Blue Chip Lubricants (BCL) has completed the construction of a new blending plant in Johannesburg, which it hopes will help the company to secure a fifth of the lubricants market in South Africa.
The company will be aided in this ambition by the sale of 51% of the business to black-owned firm Lutramart Oils.
BCL secured an agreement to blend and distribute lubricants from Q8Oils in 2015.
Following the agreement, it secured funding from the Industrial Development Corporation (IDC) to construct a new blending facility and testing laboratory at Kya Sands, in Johannesburg.
This plant came on stream earlier this year.
BCL does not want to quantify the funding it received from the IDC.
Q8Oils is part of the Kuwait Petroleum Corporation, one of the world’s largest oil companies. With 120 years of known reserves and crude oil production levels of 2.9-million barrels a day, it is ranked the seventh largest oil producer in the world.
BCL MD Gary Marais says the Kya Sands plant currently produces around 4-million litres of blended lubricants a month.
The aim, notes BCL director Kathleen Marais, is to secure a 20% share of the market – currently at 22-million litres a month – in the next three to five years.
BCL will also look at expanding into the production of greases.
Gary Marais says BCL would hope to secure this increased market share by entering major sectors where the company currently does not have a presence, such as the mining and automotive industries.
“The successful conclusion of our [empowerment] transaction effectively makes us the only majority black-owned blending facility in South Africa to blend and distribute a global brand, as well as complying fully with the government’s empowerment, employment, and equity objectives,” adds Kathleen Marais.
“With lubricants constituting the major expense for equipment-intensive industries such as mining and engineering, the fact that an international brand is now being blended locally on a large scale, in accordance with exacting international quality standards, as well as all local black economic empowerment criteria, is of immense benefit for local companies,” says Lutramart director Sandile Koza.
“We are very excited, as we now have the opportunity to rationalise the entire value chain in the petrochemical industry, from blending and manufacture through to proactive maintenance and leveraging the lowest total cost of ownership for our customers. Not only is Blue Chip Lubricants now positioned strategically as a leading lubricant supplier, it has set a benchmark for the proactive transformation of the industry.”
Q8Oils regional sales manager Abdul Homoud says his company views Africa as the last “global growth frontier”, with South Africa providing access to 14 countries in the Southern African Development Community.