The world is embracing renewable energy sources to meet its energy needs, and Africa is not about to be left behind. The European Commission defines bioeconomy as the application of renewable biological resources from land and sea, including crops, forests, fish, animals and microorganism in the production of food, materials and energy.
On a global scale, bioeconomy accounts for 10 percent of the chemical market, and it is forecast to grow at between 5 and 10 percent annually, said Suri Chetty, business development director for Unichem Services Ltd. in South Africa. While Africa as a whole has not made commendable strides in developing a bioeconomy, South Africa has taken the lead with the launch of its bioeconomy strategy in January 2014. South Africas government projects that bioeconomy should account for 5 percent of gross domestic product by 2050.
In the same vein, Mordor Intelligence estimates the global biolubricant market in 2015 at U.S. $1.81 billion and projects it to reach $2.56 billion by 2020, with a compound annual growth rate of 6.27 percent. Recently, major oil marketing firms and original equipment manufacturers launched several biolubricant products, and Unichem is positioning itself to take advantage of the emerging bioeconomy in South Africa, with the production of biobased oils from sugar cane. According to Chetty, the proposed project is targeting a 50,000 tons per year facility.
Our history [South Africa] is all about sugar cane, Chetty told LubesnGreases at the ICIS African Base Oils and Lubricants Conference in Dar Es Salam, Tanzania. South Africa is a strong global sugar player, with knowledge, skills and innovators within the industry. We see a rare opportunity to leverage these skills and resources to integrate into the wider biobased chemical sector, and specifically into the renewable base oil market.
Manufacturing Process
This is a departure from our original strategy of simply marketing the ground breaking technology of Novvi LLC from California, Chetty explained. The concept of renewable hydrocarbons as a high performance base oil has captured the imagination of government, sate-owned enterprises, OEMs and lubricant marketers in the region to such extent that we have been driven to bring this technology to our shores.
While the motivation for adopting this technology in other parts of the world is driven by environmental legislation, he continued, The key driver in our region is our need for economic empowerment. And the business case for economic empowerment of rural communities through renewable chemistry is compelling.
Initial feasibility studies by a startup company eThala Biofuels projected 10,000 farming jobs would be created by cultivating 35,000 hectares of land. This will bring much needed economic empowerment to impoverished areas of rural KwaZulu-Natal and Eastern Cape.
A critical aspect for Unichem is the local cost of sugar, and the company is working closely with various stakeholders to ensure it can deliver on Novvis requirement to produce cost-efficient feedstock to justify the investment in a farnasene plant in KwaZulu-Natal. Farnasene is the feedstock used to manufacture renewable API Group III base oils. At that point, we will have a viable business case, Chetty continued.
Novaspecs base oil has already been recognized by the American Petroleum Institute and other organizations as an acceptable Group III oil and is the only renewable and biodegradable hydrocarbon base oil available today. Chetty noted that doubts about the viability of biobased oils have been demystified with the launch of several biolube products by major marketing oil companies and OEMs.Unichems technology partner Novvi LLC is responsible for this break-through in renewable synthetic chemistry. And the fact that Chevron recently bought a stake in the company validates the global shift toward renewable hydrocarbon base oils.
Legislation
While legislation on emission limits in the U.S., Europe and China has aided the growth of the biolubes market in those regions, growth in the African market remains a daunting challenge. Although South Africa has proposed a Bioeconomy Strategy, it has yet to be enacted into law. As a result, the segment lacks government incentives and regulation.
Chetty acknowledged this difficulty but noted that Unichem is not relying on government legislation. All the company needs is buy-in from big organizations that can influence OEMs and lube oil marketers to qualify its product.
He contended that biobased oils have a competitive advantage over mineral base oils and offer the most viable option for producing higher quality base oils in Africa. There is no possibility for Africa to build a base oil plant from scratch because it is too costly. It also means you are going to compete with the giants like Chevron and ExxonMobil. You can never compete with them, but you can position yourself to be competitive with high-level base oils.
During his presentation, Chetty reviewed the base oils performance in a transformer, showing that in a field evaluation a noncompacted 30-kVA class transformer showed great electrical performance, a constant ultralow power factor of about 0.04 percent and insignificant power loss. The transformer also showed excellent cooling performance, resulting in a temperature rise comparable to that of mineral oil in pole-mount natural convection.
Novvi transformer oil is the only biodegradable, renewable and nontoxic dielectric fluid that meets industry standard specifications including ASTM D3487, said Chetty. This performance coupled with seamless integration into the existing infrastructure is the key reason companies are turning away from expensive and incompatible ester-based biodegradable molecules and looking at this technology.
Target Market
African stakeholders have raised concerns about the market for biobased lubricants on the continent because of cost implications. Emmanuel Ekpenyong, head of lubricants for HOGL Energy Ltd. in Lagos, Nigeria, noted that biobased lubricants are not cheap and cost about 3 to 5 times more than mineral oil lubes.
Jonathan Njine, managing director for Lubesoil in Nairobi, Kenya, concurred and stressed that the difficulty in marketing biobased lubes is that the market is not educated, so it is not ready for such specialized products. I introduced biohydraulic oils to the Kenyan market in 2009, but the market was not ready.
For his part, John Erinne, chief executive officer of Matrix-Petrochem in Lagos, said that the technology to produce biobased lubes is available, but he cautioned that the market to support it might be a different matter. However, he emphasized that such specialized products will be reserved for niche markets.
Chetty acknowledged that it will be difficult to market biobased lubes in Africa because of their premium pricing, but he added, Our model in South Africa becomes a test case for the rest of Africa. We believe we can recreate hubs on the continent that will be aligned to the strategic objectives and macroeconomics of these regions, focusing principally on sustainable industrialization and agriculture.
He concluded, We can take our experience of business development in the South African market and introduce it to these regions. We are fortunate to have dynamic individuals within organizations like Transnet and Eskom who have brought OEMs to the table. When you sit around a table with talented people, invariably there are no limits to what you can achieve, particularly where all these organizations share core values of sustainability and respect for human dignity.