A lawsuit in South Africa alleges petrochemicals giant Sasol of abusing its ethylene deliver monopoly. The lawsuit has been added by means of KAP Industrial, the figure organization of Safripol, South Africa’s biggest plastics producer.
Safripol and KAP released legal proceedings impose to Sasol at South Africa’s Competition Commission on 2 July, seeking the trade court to ‘quickly look into whether Sasol’s conduct, because the monopoly ethylene provider in South Africa, is in contravention of the Competition Act’.
Sasol’s dominance of the South African petrochemical quarter commenced in the course of the global trade sanctions of the Apartheid era. Without get entry to imported petroleum, the corporation advanced skills in coal-to-chemicals and Fischer-Tropsch tactics to create liquid hydrocarbons, said Roderick Crompton, a liquid-fuels pricing professional, and ex-director at South Africa’s energy ministry, where he led hydrocarbons planning.
South Africa’s plastics industry is the biggest in sub-Saharan Africa, and provided $4.5 billion (2.3%) to South Africa’s GDP in 2022, as per an assessment by the World Economic Forum’s Global Plastic Partnership.
‘[Sasol’s] single-seller monopoly over ethylene has been assertively retained when you consider that [it] was privatized in 1979,’ Crompton stated. Safripol is consequently essentially rely on Sasol’s ethylene supply as feedstock for its manufacturing of polyethylene, polypropylene and poly(ethylene terephthalate) (PET). In a declaration, the corporation stated it has ‘formerly communicated the ability supply risk from its exposure to Sasol as a main provider’.
Sasol’s flagship Secunda site sits in the Mpumalanga ‘coal belt’ of north-eastern South Africa. In a policy concise prepped for the economic research institution Trade and Industrial Policy Strategies in August 2024, Crompton explained Secunda as the hub of Sasol’s ‘inextricably interdependent liquid fuels and petrochemicals production activities’. Sasol stated that Secunda manufactures a 150,000 barrels of liquid fuels according to day. That’s a big input into South Africa’s economy, and almost not possible to substitute, Crompton tells Chemistry World. Sasol isn’t always most effective the only supplier of feedstock material to downstream plastic makers in South Africa, however an influential producers and exporter of polymer materials to offshore markets, he outlined.
‘Importantly it adds gigantic direct and indirect value to a stranded herbal asset, low-grade South African coal, by a 70-year old coal to-liquids Fischer–Tropsch procedure that these days is utilized in only a few nations’, Crompton described. Moreover, that price comes at the cost of a considerable environmental footprint, and comparatively higher costs than manufacturers that use feedstocks inclusive of oil or ethane from shale gas.
‘For plastics Transformers there are advantages to having your raw material provider nearby and in the same nation,’ he stated. Some South African manufacturers truly agree, that’s why they hold on buying for from Sasol, ‘although they don’t like Sasol’s prices’, argues Crompton.
Despite the fact that Sasol has maintained a monopoly in main ethylene supply, numerous domestic and foreign corporations have entered the South African market for completed plastic products. Import tariffs on plastic pellets, the raw material used by the plastic transferring industry, were reduced in 2011. Furthermore, South African manufacturers complained in a 2012 tribunal that they could not finish with cheap-imported plastics, and could not decrease the costs due to the excessive price of Sasol’s materials. The International Trade Commission of South Africa, a state agency, re-imposed tariffs of 15% in 2020 following complaints that Chinese exporters had ‘flooded’ the domestic market with reasonably-priced PET.
From the point of view of technology and funding boom in South Africa’s petrochemical industry, it not best for Sasol’s ethylene monopoly to keep, provides Crompton, but a few could say it’s better than having nothing in terms of a domestic manufacturer. ‘Why haven’t competition invested in [ethylene]?’ he asks. ‘There isn’t any law or regulation prohibiting them.’
Shamiso Mupara, an environmental activist and stable-waste academic, characterizes KAP’s lawsuit as an act of ‘bare self-interest’ in preference to an effort to boosting market competition. ‘Safripol is a considerable plastics producers, and the most effective virgin PET manufacturers within the Southern Africa bloc of nations. The same Safripol, now complainant, has earlier petitioned the International Trade Commission to protect its territories from Chinese competition by tariffs in 2024,’ she observes.
Crompton agrees, declaring that the dispute is about exceptional parts of the same chemicals-to-polymers value chain. There’s a restriction to the overall profit that may be extracted from that value chain, he explains. ‘This looks as if a fight about who extracts what share of the [profit].’
