The Future of Chemical Companies in South Africa


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In a world of emerging technologies, chemicals companies need to diversify beyond their current scope to remain competitive and secure their position in the African and global chemicals markets.

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The Future of Chemical Companies in South Africa

  1. 1. Future of Chemicals Companies in South Africa Should chemicals companies in Africa diversify to strengthen their base and minimise risk? Dr. Brian Balmer, Industry Principal Avril Harvey, Senior Industry Analyst Margot Kuhn, Research Analyst Chemicals, Materials & Food 30 October 2013 © 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. Today’s Presenters Dr. Brian Balmer, Avril Harvey, Margot Kuhn, Industry Principal, Senior Industry Research Analyst, Frost & Sullivan Analyst, Frost & Sullivan Frost & Sullivan Follow me on: • 13 years' research experience at Frost & Sullivan. • Company expert in Performance Materials. • Advises clients on geographic expansion as a growth strategy. Follow me on: • 13 years of research and development and technology commercialization expertise. • Market Research, growth consulting, market insights and strategic analysis of opportunities. - Focus on Petrochemicals, Bioethanol and Water treatment industry sectors Follow me on: • Experience base covering broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives: - Construction industry and materials. - Chemicals industry. - Commercial due diligence. - Public sector. 2
  3. 3. Focus Points 1 Chemicals, Materials and Food - Global Context 2 Opportunities in Africa 2.1 2.2 Drivers and Restraints 2.3 Construction and Infrastructure 2.4 Mining 2.5 3 Mega Trends Agrochemicals Chemical Companies in Africa – Case Studies 3
  4. 4. Chemicals, Materials and Food – Global Context
  5. 5. Our Chemicals Market Approach Focus on end-markets and mega trends Functionality and performance Health and wellness Food Drugs & Cosmetics Transportation Globalisation Construction & Utilities Low carbon economy Source: Frost & Sullivan analysis 5
  6. 6. Introduction Why Africa? "Ghanaian president John Mahama launched Hope City, a $10 billion high-tech hub aiming to foster technological growth and attract major players in the global ICT industry to the West African country." March 2013 "High Level Negotiations with South Sudan to Join the East African Community." October 2013 "A huge water source has been discovered in the arid Turkana region of northern Kenya which could supply the country for 70 years, the government says." September 2013 "In 2012, operators in Mozambique have announced as much as 100 Tcf of natural gas discoveries. This will position Mozambique as a major player in the sector." January 2013 6
  7. 7. Introduction Africa in a Global Context Africa's Share of the World 16% 14% 12% 10% 8% 6% 4% 2% 0% Population GDP Chemical industry Chemicals market demand Source: Frost & Sullivan analysis 7
  8. 8. The Chemical Industry Historic growth rates Historic growth (2005-2012) 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Africa World N America W Europe Source: Frost & Sullivan analysis The medina, Marrakesh, Morocco 8
  9. 9. The Chemical Industry Forecast future growth Forecast growth (2012-2020) 12% 10% 8% 6% 4% 2% 0% Africa World N America W Europe Source: Frost & Sullivan analysis Plans for Hope City, Ghana 9
  10. 10. Opportunities in Africa
  11. 11. Impact of Mega Trends on South Africa’s Chemicals Industry Sustainable Development Public / Private Sector Investment to Drive Industry Development Health & Safety Increasing Urbanisation Visionary Innovation & Market Vanguard Infrastructure Development Rebuilding War Torn Countries 11
  12. 12. Impact of Mega Trends on South Africa’s Chemicals Industry Mega Trend Impact on the Chemicals Market, South Africa, 2012 Mega Trend Degree of Impact 4 Increasing Urbanization Infrastructure Development 6 8 2 10 Present 10 Present Severity 4 Sustainable Development Impact Timing 6 8 2 Severity 4 6 8 2 10 Present Severity 12
  13. 13. Drivers and Restraints Chemicals Market: Key Market Drivers and Restraints, South Africa, 2013–2017 Production facilities are small Strikes in the mining and manufacturing industries Exchange rate fluctuations Food, water, and electricity scarcity Increase in Manufacturing Activity Increase in Demand for Infrastructure 13
  14. 14. Construction and Infrastructure Chemicals Where are the growth opportunities? Where are the growth opportunities? Morocco • Infrastructure (road, rail, airport, port, water, telecommunications) • Residential Ethiopia • Infrastructure • Commercial Nigeria • Infrastructure (road, rail, airport) • Residential • Commercial Kenya • Infrastructure • Residential Cameroon • Infrastructure Angola • Infrastructure (road, rail, port and airport) • Residential Zambia • Residential • Commercial • Tourism Botswana • Commercial • Infrastructure High Medium Tanzania • Infrastructure South Africa • Residential • Infrastructure Mozambique • Infrastructure (road, rail and airport) • Tourism 14
