South Africa: Glencore refinery invests in cleaner fuels

Astron Energy, a subsidiary of global commodities giant Glencore, announced on Wednesday an investment of up to six billion rand (around 328 million dollars) to modernise its refinery near Cape Town and comply with South Africa's new clean fuel standards by July 2027. This commitment comes at a time when South Africa is seeking to strengthen its energy security while reducing polluting emissions.

Astron Energy's 100,000-barrel-per-day crude oil refinery has already begun foundation work to install a petrol hydrotreating system. This process will produce petrol that complies with Euro 5 standards, which require sulphur levels to be limited to 10 parts per million (ppm). "We will supply compliant fuels by the date we are asked to," assured Astron Energy's Managing Director, Thabiet Booley, during a tour of the plant by legislators on Wednesday.

This investment is part of South Africa's Clean Fuels II regulation, initially scheduled for 2017 but postponed until 1 July 2027. This standard aims to drastically reduce the sulphur content of petrol and diesel, bringing the country into line with stricter environmental standards.

Astron Energy is one of only two crude oil refineries still operating in South Africa, a country whose refining capacity has halved in recent years to around 358,000 barrels per day. This reduction follows the closure or mothballing of Durban's two major refineries, including the 180,000-barrel-per-day Sapref refinery. Closed in 2022, the Sapref refinery was severely damaged by floods before being bought by the South African government, which is seeking to revive local production.

Today, Africa's most industrialised economy relies on imports for around 75% of its liquid fuel needs, estimated at more than 19 billion litres in 2023 according to the Federation of South African Fuel Industries (FIASA). In addition, the Strategic Fuel Fund, the state agency responsible for strategic reserves, has indicated that current stocks cover less than 21 days in the event of a major crisis, exposing the country to supply risks.

Astron Energy's investment and the State's acquisition of Sapref are evidence of efforts to reverse this trend. By modernising its infrastructure, Astron Energy intends not only to meet environmental requirements, but also to help stabilise fuel supplies in a country where demand remains strong.

With an exchange rate of $1 for 18.2682 rand, this 6 billion rand investment represents a significant step forward for the South African energy industry, which is facing both ecological and logistical challenges. It remains to be seen whether these initiatives will be enough to reduce dependence on imports and secure the country's reserves in the long term.