Eastern Cape gets R12-billion injection
The investment signifies the start of a more prosperous era for the battling province, writes DON ROBERTSON
Well over 100 new private sector investment projects were announced at a conference in East London on Friday, which officially launched the government-backed development zone initiatives for the region.
Heading the investment package is a R2.7-billion zinc smelter by Billiton and a R1.5-billion deep-water port at Coega near Port Elizabeth.
The conference, which was opened by President Nelson Mandela, also attracted commitment to large agricultural and tourist projects.
Trade and Industry Minister Alec Erwin said the conference had generated 150 projects with a total value of between R11-billion and R12-billion. They should generate 60 000 jobs initially, and 30 000 to 35 000 jobs on a permanent basis. The project would eventually add R4-billion a year to the province's gross domestic product.
The Eastern Cape development initiative is modelled on the successful Maputo Corridor project, which has already attracted about R20-billion of new investments in Mpumalanga province.
The location of the Billiton zinc smelter has yet to be decided but it will be established either at Coega or near East London. Government backing for the Coega port was one of the conditions for the move to PE.
John Raubenheimer, executive director of Base Metals at Billiton, said the zinc refinery, the seventh largest in the world when completed, would produce 250 000 tons of zinc plus 450 tons of sulphuric acid. Raubenheimer says Billiton will have a 40% stake in the plant, the state-owned Industrial Development Corporation 35.5% and Mitsui Mining and Smelting of Japan 24.5%.
Construction at either of the sites will start during the first quarter next year.
Raubenheimer estimated the zinc plant would generate sales of about R1.4-billion a year when in full production. However, because the zinc concentrate would possibly be imported from the US and Australia, foreign exchange of R700-million would be needed for the purchases.
The project will employ 4 000 people in the construction stage, estimated to take two years, and 600 permanent jobs thereafter. It will add 10% to the Eastern Cape's GDP.
The decision by Erwin to back the Coega harbour and industrial development zone comes after months of deliberation on whether government should be involved in funding what is essentially a private sector project.
"Cabinet has decided that we should proceed with this project and complete all the work to bring the project to fruition," Erwin said.
Cabinet finalisation is expected on December 3 and work on the harbour will begin early in 1998.
Water Affairs and Forestry Minister Kader Asmal also confirmed that state-owned forests would be made available for private sector use.
"We will make the timber that is currently held by the SA Forestry Company and the forestry department available to the private sector. However, the land will not be alienated and will continue to be held by the state."
Asmal said the planting of new forest could double the plantation harvest within 15 years, providing a springboard for renewed industry development. He said a world scale newsprint mill with an investment of about R1-billion would be a feasible investment project.
A second option was a board mill or plywood mill requiring an investment of about R500-million.
On the industrial front, SA Breweries operations director Rob Childs said it was finalising plans for a new R750-million brewery in the area.
Other projects announced included a R40-million Regent Hotel in East London, backed in part by funding from the IDC and Absa, and a R12-million ostrich breeding farm.
A number of new tourism ventures on the Wild Coast were also announced despite a recent government decision not to proceed with a new national road along the coast.
The motor manufacturing and motor parts industry, which traditionally has a strong presence in the Eastern Cape, also chipped in with a number of projects, including a R124-million automobile seats cover factory.
Delta Motor Corporation said it would spend R1-billion on major projects in the next five years.
Volkswagen SA managing director Heinrich Holtmann told the conference that his company would be boosted by new export orders. After an initial export order of 950 Golf GTIs to the UK, it has been asked by the parent company to provide a further 4 500 units. A similar order of 97 Audi A4s to Australia would be followed by a further 500 in 1998.
UK group Rolls-Royce confirmed that it was still contemplating a R100-million plant in East London, but that it was awaiting a final decision by SA Airways to use Rolls-Royce engines for its fleet.