schalk Venter   EXECUTIVE MANAGEMENT TEAM
From left:
Mark Dytor
Graham Edwards
Mark Kathan
Edwin Ludick
Schalk Venter

AECI’S SPECIALTY CHEMICALS CLUSTER COMPRISES 16 BUSINESSES, EACH FOCUSED ON SPECIFIC MARKETS WITH COMMON VALUES OF INNOVATIVE CUSTOMER SERVICE AND BOTTOM LINE DELIVERY. HISTORICALLY, THE CLUSTER HAS GROWN BY ACQUISITION AND BY ORGANIC GROWTH.

Each business in the cluster aspires to be the supplier of choice for customers in its markets, supported by the best technology available, a carefully designed service package and with the lowest possible cost base. Technology is sourced from international partners and is also developed in-house. Full service package business models provide customers with innovative solutions to their chemistry-driven requirements and differentiate AECI’s businesses from competitors in terms of skills, competencies and value-add for customers.

In 2011 the remaining major capital investment projects which commenced in 2007 were completed and commissioned.

The cluster’s strategy is to:

  • expand its mining chemicals product and service offering in South Africa, the rest of Africa and in other geographical areas where the full service model is valued and the mining profile fits the cluster companies’ capabilities. Senmin, Chemical Initiatives and ImproChem are driving this strategic thrust;
  • expand its water-, oil-, gas- and energy-related product and service offering from Southern Africa to the rest of Africa and to other geographical areas where the full service model is appropriate. ImproChem is the vehicle for the push out of Southern Africa;
  • explore opportunities for sales of specialist products and services offered by the global and regional focus on food production and preservation and agriculture. Lake International Technologies is at the forefront of this;
  • grow its joint venture business in Brazil, based on oleochemical expertise it shares with its partner, move into other sectors where the partnership has appropriate expertise and seek other investment opportunities; and
  • manage and grow its South African portfolio.

BUSINESS ENVIRONMENT

The cluster delivered a commendable performance in a generally less than buoyant trading environment. The start to 2011 was particularly difficult for the mining sector where activities were suspended or reduced. In the manufacturing sector large operations, including paper mills, operated on short time or care- and maintenance-shutdowns. For the first nine months manufacturing volumes in South Africa declined by 13% overall and capacity utilisation dropped to 79%. Mining production volumes dropped 7% from 2008’s levels and 15% from the peak highs of 2007.

The ZAR/US$ exchange rate remained strong before weakening late in the year. The oil price remained firm, supporting base chemical prices despite sluggish global demand.

PERFORMANCE

Year-on-year revenue improved by 17% to R7 558 million (2010: R6 453 million) and trading profit increased by 9% to R881 million (2010: R811 million). Overall volumes grew by 10,9% and this growth came mainly from high demand for sulphur from the copper mining sector in Africa. As a result of the higher revenue value of sulphur at lower margins, the overall trading margin declined slightly to 11,7% from 12,6% in 2010.

Prices were under pressure in the first nine months owing to the rand strength, but this was partly offset by increases in global commodity prices. For the full year the cluster increased its prices by 6,2% overall.

FINANCIAL PERFORMANCE (RM)
FINANCIAL PERFORMANCE (RM)

COSTS, MARGINS AND GROWTH

All businesses reduced their costs by reviewing expenditure and by bottom-slicing to minimise resources allocated to less profitable products and markets. The focus on margin maintenance resulted in better purchasing, inventory management and pricing.

Although the manufacturing environment made organic growth difficult, most companies in the cluster retained or improved their market share thanks to enhanced service levels.

STRATEGIC PROGRESS

Substantial investments have been made in mining chemicals production capacity to supply local and international markets and on infrastructure at mines to supply the related services. Senmin in particular has built an impressive team of qualified and experienced people to meet the mining industry’s needs, including team members based at mining extraction sites.

