The First Australian Chemicals Summit
Sydney 10,11 August 1998
The First Australian Summit
This two-day conference, initiated by ACTED and managed by AIC Conferences, was attended by Government agency leaders, senior industry managers and consultants. Speakers included Dr Charles Fryer of Tecnon UK, Dr Susan Connor of Marcam Solutions USA, Mr Ross McCann Executive General Manager Projects WMC and Dr Nicole Williams CEO of PACIA.
The speakers provided useful insights into the nature of the chemical industry. Remco Van Santen, in opening with the description of the chemical industry, pointed out how one decision by the Fraser Government in 1978, described as "politically expedient", reshaped the petrochemical sector. In promoting the higher cost Botany complex, it left the petrochemical sector weaker and vulnerable to dumping. The Altona complex would have been larger and more competitive and so he welcomed the proposed Joint Venture of Orica and Kemcor as partly redressing that poor decision of 1978.
Notwithstanding that setback, the industry was signalling a turnaround and exports, once exceeded by imports by a factor of five, had improved to three and he predicted it to rise above one-half of imports within the next decade. He pointed out there was an important role for government to promote the development of the new chemical industry. The Commonwealth should promote an effective national body to oversee the interests of those participating in and contributing to the industry. He said there are skilled people who could become party to promoting new industry and help focus tomorrow’s intellect. He hopes to see the participation of others soon including the Royal Australian Chemical Institute and the Institution of Chemical Engineers of Australia.
Dr Fryer of Tecnon described the marginal competitiveness of the Pilbara Petrochemical Project and later with a fascinating insight on the correlation of profitability and industry capacity utilisation rates. He pointed out how the tussle of the "Engineer" with the "Marketing" managers drove the price in a predictable direction with reductions in demand reflected in reduced capacity utilisation. With that knowledge, relative performance could be assessed.
A more flexible and focussed way to measure industry costs was provided by Dr Connor of Marcam who had developed a new management tool. Insights into the direction and relevance of developments in Asia were given by Terry le Roux and Dr Fahey.
The largest chemical investment made in Australia for the past decade was described by Mr Ross McCann. The ammonium phosphate fertiliser plant in Queensland, two decades in development, was now enabled by the availability of gas, sulfuric acid and market development with its HiFert company and alliances with competing fertiliser companies.
Dr Williams showed the national benefits of a chemical investment in Australia while returns in the chemical industry were still too low to promote new investment. The government should ensure adequate dumping protection, most notably from Asian regions since the "meltdown" of their economies.
Innovation was clearly demonstrated by Peter Hood, General Manager of Coogee Chemicals. As one example, in just six months, his company developed technology to manufacture xanthate chemicals avoiding expensive licensing costs. In keeping with their carefully considered strategic growth, Coogee had grown from a $5m to $100m company in just 12 years. Overseas and interstate investments showed the potential of this company as one of the fastest growing in Australia.
Key elements for success were shown but the key issue was confirmed in the Panel Session that concluded the conference. Going overtime with intense discussion, it confirmed the chemical industry had a poor image with more interest in lower value adding activities. As Remco Van Santen also pointed out in his presentation, DIST, the Commonwealth Government agency responsible for Industry, had changed the letter "T" from "Technology" to "Tourism" as an indication of political priorities promoting low value adding activities (from which there were more votes than from the chemical industry). The Panel resounded that every effort should be afforded to communicate the importance and value of Australia's chemical industry.
The basis for a second conference was clearly signalled. As Remco pointed out, and indicator of success would be its opening by a senior Minister for Industry.
Remco Van Santen