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Operational overview |
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Hosaf FibresPeter White Managing director; BSc (Hons) Textile Technology Hoechst South Africa was founded in 1957. Daun & Cie acquired the polyester division in 2001 when Hoechst Germany took a decision to disinvest in anything that did not constitute its core product of pharmaceuticals. The company operates two manufacturing sites in Durban and Cape Town and has just invested in a recycling plant in Johannesburg. The company's products are PET bottle resin used for packaging of bottled water and soft drinks, polyester staple fibre used in textiles and speciality fibres such as hollow fibres used in duvets and pillows. The company has the only continuous polymerisation plant in sub-Saharan Africa, utilising the most modern technology, situated in Durban. Replacement cost of this plant is in excess of R800 million. During 2004 the industry experienced difficult trading conditions as a result of large capacity increases leading to an oversupply of polyester and a shortage of raw materials. Hosaf was able to withstand this threat for two reasons. Firstly, it has a guarantee of raw material supply by contract and has maintained a good relationship with its suppliers. Secondly, the value of the plant had been substantially impaired prior to the acquisition by Daun & Cie, before the company was acquired by KAP International for R57 million on 1 July 2004. This means that Hosaf does not have the high depreciation and interest charges of its competitors. Capacity increases were done in 2004, which will improve total capacity from 50 000 tons to 74 000 tons per annum and significantly reduce fixed costs per ton of production. The commissioning of the recycling plant in late 2004 will have a significant effect on raw material cost in future years. World demand for PET resin is expected to continue to grow by 7% per annum. The reason for this growth is because PET offers substantial benefits for packaging. It is cost effective, environmentally friendly and easily recycled. Hosaf Fibres recognises the need for the recycling of polyester bottles and has played an active role in an industry-promoted initiative. A non-profit company will be formed early in 2005 to implement a levy system to increase the collection of used PET bottles. During the second quarter of 2005, plant and machinery will be installed to increase the PET bottle resin capacity and add flexibility to switch between textile fibres and resin, as market needs change. Discussions are in progress to conclude a technology agreement with a major polyester resin producer to give access to recipes for niche bottle resin products. With the plans that have been implemented, Hosaf Fibres is budgeted to improve on the financial performance of 2004.
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