5 th Annual CHIETA Chamber Colloquium Growth opportunities
5 th Annual CHIETA Chamber Colloquium Growth opportunities in the South African Chemical Sector 9 February 2018 | Birchwood Conference Centre INSERT THE TITLE OF YOUR PRESENTATION HERE
Ozone Business Consulting CMCS was founded in 1986 Ozone was formed from CMCS in 2003 Ozone is a BBBEE Micro Enterprise Ozone has 32 years market research experience in the chemical and related sectors in terms of production, supplies, consumption, and trade in chemicals, with an up-to date database on chemical operations in South Africa. Ozone completed more than 600 market studies See www. o 3 bc. co. za for a list of studies
Research on Skills in 2017 • Identification of new growth areas in the chemical sector • Identification of new skills not currently part of the chemical industry’s skills set • Growth in the chemical sector cannot be generalised, as each sub-sector has its own specific growth drivers that will influence skills needs in the future • Therefore, each sub-sector & product type was separately targeted
AIMS AND OBJECTIVES OF THE PROJECT PART 2 • Aim: This impact assessment aims to determine whether the TVET College Partnership programme has so far made any positive impact on the three TVET colleges as well as on the learners, lecturers and industry. • Objectives: To determine – How the three TVET colleges were capacitated – Whether the learners’ skills and knowledge have increased – There is an increase in the number of suitably qualified chemical operators available for work in the chemicals sector – Whether industry has benefited from the partnership with the colleges and CHIETA – The partnerships’ potential for long term sustainability and impact – Ascertain whether this model can be replicated on other programmes
METHODOLOGY Data Collection – Primary data from interviews – Secondary data from desk research Sampling – Most major operations in upstream chemicals manufacturing – Sample of operations in downstream chemicals manufacturing => at least 1 operation per product category – Sample of glass producers and new development areas Outcome of the Research – 178 operations were targeted => got 290 respondents – More than 1 500 points if contact were made – There was a good overall market coverage by product category
Questionnaire New growth areas for the respondent operation Growth areas and drivers for the sub-sector Perception of SMME’s in the sub-sector New skills implications Company specifics are confidential – It is only shown if it is published information – The major players by sub-sector are listed in the report Perception on Sub-Saharan African growth
General Growth & Development Generally, growth rates were low and uncertain based on the 2017 economy There are only a few expansions and new greenfield developments but. . . – Construction will mostly be done by established engineering firms – New operations require more of the current skills set and not any specific new sets of skills However, current conditions and regulations may require new skills that cut across sub-sectors
Cross-Cutting Skills • Paperless Reporting (IT Skills) • Process Automation & Artificial Intelligence • Operator Technicians vs. Machine Operator e. g. Mechatronics is a combination of mechanical engineering, electronics, computer engineering, telecommunications engineering, systems engineering and control engineering • Technical sales skills for customer end-use specific applications • Customer specific product research and development skills
Cross-Cutting Skills (continued) • Alternative Energy & Energy Efficiency Improvements • Regulatory compliance, e. g. good manufacturing practice (GMP) and hazard and operability studies (HAZOP) • Solvent recycling, and waste water treatment • Greenhouse Gas (GHG) emissions reporting for potential carbon tax regulations
Petroleum Sub-Sector • The main driver for growth is the oil price June 2014: $105 per barrel - June 2017: $45 per barrel - Jan 2018: $70 per barrel - Investments need sustained higher prices • Sinopec purchased the Chevron refinery in Cape Town R 6 billion upgrades and modernisation => they should be able to use currently available engineering skills • Next phase of Cleaner Fuels Specifications => this may only require new skills in hydrogen production • SMME’s are mostly lubricants producers
Base Chemicals Sub-Sector New cross-cutting skills include process automation, paperless reporting and energy efficiency development The SA chemical market has not grown like the global market – Unavailability of feedstock – Marginal growth in end user markets – Lack of downstream beneficiation – Continued threat of low-cost imports Potential new skills are in 3 D printing, which may influence primary polymers production There are very few SMME manufacturers in this sub-sector
Fast Moving Consumer Goods Markets are growing in existing categories, but the same skills sets is required New skills are only related to cross-cutting skills only e. g. automation, paperless reporting, and regulatory compliance Drivers for growth – Consumer demand – Disposable income SMME challenges – Financial resources to manufacture large volumes – Uncompetitive marketing & promotional expenditure – Cannot provide the service levels required by large retailers
Pharmaceuticals Sub-Sector • Downscaling of end-use dosage pharma manufacturing in SA Multinationals focus on bulk imports and re-packing in SA • Driver for growth => Regulatory The planned universal private sector healthcare plan. . . => Should increase public expenditure => Should increase lower cost generics sales • Synthesis of Active Pharma Ingredient (API) & Vaccines – May be specific for HIV drug API’s – This is part of the speciality chemicals sector
Pharmaceuticals (continued) Biosimilar pharmaceutical API’s & Vaccines production – Will require a complete new skills set focus – Protein chemists – Biochemical engineers – Specialist analytical chemists New companies are expected to utilise overseas resources and work closely with universities to acquire the new skills SMME challenges: – Regulatory requirements – Capital intensive nature of the industry
Explosives Sub-Sector Growth Drivers – Geographic diversification – Development of new technologies No new growth areas identified New skills required in product specialisation e. g. Blasting Application Skills There are no SMME manufacturers – Lack of economies of scale – Uncompetitive sourcing of raw materials
Fertilisers Sub-Sector Growth Drivers – Weather – Population growth The dti’s 2016 -2017 IPAP plans to invest in gas feedstock for local producers Depending on the type of gas, the skills required would differ e. g. shale gas, liquefied natural gas or coal gasification. Agronomists are scarce and expensive. Skills include knowledge on plant genetics, plant physiology, meteorology (atmosphere), and soil science.
