Plastics in South Africa's industrial sector

CONSUMER-driven economic growth plus the emergence of an industrial sector pushing demand for raw materials, equipment and advanced technologies will see South Africa having all the opportunities to encourage industrial expansion – including in its plastic industry.

Whilst still emerging, the plastics industry is a government-identified potential growth area. Plastics manufacturing contributes approximately 0.5% to South Africa’s GDP and 3.2% to the manufacturing sector. The sector has an estimated annual turnover of R35 billion ($4.3 billion).

That said, plastics production has been growing faster than the country’s economy with an impressive overall annual rate of 5.5% for the past five years, with sales of about R175 billion ($21.4 billion). The industry employs over 60,000 people or 3.4% of those employed in the manufacturing sector in South Africa. Export of plastic products reached R2.4 billion ($294 million) in 2010 as against import of R7 billion ($857 million) worth of imported plastic products.

To encourage production as well as stable supply of plastic products, the government recently lowered import tariffs on products and inputs for automotive parts and interior products; packaging; medical products such as syringes, HIV and diagnostic tests kits; building supplies such as pipes, sheets, woven PP, roofs; electrical and electronic cables and appliances; as well as products for the energy sector such as wind turbine blades.

The industry is self-regulated by the Plastics|SA (www.plasticsinfo.co.za) in which the Board is composed of raw material suppliers and importers Safripol, Sasol Polymers and Hosaf, and trade groups Plastics Converters Association of SA (PCA), Association of Rotational Moulders of South Africa (ARMSA), Plastics Institute of Southern Africa (PISA), Expanded Polystyrene Association of South Africa (EPSA) and South African Plastic Pipe Manufacturers Association (SAPPMA).

Surpassing many challenges
South Africa’s emerging plastics industry needs to overcome a host of challenges to be able to meet rising demand from both local and international markets. Upgrading of production processes must be undertaken, but this has proven to be difficult due to the huge capital requirements that only foreign companies can provide.

Moreover, technical skills are not readily available, especially for start-up projects needing highly skilled and knowledgeable professionals. Delivery costs and other logistics are also relatively higher due to geographic setting. South African companies also find it hard to keep up to fast-moving production techniques from other parts of the world. To date, there are roughly 2,000 companies engaged in plastics conversion.

In spite of these barriers, however, costly initiatives have been undertaken by the industry.

Home-grown initiative
One of the fast-growing segments of the plastics industry is building and construction, where pipes production is a thriving business. There has been continuous campaign to use plastic pipes for projects, and this has been successful.

A move to eliminate lead from all locally manufactured plastic pipe products has been costly but effective, said SAPPMA. Lead is commonly bonded into the PVC pipe due to its excellent heat and UV resistance, but the group had a voluntary policy for its members to stop using heavy metal free stabilisers for the manufacture of PVC pipes for health and environmental reasons since 2006. At that time, the prices of alnike