Afurther 160 line items have been added to piping distributor and services provider Rare’s supply contract with petrochemicals company Sasol.

The contract for the supply of all the group’s carbon steel pipes, fittings and flanges at its Sasolburg and Secunda plants has been extended for another year, and Rare believes that further plant expansions at Sasol will likely broaden the scope of the contract.
Rare CEO Wally van Coller explains that the company was initially awarded the five-year contract in July 2008 and it was extended in July after retendering.

The contract involves supplying products to Sasol Group Services, Sasol Group Shared Services, Sasol Synfuels, Sasol Mining, Sasol Technology, Sasol Chemical Industries, Sasol Infrachem Division, Sasol Nitro Division, Sasol Polymers Division, Sasol Gas and National Petroleum Refineries of South Africa, he explains.

“In 2000, Rare was awarded its first Sasol supply contract. Since then, Rare has tendered for and won the Sasol contract three times, securing Sasol as a significant partner over the years,” says Van Coller.

“Rare operates a dedicated office in Midvaal to meet Sasol’s requirements, and has another dedicated Sasol supply office at Evander, close to Sasol’s main plant, in Secunda,” he notes.

Van Coller adds that Sasol orders are placed directly on Rare’s information system by Sasol’s information system, after which the products are processed, dispatched and delivered to the relevant site.

“This has enabled Rare to build a knowledge base of Sasol’s main supply requirements over the last 13 years,” she says, adding that the company predominantly supplies Sasol with carbon steel piping, flanges and fittings.

“Rare keeps an inventory of about 25 000 line items to ensure a world-class service to any Sasol plant. If there is a plant breakdown or planned maintenance shutdown, for example, Rare offers Sasol a 24-hour supply service. We also have people on standby to ensure stock that is urgently required will be delivered immediately,” states Van Coller.

He says the company has developed a partnership with Sasol in which Rare is regarded as a solutions-based supplier and not only a commodities supplier.

“The opportunity exists for Rare to roll out similar supply agreements with the other principal oil refineries in South Africa and with major parastatal companies involved in the fuel supply and conveyance industry,” he highlights.

Van Coller adds that, owing to the wide petrochemical stock range, the logistics model and the close working business relationship it has with clients, Rare is well positioned to be awarded similar supply contracts. The relevance and efficiencies that are gained are universally applicable.

“Sasol has stringent quality and trace- ability requirements and Rare’s proven record with the Sasol group has stood the company in good stead with customers in similar and other industries.

“There are also large pipeline projects in the mining sector in Southern Africa, with Rare completing numerous pipeline installations for large mining groups and being represented in Zambia and Ghana,” he notes.

Industry

The carbon piping industry is competitive, cyclical and depends on plant expansions and maintenance, states Van Coller.

“In the past few years, companies have had to restructure and rethink their position to ensure continued operation. Competition is tough and an anchor contract, such as the one Rare has with Sasol, has proven valuable and has given the company credibility and longevity in the industry,” he notes.

Low-cost imports do not always conform to a customer’s stringent quality requirements, which could lead to costly and dangerous consequences if these items are installed at plants.

“Rare and Sasol have also audited international mills to ensure they can be added as approved suppliers of Sasol’s plants,” Van Coller states.

He notes that there have not been many technological advances in the pipes industry and products have not been subjected to a great deal of development, adding that the major differentiator between competitors is superior customer responsiveness and that continuous improvement in service and quality will ensure success.

However, Van Coller states that the increase in the oil price may offer growth prospects for the petrochemicals industry, while international migration to cleaner fuels necessitates plant upgrades, which will bode well for the pipes industry.