In 2011 ImproChem secured a distribution agreement with GE Betz. This provides ImproChem and its customers in Africa with world-class technology and equipment for the water treatment industry. More detail is given in ImproChem’s Operational Review.

Through Lake International Technologies, in particular, medium-term opportunities in the food and agricultural chemicals markets are being assessed to determine the most promising areas.

In Brazil acquisition opportunities are emerging and these will receive much attention in 2012.As already discussed elsewhere in this Integrated Report, Executive resources have been allocated to this strategic objective.

Local acquisitions for a total consideration of R180 million were concluded in the year under review: the business of T&C Chemicals was integrated into ImproChem and Chemisphere; Qwemico Distributors was consolidated with Nulandis; and Croxton Chemicals was merged into Crest Chemicals. Lake International Technologies now owns 100% of Cobito, its subsidiary which operates in the food and beverages sector. Instavet was merged into Chemfit.

As always, several acquisition opportunities have been identified and a number of transactions are expected in 2012.

MINING CHEMICALS VOLUME GROWTH AND NEW CAPACITY
SALES VOLUME INDEX (2006 = 100)
MINING CHEMICALS VOLUME GROWTH AND NEW CAPACITY

 

Akulu Marchon   AKULU MARCHON
(“AKULU”)


Managing Director:
Schalk Venter

www.akulu.co.za
  Schalk Venter    

Akulu supplies chemical raw materials to the personal and home care, toiletries and cosmetics manufacturing industries in Southern Africa. It operates manufacturing and warehousing sites at Chloorkop in Gauteng and at Mobeni in KwaZulu-Natal. Akulu supplies customers with locally manufactured products, imported specialties from its overseas principals and expert technical know-how and service backup. The Chloorkop and Mobeni sites are ISO 9001, ISO 14001 and OHSAS 18001 certified.

The company delivered a satisfactory performance in a difficult economic environment where consumer spending decreased and resulted in an overall decline in Akulu’s volumes. Profit margins were also challenged as the strength of the rand encouraged imports of alternative raw materials. Akulu nevertheless maintained its market share.

Initiatives for continual improvement and cost reductions launched in 2010 began yielding results with the full benefit expected in 2012.

Progress in 2011 included the installation of a new effluent treatment plant to enhance the Chloorkop site’s environmental performance. Akulu also completed the implementation of the Mercuri sales and key account management model and this will contribute to maintaining the company’s leading position in its markets.

Good progress was made in expanding business activities with key principals.

The focus on customer service excellence and operational efficiency will continue in 2012 and the outlook for Akulu is positive, particularly should a weaker rand environment prevail.

Chemfit   CHEMFIT

Managing Director:
Ryan Harrison

www.chemfit.co.za
  Ryan Harrison    

Chemfit supplies traded and blended specialty chemicals to a broad range of industries including animal feeds, water treatment, soil fumigation, petrochemical, detergents, lubricants, polymers and plastics. It has ISO 9001 certification.

The company benefited from the restructuring of its business units and the enhancement of its sales function in 2010. Although the ZAR/US$ exchange rate resulted in lower selling prices and pressurised margins, Chemfit achieved an increase in volumes. The company pursued its product diversification strategy and commercial relationships were established with a number of new suppliers, including a distribution agreement with BASF for personal and home care products. The business of Instavet was acquired. This company supplies medicated feed additives, diagnostic equipment and vaccines to the livestock industry.

In addition to further product diversification and potential investment opportunities, Chemfit’s focus in 2012 will be on extending its footprint into sub-Saharan African countries and building critical mass in these geographies. A number of projects are in the pipeline and the aim is to commercialise these in 2012.

Chemical initiatives   CHEMICAL INITIATIVES (“CI”)

Managing Director:
Graham Sanders

www.cheminit.co.za
  Graham Sanders    

CI is the market leader in manufacturing and trading bulk chemicals as well as balancing the supply and demand of these in the mining, industrial and agricultural sectors. CI’s competitive advantage is its guarantee of supply to and/or offtake from customers through innovative and flexible manufacturing, logistics and storage practices. The company is ISO 9001, ISO 14001 and OHSAS 18001 certified and its product range has been expanded to include a range of “green chemicals” that have a lesser environmental impact than more established alternatives.

