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An Overview of the Role of Producer Services in the Petrochemicals Industry in South Africa: A Case Study of Sasol


  • James Hodge

    () (Genesis Consulting (James Hodge))


The petrochemicals industry in South Africa has grown significantly over the past two decades, largely as a result of the expansion and diversification of the premier petrochemical producer - Sasol. This working paper examines the role that producer services have played in this growth. It finds that due to Sasol's unique processes (the use of coal instead of crude as a primary input) and continued pressure to cut costs (from the collapse of the oil price to reduced protection), it has developed significant in-house expertise in technology and engineering services. It has also actively promoted an efficient supplier network for components of these services through a shift to greater outsourcing. These services have then played a key role in enabling Sasol to both reduce costs significantly and diversify into new product streams, allowing growth in the sector. It does find that although independent suppliers have been developed, most of the spillovers from such a process have been internalised within Sasol, enabling the company to grow faster than the industry. Also, the growing liberalisation of trade in South Africa has had an effect on the organisation and performance of these producer services. There is now greater global outsourcing coupled with trade in Sasol's own services through international acquisitions and joint ventures.

Suggested Citation

  • James Hodge, 2000. "An Overview of the Role of Producer Services in the Petrochemicals Industry in South Africa: A Case Study of Sasol," Working Papers 00036, University of Cape Town, Development Policy Research Unit.
  • Handle: RePEc:ctw:wpaper:00036

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    References listed on IDEAS

    1. Gahan, P. & Robinson, J.A., 1998. "What Model for the South African Labour Market? Lessons from the OECD and LDC's," Papers 119, The University of New South Wales. Department of Industrial Relations..
    2. Lustig, N. & Mcleod, D., 1996. "Minimum Wages and Poverty in Developing Countries : Some Empirical Evidence," Papers 125, Brookings Institution - Working Papers.
    3. Murray Leibbrandt & Haroon Bhorat, 1999. "Correlates of Vulnerability in the South African Labour Market," Working Papers 99027, University of Cape Town, Development Policy Research Unit.
    Full references (including those not matched with items on IDEAS)

    More about this item


    South Africa: Sasol; petrochemicals industry; Producer Services;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics


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