Aug 05, 2011
Afrox not receiving bulk volume allocation from refineriesBack
Pretoria|Wadeville|African Oxygen (Afrox) MD Tjaart Kruger|Afrox|Evraz Highveld Steel|Gas|Industrial|Welding|Highveld Plant|Liquefied Petroleum Gas|Products|Steel|Kruger
© Reuse this
“We are concerned about the refineries’ capabilities going forward. We must establish a better supply chain in LPG, which will include importation in the next year or two,” Kruger said at the Afrox interim results presentation for the six months ended June 30.
He added that, although the company has made good progress, cost and price management and plant reliability will remain challenges going forward.
“We have made huge strides in managing our costs but they will remain a focus area going forward in an economy that has labour inflation of over 10%.”
On price management, he added that the company was comfortable with its competence in managing pricing but warned that the fragile economy was not going to save the company – it needed to save itself.
“I do not believe that for the rest of the year, we are going to see huge growth. July is going to be a disaster for most companies in view of the strikes we have had. We have to manage those issues and get through them as an economy, which puts a damper on expectations for the second half of the year,” said Kruger.
Afrox also announced that it had been unsuccessful in the renewal of the Highveld supply agreement, which had led to an impairment of the R152-million assets associated with its Highveld plant.
Evraz Highveld Steel & Vana-dium’s decision not to renew a gas supply contract followed Highveld initiating arbitration against Afrox last year, because it lost a “substantial volume of tons” of steel and vanadium because of gas supply disruptions.
Kruger pointed out that capacity at its Pretoria and Wadeville plants would be increased to fill the gap of supplying gas to the merchant market if the Highveld plant was closed.
“We will have enough products for at least three years. The argon will be procured from other sources. “It is embarrassing for us to have lost that contract. It is not something that we planned, but that is not the end of Afrox,”
He noted that the tonnage business was important from an integration point of view, but relatively small if one looked at the numbers.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines (150 word limit)
Other Video News
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...