Infrastructure Projects boost Africas Grease Market
While Africas local lubricant blending capacity has grown, the capacity for grease blending is very limited and the grease market depends on imports. This point was emphasized by Eltepu Sayanna, chief technology officer for Indias Siddhartha Greases and Lubes PvT, in a presentation at the ICIS African Base Oils and Lubricants Conference in Dar es Salam, Tanzania. Citing a 2015 global production survey by the National Lubricating Grease Institute, Sayanna said that 12 plants in Africa and the Middle East produce a little more than 110 million pounds of grease.
He explained that Africas grease market is vibrant and increasing due to agriculture, industrialization, infrastructure and mining projects. According to Sayanna, lithium and lithium complex are the dominant greases in the African market, accounting for 84 percent of total demand. Jonathan Njine, managing director of Lubesoil, Nairobi, Kenya, agreed that lithium greases are the most widely used in Africa, mainly due to their high dropping point.
On the other hand, Sayanna noted that sodium greases are still used in automotive applications while calcium sulfonate greases find only limited use. He added that there is no production of polyurea greases in Africa, and well over 99 percent of grease on the continent is based on mineral oils.
African Grease Markets
Rami Al Kinanny, general manager for Egypt-based Hitech Lubes and Greases, told LubesnGreases that he could not put a figure on the size of Egypts grease demand, but it is a large market. He said that sodium greases dominate in Egypt, stressing that the country is only one of a few countries in the world where sodium greases thrive.
Sodium greases can stand high temperatures, but wash off is rapid. That is why they were banned in Europe and other parts of the world, Kinanny explained. But in Egypt, all users care about is price and they need something that can handle temperature. He noted that sodium greases cost half as much as other types, accounting for their popularity. Complex greases are used by the cement and heavy industries, but nobody uses them in the automotive industry.
While some greases are produced locally, Rami said Egypts market depends heavily on imports, mainly by Petromin. In addition, he related that a significant challenge for the local grease industry is access to raw materials, all of which must be imported. For instance, he said that Egypts currency problems make it difficult to import lithium oxide. Rami also pointed out that Egypts grease market faces counterfeiting problem, especially in the sodium and calcium segments of the market, adding that lithium grease is difficult to counterfeit because of cost.
In South Africa, lithium greases are the most popular, said Paul Deppe, managing director for Fuchs Lubricants South Africa. Lithium based greases are commonly used in most applications and have the highest demand/sales volume in South Africa.
Taiye Williams, managing director for Lubcon International, said that the Nigerian grease market also relies on lithium greases. While these greases are produced locally, the market relies on imports from the UAE and other countries.
The same holds true for Ghana, where Lubcon is the only local blender. Williams said Lubcons blending capacity in Ghana is 10,000 metric tons, but the plant presently operates at only 50 percent capacity.
John Erinne, chief executive officer of Matrix Petrochemical in Lagos, Nigeria, noted that Nigerias grease market once was dominated by sodium, but lithium greases are taking over. He explained that Nigeria is home to two major grease manufacturers, MRS and Oando, and a few other marginal players. There is demand for complex greases, but it is limited to certain industrial sectors like cement, oil and gas. The automotive industry is happy with lithium greases.
Lubesoils Njine told LubesnGreases that only one company blends grease in Kenya. Comet Lubricants actually does it as a sideline not as a serious business. Grease is basically imported, he said. The most widely used greases in Kenya are lithium and lithium complexes. Calcium sulfonate grease usage is marginal.
Similarly, many companies sell greases in Tanzania, but Fuchs is the only local blender. Manoj Srivastava, plant manager for Fuchs Tanzania said the company has a blending capacity of 100 tons per month, but utilization is only about 50 to 60 t/m. Tanzanias market is dominated by lithium and lithium complex greases; aluminum greases are available via imports. Srivastava disclosed that Fuchs is planning to manufacture complex greases in Dar es Salam in 2017, but added that it will depend on demand.
Stakeholders agreed that Africas grease market offers opportunities for investment. Williams believes the best prospects lie in blending high-performance greases because there are no local blenders for it.
Njine agreed, stressing that the grease market and local grease manufacturing offers a very big opportunity in Kenya. People are not investing in grease because of high barriers to entry and the perception that it is a difficult market to enter. He disclosed that Lubesoil plans to start blending grease once the company stabilizes its food grade lubricant market in Kenya.
Kinanny disclosed that Hitech has been manufacturing grease for almost 2 years and said the market opportunity in Egypt are significant. He noted that the calcium and lithium markets are difficult to penetrate because of established players who have been in business for more than 50 years. However, he added that the fact that unregistered and unofficial small time players are in the market suggests there is demand and opportunity for growth.
The grease market in Egypt is not bad, said Kinanny. We have delivered grease to steel companies, and we are getting ready to enter the automotive sector in 2017.
Lithiums a Problem
However, Kinanny cautioned that the scarcity of lithium poses a challenge to grease consumption in Africa. He cited estimates from the United States Geological Survey that global lithium deposits of some 13.5 million metric tons are enough to supply battery manufacturers for 350 years. However, the estimates do not take into account other applications of lithium.
Whats missing from this prediction is the future, and indeed the present, said Kinanny. This calculation takes into account only the current rate of lithium-ion battery usage. It does not account for the entrance of electric vehicles into the mainstream. It does not account for Tesla, not to mention the growing ranks of Tesla rivals. And it most certainly does not account for what is by all means a pending energy revolution that sees lithium as its leader.
Kinanny suggested that the demand for lithium could outstrip supply by 25 percent in 2020, at which point the world is expected to need over 380,000 tons of lithium. Consequently, lithium grease suppliers will have to pay higher prices for raw materials, leading to inability to meet orders.
Williams agreed that lithium scarcity is the reason prices are rising. I think the pressure on lithium was caused by increased demand from China. However, Chinas demand is dropping, so lithium prices are not as crazy as they used to be, he said. While Williams contended that Africas demand for lithium grease is not strong enough to affect pricing, Njine argues that the cost of lithium will continue to rise, and consumption of lithium greases in Africa would likely contract.
Njine added that suppliers are beginning to experiment with other greases to boost dropping point to that of lithium greases. For instance, he said calcium sulfonate grease is beginning to gain traction in Africa because of its lubricating ability. Also, aluminum and aluminum complex greases are gaining attention because of price considerations. Aluminum greases are also easier and less expensive to manufacture, but they have suffered from poor marketing.
Looking to the future, Njine said there is hope for increased use of aluminum and aluminum complex greases. I recently had a discussion with an aluminum supplier who said they are finding it hard to meet the increased demand. I think the market in Africa will move toward calcium and aluminum greases and away from lithium. Fuchs Deppe added that if the lithium scarcity continues, South Africas market will likely shift to calcium and calcium sulfonate greases.