Research and development at the heart of innovation: Sasol - CNBC Africa

Research and development at the heart of innovation: Sasol

Southern Africa

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An oil refinery tower. PHOTO: Getty Images

[DATA SOL:Sasol Limited], an international integrated energy and chemical company based in South Africa, developed the first oil-from-coal refinery in the world, perfecting the technology for making petrol and diesel from coal.

“It started in the early 50s, where the government identified the need to create a bit of independence in South Africa around the fuel industry. With ample coal reserves but very limited oil reserves at the time, they identified a set of technologies which had been used elsewhere in the world,” Sven Godorr, executive manager of research and technology at Sasol, told CNBC Africa.

(READ MORE: Coal investment plans aided by Sasol venture)

Godorr however added that since Sasol’s establishment in 1950, the skills needed to develop and implement technologies for the refinery were largely obtained from Germany and the United States. This resulted in the inability to fully invest in the country’s skills development.

“That [using outside skill] immediately created huge challenges in the country in terms of executing this project, the engineering that was required, and the skills to run such a large and complex project in the country. That was probably the first problem that the company faced,” Godorr explained.

“Shortly afterward, in the early 60s, [Sasol] actually started with their own research and development in order to start developing not only the catalysts, but to develop the processes further, and also to start looking at some of the environmental issues that relate to the process.”

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Research and development for companies such as Sasol is significantly costly, of which it spends spent over a billion rand towards every year. The spending subsequently accounts for 1 per cent of turnover, more than what companies such as Shell would have.

(READ MORE: Sasol sees rise in 2013 full year headline earnings per share)

“The research and development is an ongoing effort. The initial spend as higher as a percentage of turnovers. As the company has matured – and we have a certain amount of technologies going forward – we therefore then focus on some development of new technologies, as well as supporting existing technologies. That percentage had dropped off to what I would regard as a world acceptable range,” Godorr explained. 

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