  15. 15. Construction and Infrastructure Chemicals Market Growth Rate (CAGR) (%) Where are the growth opportunities? Total Adhesives Market: Country Attractiveness, 2013 Angola $12 million Botswana $6 million Namibia $4 million Low Barriers to Entry South Africa $239 million High Percentage of Revenue Breakdown 2013 Admixtures Kenya 36.6% Waterproofing 7.3% Flooring 26.2% Sealants & Grouts 12.5% Repair and Rehabilitation 17.4% 15
  16. 16. Mining Chemicals Where are the growth opportunities? Mineral Resources Distribution , sub Saharan Africa, 2013 Country Mineral Growth / Decline South Africa U Namibia Resource Share of global resources, % Platinum 88 Gold DRC C Malawi U 20 Diamonds C 5 Uranium Zambia U 40 Copper C C U 60 Platinum Gold C Copper U Diamonds U Uranium Source: Frost & Sullivan. 16
  17. 17. Mining Chemicals Where are the growth opportunities? Mining Chemicals Market, Drivers and Restraints, sub Saharan Africa, 2013 Increasing need for safety in mines Demand for energy and industrial applications Disruptions and low productivity Extended mine lifespans Disruptive technologies such as alternatives to blasting New technology and uptake by the industry Increased exploratory activities and discoveries Mining Chemicals Revenues ($ million), sub Saharan Africa, 2013 and 2016 CAGR = 4.0% Power and water shortages Environmental concerns 17
  18. 18. Agriculture Chemicals Where are the growth opportunities? Key Agricultural Markets, sub Saharan Africa, 2013 Future Growth, 2013 KENYA Agricultural sector ($ billion) Agrichemicals market ($ million) Fertilizers 8.04 US$5 billion (increase fertilizer use from 9kg per hectare to 15kg) 111.6 Crop Protection > US$2 billion (projected value of the market in sub-Saharan Africa by 2020) GHANA Agricultural sector ($ billion) 11.33 Agrichemicals market ($ million) 125.5 ` NIGERIA SOUTH AFRICA Agricultural sector ($ billion) 96.04 Agricultural sector (primary) ($ billion) 12.06 Agrichemicals market ($ million) 225.3 Agrichemicals market ($ million) 675.5 African countries underutilising agrichemicals Countries with sizeable agrichemcals usage 18
  19. 19. Agriculture Chemicals Where are the growth opportunities? Growth in the markets for fertilizers and crop protection chemicals are expected in the Agricultural sector along with increased local and foreign investment Volume (metric tonnes) Total Fertiliser Market: Volume Forecast, sub-Saharan Africa, 2013 and 2016 CAGR = 5.7% 19
  20. 20. Poll Question In which African region are you planning to invest? a) Southern Africa b) West Africa c) East Africa d) I’m not planning to invest in Africa 20
  21. 21. Chemical Companies in South Africa – Case Study
  22. 22. The Growth Processes Ensuring Sustainable Profitable Growth in Africa Consulting Offering Through 10 Growth Processes Business Case Development Mergers & Acquisitions The Business Case New Product Development New Product Launch Distribution Channel Optimisation Geographic Expansion Generation Of Viable Implementation Options Implementation Planning Design/Development Detailed Benefits Statement Feasibility Analysis Vertical Expansion Risk Reports Strategic Partnering Roll-out Impact Analysis Handover Technology Strategy Customer Strategy Competitive Strategy Prioritisation Stakeholder Alignment Sustainable Profitable Growth 22
  23. 23. Case Study 1 - AECI Geographic Expansion Explosives Home Country Footprint Specialty Chemicals AECI Ltd Divisions Specialty Fibres Property AECI Speciality Chemicals Revenue by Market Sector, 2012 23
  24. 24. Case Study 2 - Chryso Mergers and Acquisitions Chryso Headquarters a.b.e. Construction Chemicals (Pty) Ltd Regional Offices Other Distributors Limpopo North West Mpumalanga Province Free State KwazuluNatal Northern Cape Western Cape Eastern Cape a.b.e Home Country a.b.e Footprint 24
  25. 25. How do I grow successfully in Africa? Risk / Challenge Identification Identify Key Opportunities Identify Market Opportunities Distribution / Supply Chain / Partners Customer Preferences Devise Growth Strategy 25
  26. 26. Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunities Phone: 1-877-GOFROST (463-7678) EMEA: +44 (0) 20 7343 8383 Email: 26
  27. 27. Your Feedback is Important to Us What would you like to see from Frost & Sullivan? Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by “Rating” this presentation. 27
  28. 28. Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare, and Twitter 28
  29. 29. For Additional Information Samantha James Corporate Communications Africa +27 21 680-3574 Brian Balmer Industry Principle Chemicals, Materials & Food +44 1865 398634 Mani James Regional Director Growth Partnership Services +27 21 680-3208 Avril Harvey Senior Industry Analyst Chemicals, Materials & Food +27 21 680-3283 Vassilissa Kozoulina Account Manager Chemicals, Materials and Food +27 21 680-3279 Margot Kühn Research Analyst Chemicals, Materials & Food +27 21 680-3568 29