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In a world of emerging technologies, chemicals companies need to diversify beyond their current scope to remain competitive and secure their position in the African and global chemicals markets.
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Future of Chemicals Companies inFuture of Chemicals Companies inSouth AfricaSouth Africa
Should chemicals companies in Africa diversify to strengthen their base Should chemicals companies in Africa diversify to strengthen their base and minimise risk?and minimise risk?
Dr. Brian Balmer, Industry Principal
Avril Harvey, Senior Industry AnalystAvril Harvey, Senior Industry Analyst
Margot Kuhn, Research Analyst
Chemicals, Materials & Food
30 October 2013
© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
Today’s Presenters
Follow me on:
Dr. Brian Balmer,
Industry Principal,
Frost & Sullivan
Follow me on:
Avril Harvey,
Senior Industry
Analyst,
Frost & Sullivan
Follow me on:
Margot Kuhn,
Research Analyst,
Frost & Sullivan
2
• 13 years' research experience at Frost & Sullivan.
• Company expert in Performance Materials.
• Advises clients on geographic expansion as a growth strategy.
• 13 years of research and development and technology commercialization expertise.
• Market Research, growth consulting, market insights and strategic analysis of opportunities.
- Focus on Petrochemicals, Bioethanol and Water treatment industry sectors
• Experience base covering broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives:
- Construction industry and materials.
- Chemicals industry.
- Commercial due diligence.
- Public sector.
Focus Points
22
2.32.3
11
Opportunities in AfricaOpportunities in Africa
Construction and InfrastructureConstruction and Infrastructure
Chemicals, Materials and Food - Global ContextChemicals, Materials and Food - Global Context
2.12.1 Mega TrendsMega Trends
2.22.2 Drivers and RestraintsDrivers and Restraints
3
2.32.3
2.42.4
2.52.5
MiningMining
AgrochemicalsAgrochemicals
33 Chemical Companies in Africa – Case StudiesChemical Companies in Africa – Case Studies
Chemicals, Materials and Food – Global ContextChemicals, Materials and Food – Global Context
Our Chemicals Market ApproachFocus on end-markets and mega trends
Functionality and performance
Health and wellness
Construction
& Utilities
Food Drugs &
Cosmetics
Transportation
5
Globalisation Low carbon economy
& UtilitiesTransportation
Source: Frost & Sullivan analysis
IntroductionWhy Africa?
"Ghanaian president John Mahama launched Hope City, a $10 billion high-tech hub aiming to foster technological growth and attract major players in the global ICT industry to the West African country."
March 2013
"High Level Negotiations with South Sudan
to Join the East African Community."
October 2013
6
"A huge water source has been discovered in the arid Turkana region of northern Kenya which could supply the country for 70 years, the government says."
September 2013
October 2013
"In 2012, operators in Mozambique have announced as much as 100 Tcf of natural gas discoveries. This will position Mozambique as a major player in the sector."
January 2013
IntroductionAfrica in a Global Context
6%
8%
10%
12%
14%
16%
Africa's Share of the World
7
0%
2%
4%
Population GDP Chemical industry
Chemicals market demand
Source: Frost & Sullivan analysis
The Chemical IndustryHistoric growth rates
4%
5%
6%
7%
8%
9%
10%
Historic growth (2005-2012)
8
0%
1%
2%
3%
4%
Africa World N America W Europe
The medina, Marrakesh, Morocco
Source: Frost & Sullivan analysis
The Chemical IndustryForecast future growth
4%
6%
8%
10%
12%
Forecast growth (2012-2020)
9
0%
2%
4%
Africa World N America W Europe
Source: Frost & Sullivan analysis
Plans for Hope City, Ghana
Opportunities in AfricaOpportunities in Africa
Impact of Mega Trends on South Africa’s Chemicals Industry
Increasing Urbanisation
Visionary
Health & SafetySustainable Development
11
Infrastructure Development
Innovation
&
Market
VanguardPublic / Private
Sector Investment to Drive Industry Development
Rebuilding War Torn Countries
Impact of Mega Trends on South Africa’s Chemicals Industry
Mega Trend Degree of Impact Impact Timing
IncreasingUrbanization
Present
Mega Trend Impact on the Chemicals Market,South Africa, 2012
2
68
10
4
Severity
12
SustainableDevelopment
Present
InfrastructureDevelopment
Present
Severity
2
68
10
4
Severity
2
68
10
4
Severity
Drivers and Restraints
Chemicals Market: Key Market Drivers and Restraints, South Africa, 2013–2017
Production facilities are
small
Strikes in the mining and
manufacturing industries
Exchange rate fluctuations
13
Food, water, and electricity
scarcity
Increase in Manufacturing
Activity
Increase in Demand for
Infrastructure
fluctuations
Where are the growth opportunities?
Kenya• Infrastructure• Residential
Morocco• Infrastructure (road, rail, airport,
port, water, telecommunications)• Residential
Ethiopia• Infrastructure• Commercial
Nigeria• Infrastructure (road,
rail, airport)• Residential
Construction and Infrastructure ChemicalsWhere are the growth opportunities?
14
High Medium
Zambia• Residential• Commercial• Tourism
Mozambique• Infrastructure (road, rail
and airport)• Tourism
South Africa• Residential• Infrastructure
Angola• Infrastructure (road,
rail, port and airport)• Residential
Botswana• Commercial• Infrastructure
• Residential
Tanzania• Infrastructure
Cameroon• Infrastructure
• Residential• Commercial
South Africa $239 million
Angola $12 million
Botswana$6 million
Namibia$4 million
Mark
et G
row
th R
ate
(C
AG
R)
(%)
Construction and Infrastructure ChemicalsWhere are the growth opportunities?
