Coega set for boost of billions

South Africa’s Coega industrial development zone (IDZ) and neighbouring deepwater port of Ngqura outside Port Elizabeth in the Eastern Cape have firm funding commitments totalling about R7,4-billion from the public sector for their ongoing development, with the project proceeding apace despite the uncertainty surrounding a key $2,2-billion investment by global aluminium giant Alcan.

At a presentation on Friday, officials of the Coega Development Corporation (CDC) confirmed that everything is on schedule in the construction of the substantial infrastructure required for the port and IDZ, and this despite having no unconditional written commitments of investments from the private sector.

According to CDC planning manager Kelly Byrne, the National Ports Authority has committed R3,2-billion to the development of the port, the CDC (itself a government-owned company) R2-billion rand to the IDZ and power utility Eskom a further R2,2-billion for the upgrade of power supply to the area.

Plans for the port include a container terminal with two berths, bulk-material handling quays with five berths, and a bulk liquid berth, with other options also being investigated.
The port is being designed to handle ships of up to 175 000 deadweight tons, including the extra-large 4 500 TEU cellular container ships.

The western breakwater of the port is almost finished, while the 2,4km-long eastern breakwater is halfway completed.

As for the 11 000ha IDZ, worker housing, administration buildings, a resource and business centre, a sports centre and a multipurpose hall have all been completed since the start of work in 2002, and the construction of an office complex on the site is being accelerated.

Currently, about 4 200 people are employed on the site, with just less than 8 000 job opportunities having been created to date.

CDC business development manager Eugene Heeger said the group is confident of winning Alcan’s commitment to build a $2,2-billion aluminium smelter on the site, taking on the project after it had previously been agreed by French aluminium group Pechiney, prior to that firm’s takeover by Alcan late last year.

Alcan officials visited Coega on January 15, where they received a full briefing, he confirmed, and also met with Trade and Industry Minister Alec Erwin. They had not indicated a timetable for their decision on the project.

Heeger stressed that the aluminium smelter project is not vital to the success of Coega as a whole, as there were many other potential investments, worth a total of about R8-billion, also waiting in the wings. However, he confirmed, none are at as advanced a stage as the Pechiney deal has been.

“Coega can be seen as a series of investment projects, all of which involve large amounts of funds and take years to complete. The smelter is part of a broad-based basket of opportunities and the feasability of Coega will be seen over time. The challenge for us is to go and fill ... land with tenants,” he said.

“Many of the proposed investment projects have reached the MOU [memorandum of understanding] stage, in which companies have committed to investing provided certain conditions are met.”

Two of these include a precision steel strip mill and a container manufacturing facility with a total value of R1,5-billion, proposed by Germany’s Ferrostaal as part of that group’s offset agreement under the arms deal. Another metals manufacturing project being proposed is a specialised steel section rolling mill.

Other projects at the feasibility stage, Heeger said, include proposals for two manganese feroalloy smelters, a steel billet plant (largely for export to the Middle East), ferrochrome and ferronickel projects, an aluminium capacitor project (used in electric cars) and an electrolytic manganese dioxide production facility.

In the automotive arena, the CDC has also been aiming to attract a number of companies to manufacture components for export. The group will soon be talking to General Motors, the new arrival in South Africa, on this topic as well, revealed Heeger.

“The return of General Motors to South Africa will have big implications for Coega, as has the presence of the other automakers in the Port Elizabeth area,” he noted. “We will definitely be talking to them.”

Another large projected currently being negotiated is a gas power generation plant, Heeger said, which would supply both the national electricity grid and tenants in the IDZ.

An equally ambitious project involves bringing high-tech weaving and spinning techniques to South Africa from Italy, where high-end garments could be produced from wool and mohair for export to Western markets—particularly the United States under the duty-free benefits offered by the Africa Growth and Opportunity Act.

According to Heeger, Western Europe is now considered too expensive to manufacture such garments, and the entire value chain could be transported to South Africa, transferring the benefits of hundreds of years of experience in the industry to the local market.

Finally, Heeger revealed that the CDC is bringing forward its plans to develop a new international airport at Coega, primarily for the transport of freight, and aimed at attracting airport-industry-related investments.

“Recent analyses have shown that the processing and transport of time-critical goods from the region is becoming increasingly important,” he explained. “We will begin pushing for development of freight-focused airport and industry infrastructure.”—I-Net Bridge

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