Northern Cape Business 2013-14
Northern Cape Business 2013/14 is the fifth edition of this highly successful publication that has since its launch in 2009 established itself as the premier business and investment guide to the Northern Cape Province. Officially endorsed by the Office of the Premier of the Northern Cape, Northern Cape Business is unique as a business journal that focuses exclusively on the Northern Cape and that also carries full Audit Bureau of Circulations (ABC) certification, meaning its print run and circulation of 15 000 copies is independently audited and verified.
northern cape business the guide to business and investment in the northern cape join us online 2013/14 www.northerncapebusiness.co.za | www.frontiermarketnetwork.com Office of the Premier Transnet Engineering New name builds on established track record Transnet Rail Engineering has changed its name to Transnet Engineering to better reflect the increased scope of its activities. Previously a division that focused on engineering and maintenance work relating to rail transport, the organisation is now equipped to also handle the assembly and maintenance of ports equipment following the expansion of the divisionâ€™s businesses. Transnet Engineering currently has nine businesses. The future of Transnet Engineering is built on its proud history of servicing the engineering needs of the transport industry both within and beyond the borders of South Africa. www.transnet.net Coach Business Locomotive Business Wheels Business Ports Business Rotating Machines Business Foundry Business Wagons Business Rolling Stock Business Auxiliary Business contents contents Northern Cape Business 2013/14 Edition page 12 Introduction Foreword9 A unique guide to business, investment and tourism in the Northern Cape. The Northern Cape is offering the renewable energy sector a home. Acting Premier Grizelda Cjiekella is upbeat about the economic potential of the Northern Cape. 10 Special features Regional overview of Northern Cape Province Mining, tourism and agriculture have long since been staples of the Northern Cape economy, but astronomy and adventure sports are making waves. 12 Northern CapeDepartment of Economic Development and Tourism The Northern Cape Department of Economic Development and Tourism profiles investment opportunities in the Northern Cape Province. 18 Square Kilometre Array telescope The worldâ€™s greatest radio-astronomy project is heading for a Karoo home. 30 page 30 Northern Cape Business 2013/14 2 Business Banking We donâ€™t only give you the tools, we show you where and how to use them. We help you partner with the right people at the right time to give your business the edge, through world-class technology, networking opportunities and other innovative business tools. So when you design a business plan, know that weâ€™re with you the whole way. For more information, contact Enterprise Business on 0860 04 03 02 or visit www.absa.co.za Absa Bank Limited Reg No 1986/004794/06. Authorised Financial Services Provider. Registered Credit Provider. Reg No NCRCP7. TJDR 54246 contents Space to roam Game ranching in the Northern Cape has become increasingly popular and lucrative. 32 Commodities and logistics Major rail projects are redefining mining prospects in the Northern Cape. 34 Rare-earth elements Rare earths are bringing a sparkle to the mining sector. 36 Bloodhound SuperSonic Car Project The Northern Cape is preparing for a bid to set a new world land-speed record. 38 Overview of the South African economy Key facts and figures on South Africaâ€™s demographics, economy, trade and investment. 42 Destination Northern Cape Tourism48 Adventure and spectacular desert landscapes are at the heart of the tourist offering of the Northern Cape. A feast for the senses The Partnerships Unit of the Department of Economic Development and Tourism profiles award-winning accommodation and six exciting routes for visitors to explore. 52 Economic sectors Agriculture78 Grapes, sheep and goats are big earners in the Northern Cape. Aquaculture and mariculture Fish can contribute to improved food security. 83 Wine and grapes Orange River wines are growing in popularity in China. 88 Mining90 The Northern Cape has vast reserves of manganese and iron ore. page 90 Northern Cape Business 2013/14 4 contents Renewable energy International solar companies are beating a path to the sunny Northern Cape. 98 Engineering101 New rail plans will boost De Aar. Transport104 Vast distances make transport links doubly important in the Northern Cape. Banking and financial services Agricultural credit is important to the Northern Cape economy. 106 Development finance and SMME support Product development is a priority of the provincial government. 115 page 98 Education120 The Northern Cape will have its own university in the near future. Government South African National Government An overview of South Africaâ€™s national government departments. 124 Northern Cape Provincial Government A guide to the Northern Capeâ€™s provincial government departments. 