CI delivered an excellent performance in 2011, driven by its sulphur trading activities. In South Africa the local currency strength challenged the company and its exports-dependent customers. Raw material and commodity prices were volatile. The sulphuric acid market was oversupplied.

CI continued to fulfill its guarantees to contracted generators of waste sulphuric acid and to customers requiring a continual, reliable supply of this recycled product. By placing extensive volumes of waste acid in the market, CI took a substantial step towards meeting its 2011 environmental objectives.

Restructuring of CI’s agricultural interests into a new division, Ecologika™, was completed. Ecologika™ focuses on specialty products and services for sustainable agriculture. The benefits of the new structure include product diversification and the consequent maximisation of growth opportunities.

The company’s safety performance was disappointing. After extensive investigation and analysis of technical and behavioural parameters, a broad range of corrective actions was instituted, including new practical safety initiatives and personnel changes. The effects of these will be monitored closely in the coming year.

Looking to 2012, the closure of a zinc producer at the end of 2011 will remove a large portion of waste sulphuric acid from the market and will result in a countrywide shortage. Some of the shortfall will be met through increased output from CI’s manufacturing facility at Umbogintwini. Additional storage capacity will be installed to enhance CI’s flexibility in terms of meeting customers’ needs. In Ecologika™ research and development is underway for more innovative products. These will complement the existing range of soil additives and micronutrients.

Chemiphos   CHEMIPHOS

Managing Director (until 31 December 2011):
Mike Peach
  Mike Peach    

Chemiphos manufactures poly-phosphoric acid (for fuel catalyst and pharmaceutical manufacturing) and ortho-phosphoric acid (for inter alia beverage manufacture
as well as metal and water treatment). The company also provides a range of specialised traded and manufactured construction chemicals.

Chemiphos maintained its ISO 9001, ISO 14001 and OSHAS 18001 accreditations in 2011 and it is most pleasing that the company has not recorded a Lost Time Injury in three years.

From the second quarter of 2012, Chemiphos will no longer operate as a stand-alone entity. Its Acid and Constructichem divisions will be integrated into CI and ChemSystems respectively.

Chemiphos delivered a creditable result for the year under review and defended its position as a preferred supplier of locally manufactured acids, notwithstanding sustained pressure from competitors in the Far East. Although overall acid volumes declined as more local bulk users imported product directly, the implementation of a sustainable acid value proposition with high product availability, a wide range of concentrations and flexible packaging solutions assisted Chemiphos in counteracting this trend.

Constructichem grew by capitalising on opportunities in the construction sector. This strategy will be sustained in 2012 with the focus on maximising in-house technical capability in developing one-pack customer solutions. Efforts continue to identify new principals and technology sources to provide more comprehensive products and services.

Chemisphere   CHEMISPHERE TECHNOLOGIES

Managing Director:
Jaco Engelbrecht

www.chemisphere.co.za
  Jaco Engelbrecht    

Chemisphere Technologies (“Chemisphere”) was formed in 2011 through the merger of Infigro Natural Technologies (“Infigro”) and SA Paper Chemicals to address adverse trading conditions in both businesses. Chemisphere now delivers value to its customers through three divisions: Chemisphere Paper Technologies, Infigro Natural Technologies and Simitri Specialty Chemicals. Accordingly, the company supplies chemical products and expertise to the pulp, paper, board and tissue and the leather treatment industries. The Infigro division manufactures and markets a range of products derived from the mineral perlite as well as complementary products.

In 2011 Chemisphere sustained its revenue but margins were under pressure. In South Africa the pulp and paper industry’s ongoing downsizing and mill and paper machine closures resulted in lower demand for products and value-add services. Reduced consumer spending translated into less demand for board products used in packaging. With the strong rand, competition from imports was fierce and the impact was felt mostly in sales to the paper sector and in sales of filter aids to South Africa’s wine industry. The latter had an adverse effect on Infigro.

