Africa Panel Calls for Industry Investment


Large investments in infrastructure would greatly benefit Africas lubricants industry by creating additional demand for construction projects and improving transportation and better energy reliability.

That was the conclusion of a panel discussion on lubricant trading at the first ICIS Africa base oils conference in Durban, South Africa, in November.

Cliff Classen, managing director of Orbichem, South Africa, set the tone for the session, when he echoed the statement of Donald Kabruka, president of Africa Development Bank that Africa needs to invest $360 billion in infrastructure to spur industrial development.

Taiye Williams, managing director for Lubcon Ltd., Nigeria, lamented his nations poor infrastructure, emphasizing that it adds to the cost of doing business there. It is cheaper to transport raw materials by rail, but the rail system is not functional in Nigeria, William said. Energy is a challenge. In Nigeria we cannot industrialize without energy.

Williams noted that Nigerias gas sector would require an investment of U.S. $1.5 billion between now and 2020 if the growth targets set by the present administration are to be achieved. Other speakers agreed that the continent is rich in oil and natural gas resources and that the sector therefore has huge growth potential. If developed, they said, lubricant demand would increase, and it could become a pillar to support broader economic development.

Martin Webster, Africa sales manager for Lubrizol SA, said businesses would also benefit if African governments brought down trade barriers by establishing a pan-African state, the United States of Africa, an idea advanced by former Libyan dictator Muammar Gaddafi at two regional African summits, the first in June 2007 and the second in February 2009 .

If we could finish the United States of Africa project, it will be a fabulous dream and a positive move for Africa. Then we can trade fairly well, Webster said. Besides lowering trade barriers between African countries, a pan-continent state could protect the continent against inferior imports, he said. Africa will not tolerate the dumping of products from overseas. If we are united we can make our own products and distribute them with good infrastructure.

The International Monetary Funds most recent Regional Economic Outlook stated that the near-term outlook for sub-Saharan Africa remains broadly positive, and growth is projected at 5.25 percent a year in 2012-13. The report suggests a new trend in the spending habits of Africa’s middle class, and Williams said that this portends an increase in the number of high-performance cars making their way to Africa, which may lead to greater demand for synthetic engine oils.

I think prices will still continue to be an issue, he said. A lot of people are bringing new cars into Nigeria. So, those persons will likely pay premium but they are not so many.

Chiming in on Williams comments, Sudip Shyan, manager of base oils and lubricants for Optima Energy Resources in Nigeria, said some motorists need to learn that synthetic engine oils, because they lengthen drain intervals, require longer-lasting oil filters.

When you talk about synthetic oil, you come across clients that are excited but the filters do not last long, he said. So, education and telling clients how to use [the oil] is key, or else they will have problems. Webster said the biggest challenge for Africa is how to get rid of bad products.

Discussion then turned to the topic of used oils which panelists said creates issues involving the collection, disposal and recycling of used oil, which is a serious problem in Africa.

Specifically, if you look at South Africa, the way used oil is handled is terrible, Webster said, stating that it is often just dumped into a drain. Williams said there is no structure to collect used oil in Nigeria, but that a system is being worked out. However, he emphasized that rerefining should be part of a refinery.

Panelists discussed the continuing trend of API Group I base oil plants closing and the global markets shift to Group II and III base oils. Africas base oil supply base remains entirely Group I, and the vast majority of lubricants used on the continent require no better than Group I base stocks.

Celine Boutier, managing director, Shamrock Shipping and Trading, Cyprus, said that Russia and other former Soviet countries still supply Group I products to Africa. She also noted that blenders that consider using Group II can be confused by the relative costs of Group I and II. Sometimes Group II oils are priced at a premium, and at others they can cost the same or even less than Group I.

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