130 Northern Cape Local Government A guide to the district and local municipalities in the Northern Cape. 132 References Sector contents 76 Index140 Maps Northern Cape locator map Northern Cape regional map Northern Cape municipalities Northern Cape Business 2013/14 16 17 134 6 credits Production Advertising Administration Publisher Chris Whales Sales director Mark Leven-Marcon Managing director Clive During Editor Katie Reynolds Key accounts manager Loudon Cito Financial controller Brett Watson Researcher and writer John Young Advertising representatives Debbie Bender-Overmeyer, Nathalie Horswell, Jeremy Petersen, Christoff Scholtz Administration and accounts Charlene Steynberg, Natalie Koopman Creative director Ian Jamieson DTP operator Colin Carter Distribution Lizé Fourie Sales support Nadia Dicks Printing CTP Production assistant Anjé Robberts Distribution Northern Cape Business is distributed internationally on outgoing and incoming trade missions, through the regional trade and investment agency; to 115 foreign offices in South Africa’s main trading partners around the world; at top events and trade fairs; through the offices of foreign representatives in South Africa; as well as nationally and regionally via chambers of commerce, tourism offices, trade and investment agencies, provincial government departments, municipalities, companies, major stores and business-class lounges. Member of the Audit Bureau of Circulations Published by Global Africa Network (Pty) Ltd Company Registration No: 2004/004982/07 Directors: Clive During, Chris Whales, Richard Pembroke Physical address: 3rd Floor, Sunclare Building, 21 Dreyer Street, Claremont 7700, Cape Town, South Africa. Postal address: PO Box 44573, Claremont 7735, South Africa Tel: +27 21 657 6200 | Fax: +27 21 674 6943 | Email: email@example.com | Website: www.gan.co.za Copyright: Northern Cape Business is an independent publication published by Global Africa Network (Pty) Ltd. Full copyright to the publication vests with Global Africa Network (Pty) Ltd. No part of the publication may be reproduced in any form without the written permission of Global Africa Network (Pty) Ltd. Disclaimer: While the publisher, Global Africa Network (Pty) Ltd, has used all reasonable efforts to ensure that the information contained in Northern Cape Business is accurate and up-to-date, the publishers make no representations as to the accuracy, quality, timeliness, or completeness of the information. Global Africa Network will not accept responsibility for any loss or damage suffered as a result of the use of or any reliance placed on such information. Photo credits: Flickr, Anglo American, Orange River Wine Cellars, Kxo’xo Leather Designs, Geoff Brown of Planet KB, Green Kalahari River Marathon, Stefan Marjoram, Shaun Loureiro-Railways Africa and SA Hot Rods. Cover photographs: (vineyard, telescope, quiver tree) Veer, (bucket wheel reclaimer) African Rainbow minerals / Geoff Brown, (daisy) iStockPhoto, (Bloodhound supersonic car) Bloodhound SSC. Northern Cape Business 2013/14 8 Foreword Northern cape Business highlights page 30 The Square Kilometre Array project will directly and indirectly benefit a range of sectors in the area. page 38 The Bloodhound SuperSonic Car Project will massively boost the Northern Capeâ€™s tourism offering. page 48 Boasting events like the Maloof Money Cup and the Green Kalahari Canoe Marathon, the province is a hotbed of activity. page 90 New developments and key regeneration projects will add to the provinceâ€™s already impressive mining pedigree. A unique guide to business, investment and tourism in the Northern Cape Province. N orthern Cape Business 2013/14 is the fifth edition of this highly successful publication that has since its launch in 2009 established itself as the premier business and investment guide to the Northern Cape Province. Officially endorsed by the Office of the Premier of the Northern Cape, Northern Cape Business is unique as a business journal that focuses exclusively on the Northern Cape and that also carries full Audit Bureau of Circulations (ABC) certification, meaning its print run and circulation of 15 000 copies is independently audited and verified. A range of complementary online features have also been introduced to give participants in and readers of the journal a wider range of communication options. These include the website www.northerncapebusiness.co.za, the Northern Cape Business e-book and a live feed for up-to-date news and announcements. Global Africa Network (www.gan.co.za), the publisher of Northern Cape Business, specialises in business-to-business print and electronic publications, producing a series of officially endorsed, region-specific, annual print journals. Every province in South Africa is now covered by this unique range of journals and websites, complemented by a national business guidebook, South African Business. Global Africa Network thanks the dedicated sales team and the professional and committed writers, editors and designers who produced this edition of Northern Cape Business. We thank the Office of the Premier, the Northern Cape Provincial Government as well as the companies and municipalities that supported this undertaking. Chris Whales Publisher, Global Africa Network Email: firstname.lastname@example.org www.northerncapebusiness.co.za www.gan.co.za 9 Northern Cape Business 2013/14 message The Northern Cape is offering the renewable energy sector a home. Acting Premier Grizelda Cjiekella is upbeat about the economic potential of the Northern Cape. 2.6% in 2011. More than We are committed to build90% of households have ing a transparent, responsive access to water inside their and responsible administration dwellings or in their yards that has the capacity to deliver services and improve the living • More than 85% of households use electricity as a standards of our people. power source Census 2011 allowed us the opportunity to measure • Two thirds of households have access to flush toilets progress. Some of the results in key areas are: • The official unemployment rate for the Northern Cape declined to 27.4% in 2011, The basis of our provincial plans, while the average house- programmes and initiatives is the hold income more than National Development Plan. Infrastructure expansion is a doubled • 82.4% of households re- key pillar to improve the living side in formal structures conditions of our communities • The percentage of persons and create job opportunities. 