The Richards Bay Industrial Development Zone is seeking investors to invest in the production facility for carbonaceous paste for electrodes used in furnace linings. Carbonaceous electrode paste is used in closed electric smelting furnaces as a continuous self-baking electrode to produce calcium carbide and ferro-alloy. During the furnace operation the electrode paste acts as current conductor. Electrode paste is produced from calcined petroleum coke, calcined anthracite, coal tar pitch and other additional materials.
Electrode paste is used to manufacture carbon electrodes for electric arc furnaces designed for production of various types of ferro-alloys, such as calcium carbide. Carbon-paste electrode can also be made from a mixture of conducting graphite power and a pasting liquid.
These electrodes are simple to make and offer an easily renewable surface for electron exchange. Carbon paste electrodes belong to a special group of heterogeneous electrodes. These electrodes are widely used mainly for volta-metric measurements. Custom and excise data indicates that R12-million per annum worth of carbonaceous pastes for electrodes, furnace linings were imported into KZN with the majority of the product being taken up in Pietermaritzburg.
Market potential
The potential market is traceable from the volumes being imported as well as the volumes of the associated backward and forward connected products. The growth rates for the product in both demand and supply analysis were affected by an economic down turn in 2008. However, the recovery level post-2008 still reflects much lower than the expected growth rates.
Demand analysis: The latest trends and projections for the product demand are much greater from main consumers and within the primary and secondary sectors.
Global demand trends: The global demand for carbonaceous electrode paste furnace linings is from America, Europe and Asia. The biggest users are in Asia, specifically in China.
Local demand trends: The growth in import demand in carbonaceous electrode pastes is from uThungulu District Municipality in KwaZulu-Natal. UThungulu District experienced a 4% annual growth rate in import demand for carbonaceous electrode paste from 2005-2012.
Investment opportunity
An analysis of the market potential of the carbonaceous paste for electrodes revealed that:
– the largest global demand for the product is from Asia, followed by America and Europe respectively.
– the local import demand for this product experienced an annual growth rate of 4% indicating that a robust demand for the product exists locally.
– the global suppliers of carbonaceous pastes are identified from whom a potential entrant into the Richards Bay IDZ may exist. Therefore, the investment opportunity is currently associated with locating a potential manufacturer of carbonaceous electrode pastes into the Richards Bay IDZ.
The market for carbonaceous paste has shown to be robust in its recovery after the economic down turn which occurred in 2008, and given the robust nature of the demand and the large base of end users particularly in the smelting and manufacturing sector, it can be deduced that the business opportunity is potentially viable and rewarding but warrants due diligence and bankable business plan as a pre-requisite.