Transitioning SA's Petrochemical Value Chain

The South African chemicals sector is the largest and most advanced on the continent, producing around 600 types of chemicals and contributing just under 3% to GDP in 2017.  The sector is interwoven with the country’s manufacturing sector, providing critical outputs to the economy and employing in the region of 171 000 people.

South Africa is a net importer of chemicals, particularly organic chemicals.  Exports are split equally between plastics, organic and inorganic chemicals.  The country’s main export destinations include the EU, US, Zambia and Zimbabwe.

The chemicals value chain is at high risk of carbon border tax adjustment mechanisms (CBAMs). 30% (by value) of SA’s organic chemical exports, and 10% of plastic exports are to the EU, an early mover on CBAMS. The risk is lower for chemical fertilisers where less than 1% of exports are to the EU.

Sasolburg is a central hub for the chemicals sector, and Sasol a key industry  player with downstream linkages into chemical and end-user markets, providing essential goods for the functioning of the economy and modern living such as medical supplies, clothing, building materials, cleaning and hygiene products. In many cases, Sasol is the only domestic supplier of individual inputs / products.

The outputs from the petrochemicals sector can broadly be grouped as ammonia (inorganic) and aromatics, olefins and methanol (organic), as shown in the Figure here. These products are either used directly or as intermediates for production of a range of further products. More than 90% of organic chemicals are derived from just a few building blocks which are produced in large quantities and heavily traded internationally.

In 2022, Sasol ranked as the 47th largest chemicals manufacturer globally by chemicals revenue, and the largest in South Africa, with a total global chemical sales value of $ 9 billion. AECI, the country’s second largest chemicals manufacturer, has a total turnover of approximately only 7% of that of Sasol, with Omnia being the third largest producer.

In addition to selling directly to customers, Secunda supplies a large proportion of base chemicals that are used as production inputs for Sasolburg, as well as in the downstream chemical and allied industries. As the Business Engagement reflected, ‘Sasol is integral to the South African chemicals value chain. No Sasol means no chemicals.’ Sasol also accounts for a significant proportion of South Africa’s chemical exports.