Programme Director
The Managing Director of BASF Dr. Dieter Kovar,
Esteemed members of the BASF board present,
Dignitaries Present,
Ladies and Gentlemen,
All protocol observed.
On behalf of the government of KwaZulu-Natal (KZN) and the people of this province, we wish to express our greatest delight that we are meeting today to celebrate the inauguration of a new dispersion plant in our province, an investment which we have no doubt that will contribute to the economy of our province and create much needed employment.
Programme Director, as the government of KwaZulu-Natal we are more than excited that BASF has chosen our province as its base for this plant. We believe that this investment is not only a vote of confidence in our economy but can go a long way towards turning our province into the chemical hub and also attract other companies who are involved in this sector to invest in this province.
Programme Director, what makes this investment all the more significant for our province is that it comes at the time when the global economy is facing the seemingly intractable crisis of confidence. As all of us know, this is due to the Eurozone crisis and the sluggish growth of the Chinese economy which had, since the start of the economic downturn, been the engine that powered the global economy.
Just last week on Friday, the South African Revenue Service (SARB) released figures which showed that South Africa’s trade deficit had widened in July in what analysts believe reflects waning demand for domestic exports. The figures revealed that the trade shortfall widened to R6.7 billion from R5.7 billion in June, with exports rising by R1,8 billion to R63 billion in July while imports jumped by R2.8 billion to R70.2 billion.
These figures, according to economic observers, have sparked concerns that the shortfall on South Africa’s current account deficit could significantly widen over the rest of the year.
This, Programme Director, means that all of us all have to work hard to turn this situation around. As we speak today, all eyes were on South Africa’s purchasing managers’ index (PMI), which is used to gauge the performance of the manufacturing sector in the country. In July, this index was at 51 points.
With slow global demand for our exports as reflected by the widening trade deficit , there is no doubt that the manufacturing sector will be affected. This is of particular interest to us owing to the fact that KwaZulu-Natal has the second largest manufacturing base after Gauteng in the country.
As all of us know, the manufacturing sector accounts for more than 15% of our economy’s overall output, making it one of the mainstays of our economy. In short, Programme Director, this shows that we are living in difficult times. It is because of this reason that we are doubly elated that, during these trying times, BASF has seen it fit to invest in our province.
Programme Director, as all of you will attest, chemistry is a broad science which embraces the concepts of creation of molecules and the manipulation of atoms and dealing with microscopic and macroscopic scales. In its cross cutting nature it covers interactions with plants, animals and humans through agriculture, biology and medicine and with the physical world through electronics, new building materials and new sources of energy.
It affects the people of our planet, protecting and preserving our health, ecology, culture and heritage. While chemistry is a science in its own right, it also supports and interacts with other scientific disciplines. In concert with biology, physics, medicine, materials science and other core disciplines, it makes effective contributions to the solutions of problems facing the world today and to the improvement of the condition of mankind tomorrow.
Chemistry thus forms the indispensable foundation of disciplines such as biology, medicine, and materials sciences Globally, the chemical manufacturing and related industries represent a trillion dollar industry with employment levels accounting for almost two million people. The industry supplies over 80 000 products to all industries.
The chemical manufacturing growth in South Africa has been relatively slow over the past decade in relation to the increase in domestic sales. Local manufactures have struggled to take advantage of opportunities created by the expanding domestic chemical market. In addition, the decline in exports suggests that suppliers or manufacturers are finding it difficult to compete successfully internationally.
The South African industry employs almost 150 000 people, but has not been a significant contributor to growth in employment in recent years. This is due to, partly, the fact that higher salaries and wages were offset by limiting employment growth. It must be noted that the profile of employment within the industry has shifted towards skilled and highly skilled employment.
The industry is further supported by the industrial policy (IPAP 2 & 3) which has been aligned to harness state procurement, incentivise capital investment and competitiveness upgrading. This presents potential growth and competitiveness upgrading opportunities for existing enterprises as well as opportunities for attracting green field investment.
KwaZulu-Natal’s chemical sector growth is similar to that at national level, with production output growing at a rate below that of GDP growth. In addition, eThekwini chemicals manufacturing sector has been experiencing slower growth than the provincial and national level. With the absence of output growth, it has reduced the scope for employment growth and in response to competitiveness pressures the sector seems to have reduced lower skilled employment and increased its reliance on more skilled employment.
