Historical Overview of the South African Chemical Industry: 1896–1998

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

Paul Kruger opens "The Dynamite Company" in 1896.

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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

Introduction

In a limited sense, a chemical industry has been in existence in South Africa for many centuries. Dyes, fragrances, flavorings, and medicinals were extracted from plants, and animal fats were used in soap making and leather preserving. These activities were carried out on a limited scale; just enough was made to meet the immediate needs of small groups of people. As time passed, some substances, particularly fragrances, dyes, and medicinals, became articles of trade and, when in short supply, commanded high prices. However, it was not until the Industrial Revolution that chemicals were manufactured in sufficient quantities to talk about a chemical industry as we know it today.

Between 1780 and 1840, Great Britain was transformed from a predominantly agricultural to a predominantly industrial country. Rapid growth in population and urbanization was accompanied by increased literacy and the need for better housing, clothing, health, food, and transport. These changes led to an unprecedented demand for paper, glass, cotton textiles, soap, fertilizers, and explosives. Chemists and engineers responded imaginatively to meet these demands, and it was not long before a range of chemicals was being produced. So great, however, was the demand for sodium carbonate and sodium hydroxide that the fledgling chemical industry was often called the "alkali trade". The structure of the chemical industry around 1875 is shown in Figure 1

Figure 1.

The Chemical Industry in the U.K. around 1875

The chemical industry in South Africa came into being in 1896, about 100 years after the first lead chamber and Leblanc plants were built in Great Britain. The discovery of diamonds near Kimberley in 1868, gold on the Witwatersrand in 1886, and coalfields around Witbank and Vryheid, led to a burgeoning mining industry and a rapidly growing demand for explosives. For the first 40 years of its existence, the South African chemical industry could well have been called the "explosives trade".

In this article, the development of the chemical industry is discussed around three major companies, African Explosives and Chemical Industries (AECI), South African Coal, Oil, and Gas Corporation Ltd., (SASOL), and Sentrachem.

AECI's Predecessors

Alfred Nobel's discovery of dynamite had made the transportation of nitroglycerine a reality, and increasingly large quantities of the explosive were imported into South Africa in the early 1890s. To ensure a regular supply and to improve blasting efficiency, required for mining the hard quartzitic gold-bearing rock of the Witwatersrand, the Nobel Dynamite Trust decided to produce the required explosives locally.

On 22 October 1896, President Paul Kruger traveled from Pretoria to the farm Modderfontein, east of Johannesburg, to open De Zuid Africaansche Fabrieken voor Ontplofbare Stoffen. With a name like this, it is not surprising that the factory was called simply "The Dynamite Company". After the Anglo Boer War of 1899-1902, management of the company passed into the hands of the British South Africa Explosives Company, with the Nobel Dynamite Trust retaining a controlling interest.

For some years, Cecil John Rhodes, founder of De Beers Consolidated Mines, was concerned about the monopoly on explosives manufacture held by the Dynamite Company. In 1903, one year after his death, the Cape Explosives Works, at Somerset West near Cape Town, started producing dynamite, principally for the De Beers diamond mines around Kimberley. By 1907, this company's annual production of 340 000 cases (each of 50 lb) had exceeded that of Modderfontein (230 000 cases).

In the United Kingdom, Kynoch and Company, Nobel's chief competitor, had its eye on the rapidly growing explosives market in South Africa. Arthur Chamberlain, who had taken over from the founder, George Kynoch, started negotiations with the Natal government in 1907. In an amazingly short period of time, Kynoch established a third dynamite factory at Umbogintwini, south of Durban, in 1909.

By 1911, the explosives industry was by far the largest manufacturing industry in the country, with an investment of over £2 million and more than 3000 employees. But three companies-all importing the same raw materials, all making the same product, and all using the same process-were finding it difficult to make a profit. Their problems were compounded by the rising price of glycerine; only exports during World War I saved the three companies from bankruptcy.

After the war, both Somerset West and Umbogintwini diversified into fertilizer manufacture using locally manufactured sulfuric acid and phosphatic rock, most of which was imported from Morocco. The benefits of this development were short-lived; overproduction of superphosphate in Holland led to dumping in South Africa. The postwar slump only added to the woes of the industry. Rationalization was the only answer.

African Explosives and Industries

In 1923, Sir Harry McGowan, chairman of Nobel Industries, arranged a merger of their Modderfontein company with that of Kynoch's at Umbogintwini. Getting De Beers to come on board required more protracted negotiations, but success was finally achieved in December 1923 when a new company, African Explosives and Industries, was registered. Mr. Ross Frames of De Beers was appointed chairman and Sir Harry McGowan, deputy chairman. A young Ernest Oppenheimer, chairman of Anglo American Corporation, joined the board to represent the mining industry and retained a close association with the company for the rest of his life.

