Build it, and they'll come
Minister of Trade and Industry Alec Erwin’s recent statement that Canadian aluminum producer Alcan will shortly announce its decision on whether it will build a R2,2-billion aluminum smelter in the Coega Industrial Development Zone (IDZ) in Port Elizabeth, Eastern Cape, failed to inspire confidence.
The smelter is one of three pillars of the project.
The others are a deep-water port and the 12 000ha of land that is virgin territory for a range of industrial development projects.
Smelter construction has been delayed because Pechiney, the original builders, was taken over by Alcan.
Speaking from Montreal, Canada this week, Alcan spokesperson John Singerman was defensive in his insistence that “discussions are continuing and we are reviewing our options”. He noted that Coega had been added to a list of Pechiney’s and Alcan’s planned projects that had to be reviewed globally. He was unconvincing in his assertion that a decision could be expected after May 6.
At the IDZ itself, hope springs eternal. This week Vuyelwa Vika, communications manager for the Coega Development Corporation, told me that the idea of a smelter as an anchor tenant has been abandoned. (Have you ever seen a shopping centre without an anchor tenant?) Now the search was for a “basket of investments” in the metals, automotive, manufacturing and IT sector.
At a media update earlier this year, assembled hacks were told investments to the tune of R8-billion had been lined up. Vika would not estimate the total required investment.
On two helicopter fly-overs a year apart I saw the groundwork done to prepare the area. It is a massive initiative. The deep-water port is planned to start operation in September next year. To link to the country’s interior, Spoornet has committed R500-million for upgrading the line from Port Elizabeth to Johannesburg, Vika says.
Donald Kau, spokesperson for the National Ports Authority, says the “port is being built against the backdrop of increasing shipping volume traffic” and alongside upgrades at Richards Bay and Durban. He says that “our ports do not compete” noting how each port has a speciality and that Coega, apart from being South Africa’s only deep-water ports, will be the “dirty” port of the Eastern Cape.
This means it will take over the Port Elizabeth’s oil-tank farms and manganese scrap, while PE stays “clean”, with a food and container terminal and a waterfront development. The persistent argument has been that Coega is too far from major markets and that the solution lies in expanding the port of Durban. However, Raymond Hartle, a senior manager at Coega, once told me that in world terms the distance from Durban to PE does not matter much, and cited research showing South African port capacity would run out in 2007.
Coega has what it claims is the best mass-housing project in the country. However, its 2 500-resident capacity is vastly underused. Is this a microcosm of the whole ill-starred venture?
My sense is that Coega is built with the gritty determination and the rationale used by Kevin Costner to build a baseball diamond in Field of Dreams: if you build it, they’ll come. It may work for Hollywood — but can it work in the hard-eyed world of international business?