Energy costs and reliability critical to industry’s sustainability
CAIA provides a forum for interaction between members, where information is extended and opportunities are provided for participation in standing committees, and work and task groups for companies in South Africa’s chemical industry that is invaluable, according to Joaquín Schoch, chairman of the CAIA Board and CEO at Safripol.
He says CAIA has a strong reputation for advocacy and is well respected by both members of the industry and its stakeholders.
“CAIA is invited by a range of government departments to provide input into policy formulation and regulatory and legislative developments,” says Schoch.
Joan Maria Garcia Girona, CAIA Board member and managing director at BASF confirms the importance of CAIA as a forum for industry members and its advocacy role.
He says although being a member of CAIA does not provide a direct benefit to profitability or turnover, it does provide access to important platforms and forums that affect the development of the chemical industry.
He reports that in his experience CAIA is more active and proactive than many of its European counterparts.
Schoch contends that South Africa’s economy is in a phase of low growth and while the chemical industry is one of the country’s top sectors as defined by government, which is normally the case throughout the world, because the sector is a primary industry that is enabling, it has not grown as it should have.
He points out that the chemical industry’s main growth drivers are capital, technology, big markets and a high skills level of employees.
However, South Africa has a shortage in all those areas. Furthermore, oil and gas, which are the feeders of the chemical industry, are mostly imported, so the local industry has had to reinvent itself, and in that context the country’s chemical industry has done well.
Garcia Girona agrees that market conditions in the chemical industry are “very tough”.
“In fact there is hardly a single factor that is playing for the chemical industry; all the contributing factors are against the industry, from a lack of economic growth to a difficult labour environment, lack of consumer confidence, and cheap imports from China and the Middle East,” says Garcia Girona.
Schoch says further challenges that South Africa’s chemical industry has to overcome are the total cost of doing business including the cost of energy and transportation, which are very big factors in the competitiveness of the industry and its sustainability.
“However, it must be acknowledged that the energy crisis is to a large extent a global phenomenon, which means many competitors from other countries have similar challenges, that makes it a comparative issue rather than an absolute issue,” says Schoch.
“Nevertheless, the cost and reliability of energy is an important issue and remains critical to the sustainability of the chemical industry in South Africa and CAIA is constantly looking at these issues to ensure the industry acts proactively and appropriately,” adds Schoch.
Garcia Girona emphasises that electricity costs and availability is an issue that is currently undermining the competitiveness of the industry and unless surmounted will continue to constrain industry growth.
Schoch says another issue that demands a large percentage of the industry’s resources is the area of administration and compliancy with regards to regulations and legislation, which, though important, need to be streamlined to ensure efficiency.
He contends that Responsible Care is critical to the success of the chemical sector as all individual members, as well as the industry as a whole, must accept responsibility for chemical products from cradle to grave, including their production, transportation, distribution, disposal and recycling.
“Through the implementation of Responsible Care the industry becomes more sustainable on the one hand and on the other hand customers utilize the industry’s products with enough information to do it in the best possible way.
“CAIA’s support in the implementation of Responsible Care in South Africa is critical to its success as it addresses the safety, health, risk, quality and environmental sustainability issues of both the industry and its stakeholders in an integrated fashion.
“CAIA incorporates all players into the Responsible Care initiative. No company can be a member of CAIA without committing to Responsible Care, which is not a static initiative, but is constantly developing.
“As other issues emerge such as carbon mitigation, green-house gasses, water and energy use, and recycling, they could be assimilated and form part of the future of the Responsible Care initiative.
“Likewise, Responsible Care is improving both risk management and integrated reporting, because as the number of benchmarks and KPIs are constantly increasing on a global basis it allows for improved measurements that provide a basis for improved recording and control.
“This proves that Responsible Care is ultimately not a cost but an investment for all role players, as it provides the information for companies to improve performance, sustainability and quality,” says Schoch.
Garcia Girona says Responsible Care raises the entire standard of the chemical industry’s operations.
“Responsible Care gives companies a structured approach to all Responsible Care codes.
“Whereas in the past only the safety manager had the task of implementing safety, today safety is an issue that every employee throughout the organization is aware of and responsible for.
“Likewise, health and environmental issues have become the responsibility of the entire staff compliment, whether they are involved in production, administration or distribution.
“Responsible Care guidelines have to be incorporated into every aspect of the business, even the design of a new plant.
“Responsible Care equips us to plan for the management of waste and recycling of a product before we even produce the product,” says Garcia Girona.