Two successful mergers in South Africa apparently whetted McGowan's appetite for more in the UK. By 1926, he had formed Imperial Chemical Industries (ICI) from the merger of Nobel Industries; the British Dyestuffs Company; the United Alkali Company; and Brunner, Mond Limited. ICI acquired Nobel Industries' 50% holding in African Explosives and Industries, establishing a partnership that lasted until 1998. This partnership resulted in a steady flow of technical expertise, information, and personnel that was to be of incalculable benefit in the development of the local chemical industry.

The great depression of the early 1930s adversely affected the chemical industry, but the board of African Explosives and Industries was looking adventurously to the future. A technical mission from ICI was sent to investigate erecting a synthetic ammonia plant at Modderfontein. In 1932, less than two years later and at a cost of £300Ê000, the ammonia plant went into full production-5000 tons per annum! With an associated oxidation plant, it was possible to produce nitric acid, and research started into the substitution of ammonium nitrate for nitroglycerine, ultimately with considerable cost savings to the mines.

The boom in gold mining meant that expansion of the ammonia plant was inevitable. By 1936, annual capacity had been increased to 25,000 tons. In 1938, Modderfontein and Somerset West together produced 2,348,987 cases of explosives, bringing the total production since 1896 to over 30,000,000 cases.

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

African Explosives and Chemical Industries (AECI)

Diversification from explosives followed. Fertilizers, paints, veterinary preparations, and insecticides were all produced to meet a growing demand. To reflect this diversity, the name of the company was changed from African Explosives and Industries to African Explosives and Chemical Industries in 1944. Two years later, as if to celebrate the 50th anniversary of the explosives industry, a calcium cyanide plant was erected, again to meet the growing demand from the gold mines.

The next 35 years were characterized by an almost continuous increase in production and diversification. A second ammonia plant was commissioned at Modderfontein in 1955 and, when urea was first produced in 1960, annual capacity for ammonia was increased to 145,000 tons. In 1955, surplus acetylene from a carbide plant at Ballengeich in Natal was transported to Umbogintwini for the production of polyvinyl chloride, the first commodity plastic to be made in South Africa. The associated chlor-alkali plant also supplied chlorine and caustic soda to the South African Industrial Cellulose Corporation (SAICCOR) at Umkomaas. Methanol, formaldehyde, and urea-formaldehyde resins were produced at Modderfontein, and in 1963, interests in SA Titan Products (now Tioxide SA) and SA Nylon Spinners were acquired.

In 1964, the company opened a fourth manufacturing site, the Midland Factory at Sasolburg. Using feedstocks from SASOL, the new factory produced initially calcium cyanide and then polyethylene (1966). PVC, CFCs, and chlorinated solvents followed. Adherence to the Montreal Protocol resulted in the phasing out of CFCs manufacture in 1995.

The company name was abbreviated to AE & CI in 1972, and, in 1974, a 300,000 ton per annum coal-based ammonia plant was commissioned at Modderfontein. A further name change to AECI followed in 1976, and the company's dependence on coal as a raw material was emphasized with the commissioning of the Coalplex project at Sasolburg in 1978. A joint venture with Sentrachem, Coalplex consisted of five linked plants: carbide, acetylene, chlorine, VCM, and PVC. Coalplex also produced caustic soda and lime hydrate.

During the early 1980s, AECI consolidated its position as the major chemical company in South Africa, expanding and diversifying its product range. Acquisition of Chemical Services in 1980 was significant, reflecting an increased emphasis on speciality chemicals. In 1985, after 82 years, explosives manufacture at Somerset West was phased out. A joint-venture soda ash plant was commissioned in Botswana in 1991, and two years later the formation of AECI Bioproducts and AECI Aroma and Fine Chemicals was announced, with plants at Umbogintwini and Richards Bay.

In 1993, AECI and SASOL agreed to the formation of a new company, later to be called Polifin. This joint venture produces monomers, polymers, chlor-alkali products, cyanide, and peroxides. Restructuring involved closing the costly carbide-acetylene route to VCM and using, instead, ethylene from SASOL. Major restructuring also occurred within the group during the 1990s. Manufacture of nitroglycerine gave way to new-generation explosives in 1994, and the Modderfontein complex celebrated its centenary in 1996.

In 1998, SASOL put in a bid to take over AECI, but the deal was aborted owing to stringent restrictions imposed by the Competitions Board. Further restructuring is currently in progress involving a move out of ammonia and urea production, and the likely sale of interests in Polifin, Dulux (paints), Tioxide SA, and Fedmis (fertilizers). Proceeds from these sales will go to reducing debt and reinvestment in five core clusters: explosives, speciality chemicals, fibers, biotechnology, and agricultural products.

SASOL's Predecessors

Although SASOL started producing oil from coal in 1955, its origins can be traced back to 1895 when coal was first mined on both sides of the Vaal River near Vereeniging. The mining house, Anglovaal, was interested in the large deposits of low-grade coal in this area and further south in the Free State. There was considerable interest in coal chemistry during the 1920s, and, in 1927, a government White Paper was published recommending the development of gasification and carbonization processes.