Going forward, a distribution and licensing agreement with Ashland Hercules Water Technologies, a USA-based leading specialty chemical supplier to the pulp and paper, mining, food and beverage, paper, chemical processing and other markets, will boost Chemisphere’s competitive advantage. New structures in its paper division will enable the delivery of improved products, new technology and enhanced technical expertise to the market timeously and efficiently.

Chem Systems   CHEMSYSTEMS

Managing Director (until 31 December 2011):
Edwin Ludick

www.chemsystems.co.za
  Edwin Ludick    

ChemSystems provides chemical products to a diverse range of industries through its five business units. Applied Castings Solutions supplies resins and associated products to the foundry industry while Capital Polymer Additives produces PVC heat stabilisers, plasticisers and additives. The Silicones division supplies a range of silicone polymers and Status Industrial Solutions manufactures and distributes an extensive range of chemicals for industrial applications. These include cleaning, lubrication, metalworking, non-destructive testing, fire protection and marine services. ChemSystems Metal Chemicals’ products are used in a variety of processes including electroplating, phosphating and anodising.

ChemSystems has ISO 9001 and ISO 14001 accreditations.

Although growth was delivered by two of the business units, ChemSystems had a challenging year overall. Depressed market conditions and increased competition resulted in lower overall sales volumes. The company nevertheless continued to deliver a quality value-added service to its broader customer base.

All business units identified new growth areas and are well positioned to capitalise on opportunities in 2012. ChemSystems’ prospects have also been boosted by several new licence and distribution agencies including BASF (electrocoatings), ASK Chemicals (foundry applications) and Lubrimetal (wire drawing applications).

Crest Chemicals   CREST CHEMICALS (“CREST”)
(joint venture with Brenntag AG)


Managing Director:
Michiel Vijverberg
  Michiel Vijverberg    

Crest represents several international manufacturers of specialty and commodity chemical products and distributes these to a large number of industries in South Africa and Southern Africa. Its six divisions service the following key markets: food and beverage, paints and coatings, pharmaceutical and personal care, mining and water treatment, surfactants and general industry. The company’s site in Prospecton, KwaZulu-Natal, is 5 Star accredited by the National Occupational Safety Association of South Africa (“NOSA”) and is ISO 9001 certified.

Crest’s business is a good proxy for South Africa’s manufacturing industry as a whole. Accordingly, volumes in 2011 were under pressure owing to prevailing economic conditions and exports suffered due to the strength of the rand for most of the year.

Highlights for Crest included the acquisition of the assets of Croxton Chemicals as well as this company’s investment in Protank. This has placed Crest in a strong position as a supplier of caustic soda and a number of other commodities. The investment in Protank, which operates a tank terminal in Durban, will enhance Crest’s logistical capability for high volume liquid products.

These strategic additions to the company’s product offering are expected to have a positive effect on its business as a whole, particularly if the economic climate begins improving in line with forecasts.

Duco   DUCO SPECIALITY COATINGS (“DUCO”)

Managing Director:
Llewellyn Mulder
  Llewellyn Mulder    

Duco is a leading supplier of high-tech paint finishes for South Africa’s transportation, refinishing and general industrial market. Customers also benefit from the company’s online technical support service. From a company that traditionally served the automotive market, Duco has grown to offering a spectrum of technologies to an expanding number of customers outside this sector. The company is ISO 9001 and ISO 14001 certified.

Duco achieved a creditable performance in a year when factors such as the earthquake in Japan and floods in Malaysia negatively impacted automotive sales in those regions. The company is well positioned for 2012 as growth appears to be taking hold in both the automotive and the refinish markets.

It was pleasing that concerted efforts in the areas of safety, health and environmental management and performance showed good results. Initiatives to reduce risks in these areas further will be sustained in 2012.

