Unichem are in partnership with Novvi to bring synthetic renewable and biodegradable hydrocarbon production to South Africa.

Suri Chetty

DIRECTOR, BUSINESS DEVELOPMENT, UNICHEM

January 12, 2017

How has Unichem developed its product portfolio over the years?

We have always been involved in specialty chemicals but have changed a lot since we began in 1997. We have, however, never traded anything outside Group III and Group IV base oils – we operate in that 10% of the lube market. Everything else tends to be focused on molecules that are synthetic and progressive, which means driving energy consumption lower, reducing emissions, and extending oil life. We try to surround ourselves with chemistry that is functional, and we focus on the future and its requirements, such as being environmentally acceptable. That is where our DNA is centered.

A large focus for us at the moment is the development of a range of synthetic renewable and biodegradable hydrocarbons in partnership with Novvi LLC. Their chemistry has revolutionized traditional synthetic lubricant value propositions.

Could you elaborate on some of the environmental benefits of using a renewable feedstock, and if there is any trade-off with performance?

Dealing with synthetic hydrocarbon chemistry by definition speaks to performance, and that is the core tenant of the Novvi value proposition of “no compromise”. The moto stems from the biotechnology platform that enables a pure hydrocarbon feedstock, generated from plant sugars, in which the environmental benefits of the technology are also rooted. This translates into an incredibly potent technology that enables our industry to meet the growing performance and environmental challenges of our times – addressing emission reduction, energy savings and extended oil intervals, as well as biodegradability, renewability, and low ecotoxicity. All this without compromising the protection of assets.

Industries such as the mining sector, in which asset management is fundamental to operational economics, will be the beneficiaries of innovation based on this technology. We already see major OEM’s and lube oil marketers driving change with these molecules, pushing the boundaries of performance, whilst operating in environmentally sensitive areas such as marine, wetlands and forests, where operational failures can lead to unprecedented environmental impacts and rehabilitation costs.

What are some of your value propositions and the expected community advantages?

We started to see a ramp up in interest when we began to showcase how this technology could be localized economically, what the impact on the community would be, and the job creation opportunities. Initial feasibility studies around the farming of sweet sorghum, currently being conducted by experts in agricultural economics, project the creation of more than 5000 jobs through farming the acreage of land required to integrate into a 50KT base oil plant. A separate but related biodiesel plant being proposed for the region would easily push that number of jobs over the 10,000 mark in rural Kwa Zulu Natal and Eastern Cape – impoverished parts of our country with no current prospects of being connected to the formal economy. The full impact on communities also extends to infrastructure development, particularly the opportunity to provide electricity to the region through green, renewable energy.

Equally as important, it gives Africa an opportunity to export a high performance, high value base oil. Many analysts are predicting a shortage of GPIII+/GPIV base oils by 2020. This technology fits right into that segment. With major oil companies ramping up GPII production in the next 12 to 18 months, the few remaining GPI base oil plants on the continent will find it increasingly difficult to remain competitive. The economics of global base oil production strongly favors refineries that are backwardly integrated into oil and gas exploration. The exciting thing about South Africa is that we have this incredible IP around synthetic chemistry that hails from the Sasol/Petro SA heritage – this is a huge bonus not only in being able to easily set up a synthetic base oil plant, but also in bringing our own IP to the table and really starting to drive innovation for next generation base oil technology.

How do you intend to encourage widespread use, particularly in a price-conscious market?

There is already a global awareness and strong demand for these base oils. In addition, progressive environmental legislation favoring use of Environmentally Acceptable Lubricants (EAL’s) and renewable chemistries, has successfully created a sustainable renewable chemicals industry worth over US$300 billion, and, more importantly, has created four million jobs in rural America. Legislation such as the USDA’s Bio-preferred program, USEPA’s – VGP, and Ecolabel in Europe, has further enabled technology and innovation platforms and brought all the accompanying environmental benefits. This model can be transferred straight to Africa, enabling the continent to participate in the globally burgeoning renewable chemicals markets, creating opportunity for high quality jobs in areas such as biotechnology, synthetic chemistry and engineering. Equally, it is an opportunity for the continent to become innovative and create its own intellectual property to solve Africa’s problems, whilst creating sustainable jobs in rural areas.

What are your key objectives and timeline for the project?

There is a very advanced feasibility study underway to establish the economics of sugar juice feedstock in South Africa; to get to phase two the sugar economics need to be favourable and feedstock supply sustainable. One of the key reasons Novvi considers South Africa a viable location for their next base oil plant is that their base oil sold almost immediately in the region and attracted a wide range of interest. Driving this interest are a number of initiatives by government through state owned enterprises such as Transnet and Eskom to introduce renewable and biodegradable EAL’s into their operations. These are good signs, but ultimately it will be base oil sales into the region that will bring Novvi’s next base oil plant to our shores, and that is where Unichem’s objectives are firmly focused.

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