In the early 1930s, Anglovaal and the British Burmah Company established the South African Torbanite Mining and Refining Company (SATMAR) to mine oil shales near Ermelo and to distill off and refine the oil, mainly for petrol. Anglovaal's interests in oil-from-coal were extended when rights to the German Fischer-Tropsch process were acquired. In 1938, Hendrik van Eck, Anglovaal's consulting chemical engineer, appointed Etienne Rousseau as research engineer at SATMAR to pursue this initiative. Franz Fischer visited South Africa in 1938 to assist in getting the venture off the ground; however, World War II intervened.

During the war, Anglovaal maintained its interest in oil-from-coal and entered into negotiations with the M. W. Kellogg Corporation. There was considerable interest in the United States at that time, with the U.S. government considering an oil-from-coal plant on the west coast. In 1945, Anglovaal applied to the South African government for assistance to establish a plant based on the American Hydrocol process. After protracted negotiations, a license was finally issued in 1949. Owing to devaluation and involvement with gold mining developments, Anglovaal needed assistance to raise the required £20 million. The World Bank expressed polite interest in the project, but no money was forthcoming.

In the meantime, negotiations were proceeding with the Kellogg Corporation for licensing of its patents and assistance in the design and erection of a plant. However, Rousseau believed that a closer look needed to be taken at what the Germans had been doing with the Fischer-Tropsch process since the war. He obtained an offer from the Lurgi Gesellschaft, Oberhausen-Hollen, and Ruhrchemie Aktiengesellschaft, through an Arbeitsgemeinschaft (ARGE), of the designs for and the right to operate plants for the production of synthetic gas from coal and the Fischer-Tropsch process.

SASOL One

The upshot was the establishment, on 26 September 1950, of the government- sponsored South African Coal, Oil, and Gas Corporation Ltd., commonly called SASOL. This acronym arose from Rousseau's initial suggestion that the company be called South African Synthetic Oil Limited. Rousseau, SASOL's first employee, was appointed managing director, a position he held for 18 years. Both Kellogg and ARGE processes were used; the former produced high proportions of medium octane petrol, LPG, and a range of chemicals; the latter produced mainly higher-boiling waxes and oils, including diesel.

The plant, SASOL One, and its associated town, Sasolburg, were established in the Free State, just south of the Vaal River. All did not run smoothly as Rousseau recalled, "I must tell you honestly that there were times in SASOL's early years, times when we had trouble, big trouble, when I felt that my main charge was to keep up the courage of our men. I certainly could not allow myself a moment's despair". Despite these setbacks, SASOL chemists and engineers managed not only to get the plant working satisfactorily, but also to devote time to improving efficiency and to widening the product range. Feedstocks for the manufacture of synthetic rubber, fertilizers, and secondary chemicals followed. Together with Total SA and the National Iranian Oil Company, a refinery (NATREF) was established in Sasolburg in 1960. Imported petroleum was refined and cracked to produce ethylene for plastics, and pipeline gas was supplied in increasing quantities to industry.

SASOL Two and Three

Before World War II, coal provided more than two-thirds of the world's energy needs. By 1973, oil provided more than half of these needs, consumption was increasing, and the first oil crisis threatened supplies from the Middle East. SASOL's response to these developments was to commission a feasibility study on the establishment of a second oil-from-coal plant. At the end of 1974, plans for the erection of SASOL Two were announced at a cost of R 2458Êmillion. A site about 100 km to the east of Sasolburg, to be called Secunda, was chosen. Construction began in 1976 and was completed in 1980. At that time, South Africa imported much of its oil from Iran, and the overthrow of the Shah precipitated a further oil crisis. The result was SASOL Three, constructed in 1982 adjacent to SASOL Two.

Since its inception, SASOL has always placed a high priority on research and development. The SASOL One plant no longer produces fuels but instead a wide range of chemicals. The Fischer-Tropsch process has undergone continuous improvement, first through the Synthol process and more recently via the SASOL Advanced Synthol process. As a result, at SASOL Two and Three, fuels are being produced with greater efficiency and increasing numbers of petrochemical feedstocks, and speciality chemicals are being extracted from the product stream. SASOL's Slurry Phase Distillate process for the production of high-quality diesel from natural gas has aroused keen interest in Europe, Africa, and the Middle East.

SASOL functions through six main operating companies and has interests in several specialized chemical and petrochemical companies. Foreign sales amount to nearly 26% of group turnover, and there are major oil and gas exploration activities underway in southern and west Africa. By the mid 1990s, SASOL had become, by far, South Africa's largest chemical company.

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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.

News and Notices from Other Societies and Unions

Historical Overview of the South African Chemical Industry: 1896–1998

Mr. G. C. Gerrans of the South African Chemical and Allied Industries' Association (CAIA) furnished the following article at the invitation of Professor Pieter S. Steyn (SASOL Centre for Chemistry, Potchefstroom University, Private Bag X6001, Potchefstroom 2520, South Africa), Member of the IUPAC Bureau, IUPAC Committee on Printed and Electronic Publications, and IUPAC Executive Committee.

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

Sasol Plant

BACK

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

Umgeni Distillery

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