ImproChem   IMPROCHEM

Managing Director:
Louis du Toit

www.improchem.co.za
  Louis du Toit    

ImproChem provides hydrocarbon process, chemical process, water treatment, water optimisation, total water management and hygiene and sanitation process solutions for the industrial and public sectors in Southern Africa. The company will take its products and services to other countries in sub-Saharan Africa in 2012. Customers are mainly in the mining, industrial production, municipal water treatment, food and beverage and oil and refining sectors.

ImproChem’s site at Umbogintwini has certifications for ISO 9001, ISO 14001 and OHSAS 18001.

Excellent cost and cash flow management enabled the company to deliver very pleasing results for 2011, notwithstanding moderate revenue growth. This performance was achieved in an environment where investment in capital projects by customers remained subdued, although some activity was noted in the mining and power sectors.

The food and beverage sector retained its position as one of the strongest growth areas in Africa. Implementation of ImproChem’s differentiating technologies for this sector is gaining momentum and good rewards are expected going forward.

The gold mining industry showed some improvement in 2011 and the platinum mining sector was stable. Conditions remained difficult in South Africa’s oil refining industry with a number of unplanned shutdowns compounding the challenges faced. In the rest of Africa there are opportunities for ImproChem in oil exploration and production activities.

ImproChem’s dust control solutions were also applied to good effect in the year under review.

STRATEGIC PROGRESS

Competitor activity and price pressures required that ImproChem secure globally recognised and advanced technology in support of its value-add imperative. In this regard ImproChem was pleased to conclude a distribution agreement with GE Betz (“GE”), a General Electric company and a leading global supplier of products and process technologies to the water treatment and process chemical industries. In terms of the agreement signed, ImproChem will distribute GE’s water and chemical process technologies, monitoring solutions and water and process equipment systems in Africa. ImproChem gains immediate access to all of GE’s chemical and monitoring solutions technologies as well as to the engineered systems packages of General Electric’s Power and Water Division.

The agreement leverages ImproChem’s local expertise and GE’s technologies to create innovative water solutions for African markets and covers South Africa, Angola, Kenya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Reunion, Tanzania, Uganda, Zambia and Zimbabwe. GE and ImproChem have entered into a Memorandum of Understanding to explore further business opportunities.

Also of significance in 2011 was ImproChem’s establishment of an enterprise development initiative to handle its warehousing and distribution in KwaZulu-Natal.

OUTLOOK

Water usage optimisation and conservation are becoming more challenging in Africa. With GE’s technology, ImproChem is well placed to assist customers in addressing their effluent- and water conservation-related targets in the coming year. The focus will shift from product development to market development in sub-Saharan Africa in the oil exploration, water utilisation and optimisation and food and beverage sectors in line with the AECI Group’s strategy to become the supplier of choice of specialty chemicals and services for customers in these sectors in Africa.

Industrial Oleochemical Products   INDUSTRIAL OLEOCHEMICAL PRODUCTS (“IOP”)

Managing Director:
Martin Godbolt

www.oleo.co.za
  Martin Godbolt    

IOP manufactures fatty acids, resins, rosin and rosin derivatives using by-products from paper pulp and vegetable-based crops as raw materials. Customers are mainly in the mining, coatings, adhesives, synthetic rubber and bitumen industries. In addition, IOP produces a range of packaging coating resins for the food and beverage industry. These products are manufactured under licence to Akzo Nobel.

The company’s site in Jacobs, KwaZulu-Natal, is ISO 9001, ISO 14001 and OHSAS 18001 accredited.

IOP delivered excellent results in an environment characterised by shortages and higher prices of raw materials. The mining and rubber sectors were buoyant, unlike the coatings, adhesives and general chemical markets.

The company’s packaging coatings plant supplies the local and African food and beverage can markets. Projects including a new effluent treatment plant and other general site upgrades resulted in pleasing improvements in IOP’s environmental performance and operational management capabilities.