Speciality Chemicals
Speciality Chemicals (continued) Growth drivers are linked to the end-use sectors e. g. mining chemicals’ depends on mining sector investments New cross-cutting skills include regulatory compliance, technical sales skills, and customer-specific R&D Local production of lithium cells for rechargeable batteries may require new chemical synthesis and polymer conversion skills SMME constraints: – Sourcing of raw materials – Lack of economies of scale
Surface Coatings • Growth drivers of surface coatings: – End use sectors e. g. construction and re-decorating buildings – Industrial sectors, e. g. automotive, metal products, furniture • Growth driver for inks – Printing sector – Overall economic outlook • • New cross-cutting skills include regulatory compliance, technical sales skills, and customer specific R&D SMME’s focus on niche markets with similar constraints as speciality chemicals
Glass Sub-Sector • Growth drivers for flat glass: – Building sector developments which was low in 2017 • Growth drivers for packaging glass – State of the economy – Consumer expenditure growth • New cross-cuttings skills include process automation, paperless reporting and energy efficiency improvements • There are no SMME’s in upstream glass manufacturing • There are few SMME’s in downstream smaller products
Sub-Saharan Africa Skills Identified South African operations were asked to comment on potential new skills required in Sub-Saharan Africa Medical gas pipeline installations New oxygen plants at mining operations Exports of chemicals to Africa will require country specific sales skills, understanding: - Politics - Religion - Language - Local Laws - Business Etiquette - Logistics & Warehousing - Technical Sales - Customer Support
New Potential Sectors Nuclear Build Skills will depend on the technology supplier Construction skills are not available in SA Operational skills should be similar to Koeberg’s NECSA has some manufacturing capabilities, e. g. process equipment for nuclear plants • Liquefied Natural Gas (LNG) Imports • Distribution, re-gasification and electricity generation should have a similar skills set like Sasol’s existing natural gas operations • Specialised skills may be leased from importing countries
New Potential Sectors (continued) Renewable Energy • Similar technologies should be used like current PV & Solar • Biomass may require new skills utilising chemical Reactors and digesters Fuel Cells • The DST runs the Hydrogen SA (HYSA) R&D & Innovation Program • The focus is on developing platinum-based catalysts, such as those used in fuels cells • HYSA has 59 Masters & Ph. D graduates, mostly employed by them • New skills may be required in catalyst production, including chemical synthesis, which may require advanced chemists and engineers
Shale Gas Developments There is no skills base for shale gas exploration & development in SA In the USA fracking industry, for every new job created in drilling, more than 3 jobs are created in supplies and services At peak ± 64 500 jobs will be created in UK shale gas development Identified skills include: Drilling and completions Hydraulic fracturing Petroleum engineering Geosciences Planning approvals Permitting issuance Health, Safety & Environmental
There are several new cross-cutting skills mainly related to: The 4 th Industrial Revolution, e. g. IT, AI, automation, mechatronics, etc. Environmental, e. g. GHG emissions reporting, recycling, GMP Technical sales skills and customer specific product R&D Other new sub-sector specific skills identified in SA are as follows: - Hydrogen production at potential refinery upgrades - 3 D printing developments which may influence polymer production - Specialist chemists & engineers for API’s, lithium cells, biomass, catalysts - Product application specialists e. g. blasting applications & agronomists - Shale gas exploration, development, drilling, processing, and sales - Nuclear construction skills Potential new skills identified for African developments include: Oxygen production and pipeline installations Country specific chemical export (trading) skills
Final Conclusions Generally, growth expectations in the SA chemical market were low and uncertain in 2017 The situation may change if the Industrial Policy and Action Plan (IPAP) materialises, with one of its focus areas to develop the chemical and related sectors Investors will need new confidence Graduates development is important, e. g. Career guidance at schools on working environments & jobs availability Alignment of skills required by industry with tertiary institutions Internships of students at chemical operations while studying Mentoring programs for young people (e. g. millennials) on life skills
Rhoanda Jansen van Rensburg Executive Director Samuel Moshoeu Matlala Managing Director +2761 425 9683 +2782 413 9644 rhoanda@o 3 bc. co. za moshoeu@o 3 bc. co. za Ozone Business Consulting (Pty) Ltd www. o 3 bc. co. za
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