Botash fights its way out of slump

MBONGENI MGUNI
Staff Writer | Friday June 14, 2013 00:00

Last year, the Sowa Town-based producer lost two key supply contracts in the DRC, while cheaper imports from US giants squeezed its happy hunting grounds in South Africa. Despite market loss, Botash kept production up to maintain unit costs and was subsequently forced to rent warehouses and export to far off markets such as India.This week, executives told BusinessWeek that the last financial year, which ended on August 31, had been characterised by high pressure on sales and production.

'Last year, we were below budget (sales targets) and were forced to export 'deep sea,' the mine's marketing manager Tumelo Molefhe told BusinessWeek.'Demand used to outstrip supply, but the impact of the global recession, combined with production boosts from maintenance and plant uptime reversed this last year. The deep sea exports were not profitable but they allowed us to keep running the plant. We ended up renting warehouses before sending product to offshore markets and this is something that we did not know we would end up having to do.'

This financial year however, sales are going according to set objectives in South Africa, while plans were also underway to 'de-bottleneck' the soda ash plant in order to push production higher for the targeted African markets.De-bottlenecking, which involves removing all process impediments, is expected to boost plant capacity from 300,000 tonnes to 320,000 tonnes in the next 18 months.'We are looking at Zambia, Zimbabwe, DRC, Malawi and Namibia,' Molefhe said.

'We are also working on product diversification where we will offer a basket of commodities to these markets.Besides soda ash, we could go there and find out what chemicals they need, find suppliers and become agents so we have a full product offer.'Botash business development and projects manager Othusitse Seokamo said after the de-bottlenecking, the northern miner would conduct a study on expanding capacity to 450,000 tonnes per annum. At this capacity, the plant will be approximately equal to South Africa's annual soda ash demand.

'We are still at conceptual stage and have not developed further than that,' he said.'After the de-bottlenecking, we will know more about the requirements for future expansion. We have to do the groundwork for research and technology before we say we are expanding.'Seokamo said demand continued to outstrip supply in Africa, with estimates that the continent will require 22 million tonnes of soda ash in eight years' time. Botash officials say reaching into Africa has challenges such as lack of infrastructure and in some cases volatile politics. In addition, customers in these markets tend to be fickle and in some instances flip towards soda ash alternatives as happened in the case of the two lost DRC contracts.Previously, Botash managing director, Montwedi Mphathi said the African market was also fraught with visa technicalities that complicated the back and forth potential customers need to make before they accept Botash's product