The focus on growth and the development of IOP’s products for the mining industry will be maintained in 2012. In packaging coatings further opportunities identified in this sector will also be pursued.

Industrial Urethanes   INDUSTRIAL URETHANES (“IU”)

Managing Director:
Gavin Gerber

www.indur.co.za
  Gavin Gerber    

IU manufactures and supplies a range of polyurethane products, technologies, systems and solutions for customers in Southern Africa. Products are applied in the automotive, mining, white goods, construction, footwear, furniture and other industries. The Plastamid division supplies engineering polymers and technical compounds to the South African and selected export plastic conversion markets.

IU’s site at Umbogintwini has ISO 9001 accreditation.

While sales into the furniture and mining sectors were strong, the company’s profits were depressed and volumes decreased.

Erratic supply of the raw material propylene oxide and reduced production volumes led IU to a re-evaluation of its business model. A polyols production operation at Umbogintwini was mothballed and an equivalent range of products is now imported. The Plastamid business was incorporated into IU and complementary processes were streamlined.

In the elastomer business, investments were made to develop alternatives to mercurycatalysed systems. Work related to a new “green” blowing agent with zero ozone depleting potential, zero volatile organic content and zero global warming potential progressed.

With the new business model in place, IU’s outlook for 2012 is optimistic. Further developments are planned for products and services across all customer sectors
with a focus on improved efficiencies and environmentally-related benefits.

Lake International Technologies   LAKE INTERNATIONAL TECHNOLOGIES (“LAKE”)

Managing Director:
Dean Murray

www.lake.co.za
  Dean Murray    

Lake is a diversified manufacturer and distributor of products, delivery systems and services to South African and international markets. It provides ingredients and value-adding blends for the food industry, surfactants for the explosives and fertilizer industries and chemical raw materials for local manufacturers. Lake is 5 Star accredited by NOSA. Umbogintwini site also has certifications for ISO 9001, ISO 14001 and OHSAS 18001.

In another good year for Lake, the company pursued its growth strategy which is focused on providing customers with innovative products and solutions. In this regard technical and sales functions were bolstered and resulted in enhanced products and services and a better cost structure.

International growth continued mainly in Africa and in South East Asia with the proportion of Lake’s revenue from outside South Africa increasing by more than 20% year-on-year. Further growth is expected in 2012.

To ensure that adequate human resources are in place to meet its growth targets and in line with its commitment to Employment Equity imperatives, Lake initiated a development programme for technical graduates as part of its succession planning.

FOOD

The now wholly owned Cobito division recorded volume growth in spite of unfavourable market conditions, with local food inflation spiralling in the year owing to higher animal feed prices and competitive imports. Since this cost trend is expected to persist in the coming year, Cobito will concentrate on further product improvements and cost reductions for its customers.

MINING SURFACTANTS

Sales volumes for the Experse™ range of surfactants also increased. The company’s expertise in optimising feedstock supply is integral to its competitive advantage in the international explosives market. In 2012 further opportunities will be pursued in Africa, Australia and Europe

FERTILIZER COATINGS

Lake achieved a breakthrough for its Biofix™ range in the South African market. These environmentally-friendly coating agents deliver trace elements and micronutrients to soil, thereby enhancing soil nutrition. The prospects for the business are good since new fertilizer capacity is expected to be brought on line in South Africa in 2012. Sales of Biofix™ have also grown in Australia and expansion in South American markets is the next target.

CHEMICALS

Lower global demand and the negative effects of South Africa’s industrial action during the year exacerbated the already subdued trading environment for the manufacturing sector. Most of Lake’s customers in this sector recorded lower outputs.

Although the soda ash market in the USA showed signs of firming towards year-end, this commodity was generally long in the year and prices were depressed.

The coatings, inks and plastic markets were unstable with global shortages and consequent price fluctuations for major raw materials.

Refractory manufacturers noted a year-on-year improvement with stable pricing and marginally better volumes.