20 years or older with no Significant progress has been schooling decreased from registered with the establish22.7% in 1996 to 11.3% in ment of a university in the prov2011, while the percentage ince. Wits University has been of persons with matric or appointed to provide technical The publication of the fifth edihigher more than doubled project-management services, tion of Northern Cape Business from 11.1% in 1996 to 23% and land and space has already is a welcome event. This wellin 2011 been identified. The Northern regarded book provides an • The Northern Cape, de- Cape Provincial Government spite being by far the most foresees the new university opportunity to showcase the water-scarce province, becoming a symbol of the new achievements of both governmanaged to reduce the order, democracy, inclusiveness, ment and private enterprise, percentage of households growth and opportunity. and a chance to explain the without access to piped investment potential of our Mining and agriculture water from 6% in 2001 to are currently the province’s province to a wider audience. Going forward Northern Cape Business 2013/14 10 message most impor tant sectors. Renewable energy is a sec- efforts and development. In The Northern Cape has the tor within the green economy collaboration with the global Gamagara Mining Corridor and the Northern Cape has community, Africa took a giant which has the worldâ€™s rich- managed to create 4 709 jobs scientific leap forward! est manganese and iron- in the second bid window. The unique size and natuore deposits. ral conditions in the Northern It is envisaged that the Cape position it to be the prime worldâ€™s largest manganese destination for extreme toursintering plant and mine The agricultural potential of this ism in terms of culture, nature, by Kgalagadi Manganese, province is massive for growth heritage and sport. As a fitowned by women, will serve and expansion. ting example, the province will The Comprehensive Agri- host in 2013 the Bloodhound as a crucial investment to pave the way for local value- cultural Support Programme land-speed-record attempt. addition and manufacturing to (CASP) and Ilima/Letsema are Besides the attempt to set a among the key programmes to new land-speed record, the tackle poverty. It is hoped that the mining provide support to smallholder project has already implementinvestment taking place in the and black commercial farmers ed programmes to encourage iron-ore and manganese in- for production and marketing learners to pursue studies in dustries will provide a welcome of produce, including value- mathematics, science and boost to the construction and chain activities. technology Proje cts include the other economic sectors. The The event will inject muchprospects for the construc- Ramskop Calvinia abattoir, needed economic activity into tion sector are expected to Tshwaraganang Hydroponics in the area and also popularise improve with the planned con- Windsorton (a packaging facil- the Kalahari as a holiday and struction of the university, the ity for cucumbers sold through tourism destination to a widSquare Kilometre Array (SKA) FreshMark) and the Vineyard er audience instead of just a project, the investments in Development Scheme. niche clientele. Progress has been made by the rail upgrades for the Oryx The job creation and SMME Iron Ore line and the Sishen- Cape Malting House in building development initiatives of the Coe ga mangane se line, a malt-producing plant on the provincial government are banks of the Modder and Riet also pursued in the context among others. The Sishen/Saldanha Rail rivers. This is a joint initiative be- of strengthening the tourInvestment has the potential tween the provincial government, ism sector. In the month of to create up to 16 000 jobs. the Industrial Development September 2012, we hosted It will also support capital Corporation and the Foundation the annual Maloof International projects such as the Kathu for African Business and Skateboarding event in Industrial Supply Park and Consumer Services (Fabcos). Kimberley. A total of 21 SMMEs The Square Kilometre Array benefited from the event with Meat Processing Plant. As a province, we will en- is another infrastructure project 14 rendering catering services sure that the renewable-en- with great potential. The suc- and seven selling products ergy sector finds a home in cessful bid to host the SKA is including, among others, arts the Northern Cape. We have a major milestone for the coun- and crafts. packaged our application to tryâ€™s science and technology the Department of Trade and Industry for a Special Economic read more Zone (SEZ) on the basis of the Visit: www.northern-cape.gov.za Solar Corridor. Key focus points 11 Northern Cape Business 2013/14 special feature Regional overview of the Northern Cape Province The sun is shining on the Northern Cape – by Transnet to expand its rail capacity from the and attracting dozens of solar-power inves- Northern Cape to the Eastern Cape, where a tors anxious to participate in South Africa’s manganese smelter is to be built. independent power producers’ programme. One of China’s biggest mining companies, Exports of iron ore continue to grow, several Jinchuan, has taken a stake in Wesizwe platinum new manganese projects are underway and and has control of Metorex, which has baselarge reserves of rare-earth elements are metal operations in Zambia and the Democratic exciting the mineral sector. Grapes and wine Republic of Congo. In the Northern Cape, the dominate the agricultural export basket. large new manganese mine at Kudumane is being bankrolled by a 49% stake in the project controlled By John Young by Asia