Total Adhesives Market: Country Attractiveness, 2013
15
Mark
et G
row
th R
ate
(C
AG
R)
(%)
Barriers to Entry HighLow
Kenya
Admixtures
Waterproofing
Flooring
Sealants & Grouts
Repair and Rehabilitation
36.6%
7.3%
26.2%
12.5%
17.4%
Percentage of Revenue Breakdown 2013
Share of global
Mineral Resources Distribution , sub Saharan Africa, 2013
C
Country Mineral Growth / Decline
South Africa
Namibia
U
U
Mining ChemicalsWhere are the growth opportunities?
16
C
Source: Frost & Sullivan.
Resourceglobal
resources, %
Platinum 88
Gold 40
Copper 5
Uranium 20
Diamonds 60
CopperPlatinum Gold C Diamonds
C
UraniumU
U
U
Zambia
DRC
Malawi
C
C
U
Increased exploratory activities
and discoveries
Demand for energy and industrial
applications
New technology and uptake by the
industry
Increasing need for safety in mines
Extended mine lifespans
Mining Chemicals Market, Drivers and Restraints, sub Saharan Africa, 2013
Mining Chemicals Revenues ($ million), sub Saharan Africa, 2013 and 2016
CAGR = 4.0%
Mining ChemicalsWhere are the growth opportunities?
17
Environmental concerns
Disruptive technologies
such as alternatives to
blasting
Power and water
shortages
Disruptions and low
productivity
Crop Protection
Fertilizers
US$5 billion (increase fertilizer use from 9kg per hectare to 15kg)
KENYA
Agricultural sector ($ billion)
8.04
Agrichemicals market ($ million)
111.6
GHANA
Key Agricultural Markets, sub Saharan Africa, 2013 Future Growth, 2013
Agriculture ChemicalsWhere are the growth opportunities?
18
Crop Protection> US$2 billion (projected value of the market in sub-Saharan
Africa by 2020)
Countries with sizeable agrichemcals usage
African countries under-utilising agrichemicals
`̀
SOUTH AFRICA
Agricultural sector (primary) ($ billion)
12.06
Agrichemicals market ($ million)
675.5
GHANA
Agricultural sector ($ billion)
11.33
Agrichemicals market ($ million)
125.5
NIGERIA
Agricultural sector ($ billion)
96.04
Agrichemicals market ($ million)
225.3
Growth in the markets for
fertilizers and crop protection
chemicals are expected in the
Total Fertiliser Market: Volume Forecast, sub-Saharan Africa, 2013 and 2016CAGR = 5.7%
Volu
me (
metr
ic tonnes)
Agriculture ChemicalsWhere are the growth opportunities?
19
chemicals are expected in the
Agricultural sector along with
increased local and foreign
investment
Volu
me (
metr
ic tonnes)
Poll Question
In which African region are you planning to invest?
a) Southern Africa
b) West Africa
20
c) East Africa
d) I’m not planning to invest in Africa
Chemical Companies in South Africa – Case Study
Distribution Channel Distribution Channel
New Product Development New Product Development
Mergers & Acquisitions Mergers & Acquisitions
New Product LaunchNew Product Launch
Consulting Offering Through 10 Growth
Processes
Business Case Development
Implementation
The Business Case
Generation Of Viable Implementation Options
Detailed Benefits Statement
Design/Development
Planning
The Growth ProcessesEnsuring Sustainable Profitable Growth in Africa
22
Distribution Channel Distribution Channel OptimisationOptimisation
Vertical ExpansionVertical Expansion
Customer Strategy Customer Strategy
Competitive Strategy Competitive Strategy
Geographic ExpansionGeographic Expansion
Strategic PartneringStrategic Partnering
Technology StrategyTechnology Strategy
Statement
Risk Reports
Impact Analysis
Feasibility Analysis Roll-out
Handover
Sustainable Profitable GrowthStakeholder Alignment
Prioritisation
AECI Speciality Chemicals Revenue by Market Sector, 2012
Home Country
Footprint
AECI Ltd
Divisions
Explosives
Specialty Chemicals
Specialty Fibres
Property
Case Study 1 - AECIGeographic Expansion
23
Chryso Headquarters
a.b.e. Construction Chemicals (Pty) Ltd
Regional Offices
Other Distributors
Case Study 2 - ChrysoMergers and Acquisitions
24
Northern Cape
Western Cape
Eastern Cape
North West Province
Free State Kwazulu-Natal
Mpumalanga
Limpopo
a.b.e Home Country
a.b.e Footprint
How do I grow successfully in Africa?
Risk / Challenge Identification
Identify Key Opportunities
Identify Market Opportunities
25
Distribution / Supply Chain / Partners
Customer Preferences
Devise Growth Strategy
Next Steps
Develop Your Visionary and Innovative SkillsGrowth Partnership Service Share your growth thought leadership and ideas or
join our GIL Global Community
26
Join our GIL Community NewsletterKeep abreast of innovative growth opportunities
Phone: 1-877-GOFROST (463-7678)EMEA: +44 (0) 20 7343 8383 Email: [email protected]
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27
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For Additional Information
Samantha James
Corporate Communications
Africa
+27 21 680-3574
Brian Balmer
Industry Principle
Chemicals, Materials & Food
+44 1865 398634
Mani James
Regional DirectorAvril Harvey
Senior Industry Analyst
29
Regional Director
Growth Partnership Services
+27 21 680-3208
Vassilissa Kozoulina
Account Manager
Chemicals, Materials and Food
+27 21 680-3279
Senior Industry Analyst
Chemicals, Materials & Food
+27 21 680-3283
Margot Kühn
Research Analyst
Chemicals, Materials & Food
+27 21 680-3568