In 2012 Lake will concentrate on further improvements in its service levels and on leveraging key products and customers to grow market share. This should result in the company sustaining its growth trend.

Nulandis   NULANDIS

Managing Director:
Hugo Minnaar

www.nulandis.com
  Hugo Minnaar    

In 2011 the activities of Plaaskem and UAP Crop Care, its distribution arm, were consolidated with those of newly-acquired Qwemico Distributors (“Qwemico”) to form Nulandis. This company is a prominent player in the field of agricultural chemicals and develops, manufactures and distributes specialised and generic products. It is also the largest supplier of insecticides, fungicides, herbicides, adjuvants and plant nutritional products to the South African agrochemical industry.

Nulandis recorded a good increase in production volumes and therefore a greatly improved financial performance notwithstanding volatility in the farming environment due to the strong rand, varying rainfall and crop yields and adverse conditions in the wine industry.

ISO 9001, ISO 14001 and OSHAS 18001 accreditations were completed at a number of sites in 2011.

The Qwemico acquisition strengthened Nulandis’ footprint in the agrochemicals market. The company is now well represented in the northern provinces of South Africa. This, together with ongoing product and service innovation and expansion sees Nulandis well placed to maximise growth opportunities in 2012.

Resinkem   RESINKEM
(joint venture with Georgia Pacific Resins LLC)

Managing Director:
Bruce McDonald
  Bruce McDonald    

Resinkem manufactures and markets urea formaldehyde resins, formaldehyde solutions, urea, as well as phenol and furan resins for the timber, pulp and paper, animal feed and foundry industries. Toll manufacturing agreements maximise the production capacity of the company’s plant at Umbogintwini. This site has ISO 9001 accreditation.

In an unfavourable economic environment where commercial shutdowns at customers’ manufacturing facilities were frequent and the rand strength encouraged imports, volumes in the flat panel industry nonetheless recorded a year-on-year improvement.

Resinkem reaped the benefits of its new reactor and gas cooler installed in 2010 with improved conversion efficiencies. It was also pleasing that the volume of effluent requiring treatment halved from the prior year. In 2012 further effluent reduction programmes will be implemented, as will more efficiency improvement plans to enhance resin consistency.

The company will move towards manufacturing lower formaldehyde-emitting resin and is collaborating with its technology partners on new generation foundry resins for local use and for export markets.

Resitec   RESITEC
(joint venture with MeadWestvaco)

Managing Director:
Bernardo Mello

www.resitec.com.br
  Bernardo Mello    

Based in Brazil, Resitec is an international manufacturer and supplier of emulsifiers for synthetic rubber production. It also supplies fatty acids and tall oil rosin to general industry. The company serves customers in the food, lubricants, adhesives, construction, surfacing and coatings, mining, rubber processing, oil refining and printing industries. Resitec distributes MeadWestvaco’s products in South America, including emulsifiers for asphalt manufacture.

Resitec has a number of safety, health, environmental and quality certifications for its sites in Lages and Rio de Janeiro.

The company delivered a greatly improved financial performance for 2011. Better volumes of tall oil fatty acids and other fractionated products from its upgraded plant were key in this regard. Operational stability improved and boosted capacity.

Tragically, Resitec recorded a fatality as a result of an accident at its Rio de Janeiro plant. Measures to prevent a recurrence have been well understood and implemented to avert similar incidents in future.

Brazil’s economic growth in 2012 will be boosted by government investment in infrastructure in preparation for hosting the FIFA World Cup in 2014 and the Olympic Games in 2016. Industries served by Resitec that will benefit from this investment programme include oil refining, construction and automotive. The latter is the largest end user of Resitec’s products, predominantly for tyre manufacture. Brazil’s automotive industry is the sixth largest in global terms and the government intends investing significantly in the tyre sector over the next five years. This will increase the demand for rubber emulsifiers.

The growing recognition of the importance of sustainability in the chemical industry also presents opportunities since all of Resitec’s raw materials are based on renewable resources.

