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Cape Town - In recent years bitumen sales have risen sharply in response to greater demand, owing to the large infrastructure projects that the state has undertaken.
In 2008 bitumen sales rose 20.5% to 383 031 tons. Sales growth from 2005 to 2007 was 6%, 17.6% and 3.1% respectively. This followed a 4.4% slump in 2004, as reported by the Southern African Bitumen Association (Sabita).
Sabita is an industry body that represents bitumen suppliers and consumers, as well as consulting engineers.
Bitumen, one of the ingredients going into building a tar road, is in the news after the Competition Commission referred an investigation into price-fixing in the bitumen industry to the Competition Tribunal.
The Commission recommends a fine of 10% on the turnover of companies it believes guilty of price-fixing.
The companies concerned are Chevron, Engen, Shell and Total. Masana Petroleum has pleaded guilty and paid a fine of R13m. Sasol and Tosas applied for indemnity when at the beginning of last year they came clean to the commission.
This followed a comprehensive internal investigation by Sasol to expose all possible violations of competition legislation.
The oil company said its involvement in the alleged bitumen price-fixing had merely been of a technical nature and not secretive. It had been precisely at the request of bitumen consumers, such as road-building contractors.
Professor Don Ross, a guest lecturer at the University of Cape Town's economics department, who was doing research for Sabita, says in a report that bitumen represents a relatively small portion of total road-building costs.
At least 75% of the costs of building and maintaining a tar road is made up of wages, transport, machinery, measuring and paint.
Ross says 90% of the bitumen produced in South Africa is used in state-funded road-construction projects. In 2007 Sabita assured government that the refineries had sufficient capacity to meet the expected increased demand owing to the extensive infrastructure programmes in preparation for the 2010 World Cup soccer tournament.
Bitumen stocks can be increased by using more of the crude oil residue from the refining process. A certain percentage of this residue is used as heavy bunker fuel oil, among other things. Ross says bitumen production in South Africa has been stable for the past 10 years, despite severe fluctuations in the price of crude.
- Sake24.com
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