The KZN chemical environment is not without its challenges. These challenges are attributed to the limited access to industrial chemical space, the limitations on utilities such as effluent treatment and electricity, competitive incentives and environmental challenges.
The benefit, however, of relocating to KZN as an investment destination means that suppliers have access to sea ports, rail, road, abundance of water supply and a skilled labour pool.
Programme Director, our government is committed to working hand in hand with all stakeholders to reduce these challenges and provide a conducive environment that has the ability to retain and expand business activities whilst increasing the demand for sustainable and affordable jobs. In this regard, some of the interventions that have been undertaken by our department are:
- The feasibility study of a chemical industrial park which will provide a platform for businesses to focus on core business activities. It will allow for key strategic advantage such as lower costs and quality of supply.
- The development of an industrial park has the potential to generate direct employment in excess of 3 000 direct jobs and 10 000 indirect jobs.
The potential investment that an industrial park will generate will be between 7 and 10 billion rands. The park will provide SMME incubation facilities that will increase localization and transformation of the industry. The challenges with regard to climate change are a global problem and the chemicals industry is a globalised industry with a very strong production base in the emerging economies.
This requires a careful look at the global effects of policy measures. Locating the chemicals industry in regions with lower emission reduction targets would not only cause unemployment and loss of economic welfare, it would also increase global greenhouse gas emissions and pollution if major production capacity of the industry is moved to areas with a problematic energy mix and low efficiency in energy generation and use.
Adequate measurable action by emerging economies is needed to mitigate climate change. This would contribute to creating a more level playing field. We in KZN should do our utmost to create the conditions for such action. Sectoral agreements on reducing greenhouse gas emissions and making energy savings can be an important way to arrive at the engagement of industries based in emerging economies, in particular to allow them to make a meaningful contribution to reducing emissions globally.
Because of the complexity of sectoral agreements in the chemicals industry, support by all actors to bring these initiatives to a successful conclusion in as many subsectors as possible has to be welcomed. In the near future, taking into account the relationship between research in chemistry within academic institutions and the needs of industry, we can discern certain essential priorities. These are:
- the need for well-trained, imaginative molecule makers
- the need to encourage and deepen our understanding of the properties of matter and of the way in which and the speed at which chemical processes occur
Chemistry will take an increasing role as creator and enabler in materials science and biology, in particular learning from nature how she assembles molecules and how such molecules recognise each other, and learning how to mimic biological processes by simpler chemical reactions.
In the longer term, chemistry is going to create materials with extraordinary properties as yet undreamed of which will dramatically improve communications, healthcare, environmental monitoring and transport. It will stimulate and support innovation in all of the other branches of science and technology.
In leading technology towards the future, it should be remembered that the chemical industry is not involved in a new science, but has to integrate in steadily evolving disciplines like physics and biology. It is interdependent on discoveries in other areas. The chemical industry is in a discipline that has long and deep traditions. It has to be responsive to the challenges of our economy, the provincial environment and KwaZulu-Natal culture and to the influences of scientific discoveries elsewhere in the world.
A sustainable chemical industry is indispensable to address some of the pressing global issues. The industry continually develops innovations, generated by research in chemistry and other sciences, for a wide range of practical applications. At the same time, it has an important responsibility for the move towards a sustainable use of natural resources, reduction of energy demand, pollution, waste and emission of greenhouse gases, and, last but not least, for the safety of chemical products and their application.
With those few words, we wish to congratulate BASF, the market leader in South Africa and the world for making KZN the investment destination of choice. The benefit to the province KZN and Durban in particular will be experienced in the form of:
- Increasing the potential growth of paint and construction industry;
- The introduction of New Technology and best practice processes;
- The increase in labour skills;
- Increasing export potential to the meet the growing demand for Sub Saharan region
- Maintaining reliability and cost efficiency in meeting customer demands.
These benefits above can be further complimented by BASF operating model that ensures higher than legally required environmental process are in place and the impact of carbon emissions and air quality is minimised to reduce the negative impact on the environment.
We welcome BASF to our province and wish you every success going forward.
I thank you!
