Eucalyptus Article

With more than 30 years’ experience producing Eucalyptus essential oil, Busby has established itself as the leading supplier in SA.

“Busby Oils is one of the largest producers in Africa,” says managing director Jarrett Pech. “Over the years we have established ourselves as THE LEADING supplier of premium quality EUCALYPTUS oil. We consistently ensure that the eucalyptol (or cineole) content of our rectified oil is always above the 80-85% required by British Pharmacopoeia (BP) specifications.”

Busby’s primary production site is situated near Richmond KZN and it also sources crude eucalyptus oil from other smaller manufacturers in Mpumalanga.

Jarret’s grandfather Richard Lunt pioneered the eucalyptus industry in RSA back in the 1960’s with Peter Pech (Jarrett’s Dad) continuing the business from 1972 until his semi-retirement in 2008. Jarrett who is qualified Chartered Accountant joined the business in 2002 and since then has consolidated the Company’s operations in KZN. The Company’s latest investment is state of the art production and warehousing facilities in Pietermaritzburg.

During the 1980’s Peter Pech, with his training in physics and chemistry, developed the Company’s first Refinery. This was an important milestone for the business in being able to convert crude eucalyptus oil into rectified pharmaceutical grade (BP approved) eucalyptus oil. It is important to note that eucalyptus oil is not generally saleable unless it has been rectified. The barriers to entry into this market are therefore high as one not only has to invest in the crude oil extraction plant but refining capability and capacity is also required.

Busby produces and refines volumes in excess of 100t per year. This type of production requires processing facilities for up to 30 to 40 tons of leaf per day. “We get just over 1% return on wet material coming in – which means we have to process a significant amount of material to make this a viable business.”

Eucalyptus oil is steam distilled from the leaves. Production takes place throughout the year although there are variations in yields and recoveries during winter and summer.

The main oil producing eucalyptus species grown in SA are E.Smithii, E.Dives & E.Australiana.

The Pech’s sell rectified Eucalyptus Oil 80/85, derived from Smithii, which is used mainly for medicinal purposes, and Eucalyptus Dives Oil, which is used mainly for its constituent parts (Phellandrene and Piperitone).

Oil is packaged in new 186kg or 20kg steel drums, with FDA-approved food linings, and sold to pharmaceutical and, flavour & fragrance companies both locally and internationally.

Next to citrus oil, eucalyptus is the second biggest essential oil produced in RSA. It accounts for approximately 5% of the world’s supply – where we compete with the likes of China and Australia.

“Australia has a well developed, sophisticated industry. They mainly produce from E.Polybractea and their production accounts for approximately 8%  of world supply.”

But the main competition comes from China, which dominates the world market for most essential oils, including eucalyptus.

“Eucalyptus oil is a very difficult market to get into – and to stay in – as China keeps prices very low. Chinese Eucalyptus Oil trades between US$5 and US$7.50 PER KG, depending on order sizes.”

China’s ability to sell oil at low prices makes it incredibly difficult for SA producers to find new markets. But the low cineol content of Chinese material (80%) works to the Pech’s advantage.

“Chinese quality can vary considerably and they often have to blend other oils into their eucalyptus oil to ensure that the Cineol content meets the minimum BP requirements. Persuading new customers to change to our high grade eucalyptus oil, which has a Cineol content of about 90%, is not easily achieved but once they convert they are inevitably with us for ‘life’.”

Jarrett says Busby’s key to producing a high quality eucalyptus oil, which is consistent from batch to batch, is keeping a very close watch on QUALITY CONTROL, from distilling crude oil, to refining the crude oil into pharmaceutical grade eucalyptus oil.

Through the harvesting and production cycle there are over 100 employees involved in the business and a large percentage of these are employed by Busby’s Black Empowerment partner, Vincent Kunene. Vincent is the controlling member of Kusasa Harvesting and has been with the business since 2003.

As a result of Busby’s black empowerment initiatives it is a Level 4 Contributor to BBBEE and is therefore 100% complaint, with the requirements of the DTI codes.

South Africa’s eucalyptus oil requirements are fully met by the existing producers and exports are hard to come by as a result of stiff competition from China and Australia. This coupled with the high barriers to entry (in respect of capital set up cost and quality control issues) make it a very difficult industry to enter into and be successful in.