In February BASF announced it is expanding its business in industrial coatings in the growth market of Africa. The company said in a release it has, since October 2013, supplied coil coatings to Roofings Rolling Mills (RRM), which is part of the Roofings Group, East Africa’s largest steel producer.
Coatings World recently had the opportunity to interview Nils Lessmann, BASF business manager precoatings EMEA region on BASF’s expansion strategy in Africa and the opportunities available in this growing coatings market.
Coatings World: Please tell us briefly about the new BASF venture in Uganda.
Nils Lessman: Since October 2013, we have supplied coil coatings to Roofings Rolling Mills (RRM) based on an in-plant small production unit located in Uganda. This unit is served from Vanderbijlpark site in South Africa. As the leading supplier for industrial coatings in the region, the Vanderbijlpark site in South Africa has specialized in coil coatings.
CW: How will the entry of BASF into the Ugandan market impact the company’s industrial coatings strategy in Africa?
Lessman: In general, BASF’s Coatings division is shifting its focus even more on emerging and attractive markets like Russia. Africa is important not only for the BASF strategy, but in particular for the growth plans of our industrial coatings unit. The rise of African markets is a result of population growth, urbanization and increased consumer spending. We want to tap into this market as it offers new long-term business potential. With RRM, we have succeeded in gaining an important partner, which will allow us to continue to grow in the key region Africa.
CW: Some coatings manufacturers have in recent years been cautious on their expansion plans especially involving emerging markets because of unpredictable political stability and, therefore, economic performance. How is the current African economic situation likely to influence the coatings market in the region?
Lessman: African countries are among the fastest growing emerging markets worldwide. Africa offers BASF potential for growth in a large number of promising markets such as the coatings market.
CW: BASF is a global company with a foothold in many developed coatings markets such as North America, Asia and Europe. How do you compare Africa’s coatings market with other regions?
Lessman: Africa is a continent of contrasts. On the one hand, it has valuable natural resources and a great number of potential customers. On the other hand, certain regions face severe challenges like an insufficiently developed infrastructure, malnutrition and polluted water. The continent is also very diverse in terms of culture, religion, language and economic growth. More than one billion people live here in 55 countries.
The industrial coatings division of BASF has been active in Africa for more than 20 years. Given the heterogeneity of the continent, our key to success in the region is to always focus on specific countries and markets. Rapidly expanding industries such as the construction industry offer significant opportunities for BASF.
CW: What other African countries is BASF Coatings operating in and are there plans to expand the current operations elsewhere in the region apart from Uganda?
Lessman: BASF wants to expand its business in growth markets. For example, BASF Coatings launched R-M, its premium automotive refinish paint brand, in Morocco last year. In South Africa, BASF is the leading supplier of coil coatings. In other African countries and industries, we must first explore and investigate the market potential.
CW: Can you also tell us briefly which coatings products/technology is BASF Coatings targeting to increase in Africa and why?
Lessman: This depends on the business, customers and country. In particular, we see potential for our industrial coatings segment targeting the construction industry. Robust products with high quality and excellent service are crucial both for our customers in Africa and for our business success.
BASF’s Foray into Uganda.
The investment in Group Roofing’s subsidiary Roofings Rolling Mills (RRM) by BASF is its Coatings Division, which “develops, produces and markets a high-quality range of innovative automotive OEM coatings, automotive refinishes and industrial coatings as well as decorative paints.”
RRM operations in Uganda are located at Namanve Industrial Park, where it operates three production lines with an annual capacity of 240,000 metric tonnes according to a statement by BASF.
“The African market does play a key role not only in the BASF strategy, but especially in the future growth plans of the Industrial Coatings Solutions unit of BASF,” said Nils Lessmann, BASF Business Manager Precoatings EMEA.
Coil coatings are used to coat aluminum and steel coils before they are processed further into an array of different products in the construction, household appliance and automotive industries.
These products range from refrigerators to building façades. Since the panels are stamped, rolled and joined, the coating has to be extremely flexible and elastic so that it does not flake off. At the same time, however, it has to meet the requirements for scratch resistance.
RRM has invested $125 million in the site in Uganda, including for the coil coating line. The company also acquired technical support from its Japanese partner Yodogawa Steel Works and uses its technologies. Yodogawa Steel Works has produced coated coils for 75 years. –Additional reporting by BASF