CHEM Energy SA has some significant hydrogen fuel cell projects in the pipeline for the telecommunications industry that should see its Dube TradePort-based factory gear up production, grounded by the outbreak of COVID-19 in early 2020.
That’s according to Director Hal Koyama, who said the factory, completed as the pandemic locked down the country, produced only what was needed to support its cellular network client, but “things seem to be settling down this year and telecommunications companies are assessing their capital budgets and requirements”.
The company, a subsidiary of the publicly traded Taiwanese heavy equipment manufacturer, CHEM Corporation, is focused on producing the latest generation of fuel cell products, the G5, for backup and continuous (off -grid) telecom power solutions.
As a hydrogen infrastructure provider as well as a hydrogen fuel cell power generation provider, CHEM sees an enormous opportunity to start a hydrogen economy in South Africa, particularly as the country has a national green energy programme.
The company’s core business is supplying cellular telecommunication stations with power especially in areas of weak power supply or no-grid. It has deployed over 3,000 systems and clocked up millions of operating hours to support telecommunications networks globally.
Koyama said that CHEM’s R170-million factory at Dube TradePort is a cornerstone to build up a green hydrogen ecosystem, bringing all parts of the hydrogen economy together to create a virtuous cycle of growth in technology and products.
“Once you have hydrogen power generation, it can be expanded to bring innovative technology companies into South Africa to support that growth. The opportunity is now for South Africa to start that growth cycle.”
Koyama said the enormous potential for fuel cell technology to support power generation within South Africa and the continent was a key factor in CHEM’s decision to bring its technology to the country, set up production and establish a supply chain.
“Power is a challenge throughout the continent. We see opportunity in SA to support the network and other sectors, but we see a ten times greater opportunity outside SA.”
Angelin Maharaj, President CHEM Energy said Dube TradePort was selected as the ideal location for the production facility. It has easy access to an international airport, the Durban harbour, a facility that met CHEM’s needs was available, the economic trade incentives of the SEZ were attractive and the Dube TradePort team’s receptiveness and responsiveness were among the deciding factors in choosing a site. Moreover, the support and engagement within various levels of government and industry to help sustain CHEM’s investment has also been another proof point for them.
While parts and subassemblies are imported CHEM Energy has started its localisation programme.
“We have worked with several suppliers of printed circuit board assemblies, pressurised tanks, wire harnesses and other smaller parts. The selection process has been rigorous. It has taken time; in instances as long as two years and a lot of investment to get the selected suppliers approved. To date, we have achieved 20% content localisation with our target being 80% at full capacity,” Maharaj said.
“Through the selection process, we have been able to develop these suppliers by changing the way in which they manufacture their product and helped get them certified to global standards. Some suppliers have made their own investments in machinery, processes, and skills to enable them to produce more cost effectively and at the required quality.”
The company has also leveraged the services supplied by the SEZ to support local, shorten their supply chain, reduce cost, and ensure that quality and reliability of supply are always intact.
These services include AirRoad logistics and shipping, Dube iConnect cloud-based infrastructure and other industries established within Dube TradePort.
“We are quite pleased with the quality and the cost of components that we are sourcing,” said Maharaj adding that once localisation starts, development and a multiplying effect starts to take place in the supply chain.
For instance, the wire harnesses supply leverages the automotive industry, the sheet metal enclosures produced in Durban is sourced from an aluminium producer in Pietermaritzburg and the methanol in the fuel cell is produced by Sasol. Furthermore, various PGM components support the local mining industry and mining jobs.