Senmin   SENMIN

Managing Director:
Theunis Botha

www.senmin.co.za
  Theunis Botha    

Senmin supplies a range of chemicals used in the beneficiation of minerals. Most of its products are utilised in the froth flotation and tailings treatment segments of the mining industry in South Africa, Southern Africa and further afield. Senmin also provides customers with value-adding expertise in the handling and dosage of its products.

Senmin’s Sasolburg site is ISO 9001 and ISO 14001 certified and is 5 Star accredited by NOSA.

In 2011 African and international mining market growth counterbalanced difficult trading conditions in South Africa where the rand strength and rising raw material and energy costs put pressure on margins. Demand for Senmin’s products was buoyant, albeit in the context of a slow global economic recovery and delayed investments in new mining capacity.

Prices of acrylonitrile, a major feedstock for polyacrylamide production, peaked during the year and those for guar splits used in the manufacture of depressants for the platinum mining industry reached all-time records. Fortunately Senmin is able to offer its customers alternative depressants as a result of ongoing product research and development.

Some market growth was noted in uranium and other base metals. The demand for service excellence in key performance areas in the platinum, diamond and copper concentrator markets continues to offer opportunities for the company’s comprehensive service and product business model that adds value to customers who favour vendor management.

Senmin’s service model is gaining international acceptance. Demand for the installation of additional integrated bulk storage and automated chemical preparation and dilution equipment at several mine sites is indicative of the need for alternatives that are more environmentally friendly and also improve efficiencies. During 2011 bulk handling warehouses were established in countries beyond South Africa to complete the integrated supply chain for those markets.

CAPITAL INVESTMENT PROGRAMME

Bio-acrylamide and polyacrylamide flocculant production was ramped-up successfully. The polyacrylamide plant, a joint venture with BASF, delivered products of excellent quality and these were well accepted by the international market.

Plant capacity is adequate to meet growing demand and further increases in output are targeted for 2012.

The carbon disulphide plant met its production and energy efficiency targets for the year and driers on the xanthates plant were modified to debottleneck the process. Production is being ramped up.

The Sasolburg site continued to be upgraded to globally acceptable standards and further projects in this regard are being evaluated. Senmin again achieved ISO 14000 and SABS 9000 certifications.

OUTLOOK

Thanks to its new capacities and site improvements Senmin is well placed to maximise opportunities for its specialised products in international markets. Although competitor activity will remain a consideration, the shortage of skills and professional experience in African markets bodes well for Senmin’s competitive advantage. Its service model will continue to be a platform for footprint expansion.

It is expected that demand growth in Africa will be greatest in commodities such as copper, nickel, iron ore and uranium mining.

Specialty Minerals   SPECIALTY MINERALS SA (“SMSA”)
(joint venture with Specialty Minerals Inc.)

Production Manager::
Avindra Boodhram
  Avindra Boodhram    

SMSA is a joint venture with Specialty Minerals Inc., a wholly owned subsidiary of Minerals Technologies Inc. The latter is a US-based global leader in precipitated calcium carbonate technology. Accordingly, the partnership affords SMSA access to the most up-to-date technology and technical services. The company’s products are used as value-adding filler and coating materials by Mondi in the manufacturing of its copy grade paper.

Like other suppliers to the paper industry, SMSA had a difficult year owing to the prevailing environment in this industry in South Africa.

 

OUTLOOK FOR THE SPECIALTY CHEMICALS CLUSTER

The performance of the rand against the US dollar, the continued recovery of the South African economy and the evident resurgence of Africa’s mining industry will underpin prospects for 2012.

The capital programme in the specialty chemicals cluster which required considerable resources in the last four years is complete. Indications are that markets served by these investments are expanding and this will ensure that new plants are adequately loaded.

Akulu, Resitec and Senmin will focus on growth from their new capacities and from improved efficiencies. Strategically, businesses in the cluster are well placed to take full advantage of excellent opportunities on the African continent.