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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. Click here for a larger image (61K) Umgeni Distillery 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.

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