Fuchs Lubricants announced that it is investing 250 million South African rand (U.S. $14.9 million) as part of a project to build a warehouse, offices and a blending plant in the country.
The investment represents the first phase of the project, which has been approved, the company’s subsidiary in South Africa said in a press release. The company said the overall project duration is 17 months and is expected to be completed in October 2021.
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The site is in Johannesburg, according to an Aug. 19 press release by DRA Global, which is providing engineering, procurement and construction management services for the first phase of the project. The contract scope will cover all aspects of the engineering, design and construction of various infrastructure, rehabilitation and major renovations to an existing office block and the construction of the new warehouse. DRA provided the same services on Fuchs’ new grease plant in South Africa during the 2015-2017 period and worked on a study for the current project.
The new warehouse will be much larger than an existing building, the company said. “A new warehouse system will provide much needed storage space and modernization of systems and will enhance efficiencies,” Paul Deppe, managing director of Fuchs Lubricants South Africa, said in the press release. “The project was approved in May, the land had already been purchased and preliminary work has begun.”
Deppe said that the project is split into two phases. He noted that work continues to refine the concept design of the lubricants plant, which will form part of phase 2.
“A concept for a new lubes plant has been developed and now needs to be refined and optimized,” he told Lube Report. “The plant does include a new tank farm, blending hall and filling lines. Fuchs has a very wide range of lubricants, and the plant has been designed to cater for a complex manufacturing environment ranging from very small batch to large continuous production operations. The latest technology to control production, ensure the highest levels of cleanliness and minimizing contamination are being applied.” While the design capacity is not disclosed, “it is substantially more than what exists today,” he added.
Industrial Logistic Systems was appointed as warehouse consultant and ICM Architectural Studio as the architect.
The project was in planning for the past two years. “Fuchs’ business in South Africa and export into Africa is growing, and we need to plan for future expansion,” Deppe said.
He said that although Fuchs is concerned about the COVID-19 situation and its impact on lube markets, the company makes investments based on long-term considerations and is confident about the future of its business in Africa. “Our capital investment decisions are therefore not based on current situations but on long-term strategies,” he said.
According to Deppe, while Africa’s automotive market is a huge contributor to overall lubricant demand and factory fill business contributes in certain regions in the country, the automotive aftermarket is where the greatest lubricant demand lies in Africa. “While e-mobility is a fast growing segment in many parts of the world, with the limited infrastructure in many parts of Africa, this electric technology will not have a significant effect on lubricant demand as will be seen in other areas,” he said. “Demand in the mining sector is the other major contributor to overall demand as investment from both the East and West continues into our mineral rich continent.”
Deppe noted that another interesting segment driving demand in Africa is the power generation segment, where significant investment in various power sources are required to sustain the growing economies across the region. “Growth in gas turbine, solar and wind energies – amongst others – will also see a demand of both volume and in certain cases specialty lubricant requirements,” he said.
On the grease side, he noted that the greatest demand in both South Africa and Africa comes from mining, followed by general manufacturing industry and automotive off-highway markets.
Fuchs Lubricants South Africa invested R125 million to expand a grease plant in Isando in 2018. The company outlined plans for that plant in 2016, saying it would have more than 4,000 metric tons per year capacity and serve as a production hub for the rest of Africa.