Minerals Limited (AML) of Hong Kong. The China Guodian Corporation has an interest in a wind-farm project at De Aar (with Mulilo lsewhere in Africa, learned articles are Renewable Energy). Recently, Orange River Wine being written about how ‘the Chinese Cellars proudly announced that it had won six are coming’. In the Northern Cape, prizes at the China Wine Awards. Sales to China this is old news. It is Chinese demand have increased tremendously in recent times. that is behind the growth in export volumes of But it is not just the Chinese who have been iron ore (Transnet plans to spend R28-billion beating a path to the Northern Cape. With the on the expansion of the Sishen-Saldanha rail announcement that the prestigious Square line from 53-million tons-per-annum to an an- Kilometre Array (SKA) telescope project was ticipated 83mtpa). It is Chinese demand that coming to the province, it can be said that the is behind several new mining projects that are scientific world has given South Africa and the forging ahead in the Kalarahi and the decision Northern Cape a huge vote of confidence. E Northern Cape Business 2013/14 12 special feature 13 Northern Cape Business 2013/14 special feature The overall value of the SKA scheme is estimated at R15-billion, and the various phases of the huge project will be implemented over many years. There will be significant spinoffs for a large number of sectors within the Northern Cape and throughout South Africa. The Northern Cape government is hoping to leverage these scientific advances to fast-forward the process of obtaining a university for the province. Only Mpumalanga and the Northern Cape of South Africa’s provinces do not have universities. A group of very fast Britons is beating a path along a road laid out in the Karoo, north of Upington. The Bloodhound Project aims to break the land-speed record, and is projected to take off in the second half of 2013. The project is also attempting to raise awareness about science and engineering through a schools programme. The Northern Cape is South Africa’s largest province, covering 30% of the country’s landmass on the western side bordering the Atlantic Ocean, Namibia and Botswana. Mining and agriculture are the province’s most important sectors. The starkly beautiful landscape of the Northern Cape is home to six national parks and five provincial parks and nature reserves. The Richtersveld Cultural and Botanical Landscape is a World Heritage Site, while the natural spring flower show that appears in Namaqualand is one of the wonders of the world. Most of the province falls into the category of semi-arid (apart from the coastal strip) and it receives relatively little rainfall. Summers are hot and winters are cold. The western parts of the province are famous for spectacular displays of flowers in spring. The Orange River is the most important geographical feature of the province, providing irrigation to support a thriving grape, sultana and wine industry. Other crops such as lucerne, cotton, wheat, peanuts and maize are grown in the Orange River Valley and in other irrigation scheme areas such as the Vaalharts Irrigation Scheme in the eastern part of the province. Approximately one-million people live in the Northern Cape, where the principal languages Northern Cape Business 2013/14 14 are Afrikaans (68%) and Setswana (21%). The San people live in the arid regions of the north. The mining sector is strong and varied, with the province’s iron ore and manganese resources making up significant portions of South Africa’s mineral export basket. Mining contributes 27.6% to gross regional domestic product (GRDP). Sishen is the biggest iron-ore mine in the country and its owner, Kumba Iron Ore, is engaging in a massive new project at Kolomela (previously known as South Sishen). The 6 209 employees of Kumba who were allocated 3% of the company’s shares (through an employee share-ownership plan, or Esop) were paid out a total of R2.66-billion in cash in December 2011. The second tranche will be paid out in 2016. The manganese sector is also growing with several new mines under construction and capacity at existing mines being expanded. There has been quite a shake-up of diamondmine ownership in the Northern Cape in recent years, with Petra Diamonds buying many of De Beers’ assets. In the Namaqualand area, Trans Hex has acquired former De Beers properties. The province also has copper, lead, zinc, mineral sands, gypsum, granite, asbestos, fluorspar, semi-precious stones and marble. The amount of sunshine received in the Northern Cape has led to the province winning the right to host the vast majority of solar projects approved by national government in the first two windows of its private producers’ bidding programme. This will bring tens of millions of investment – and new skills – into the provincial economy. Investors and participating companies include Spanish, Norwegian, Chinese and Saudi Arabian entities. Eskom is pursuing the idea of a giant solar park to be located near Upington. The province is well served with respect to transport and communications, despite its vast size (361 830 square kilometres). Airports at Kimberley and Upington are quite substantial and many smaller towns, mines and game reserves have landing strips. Although the special feature province has many roads, maintaining them is proving to be a very difficult and expensive task. The Northern Cape does not have a major port although Port Nolloth serves as an adequate fishing harbour. The creation of a major port is being investigated, in line with provincial government’s plans to increase the amount of produce manufactured within the province’s borders before being exported. Investments in projects along the Namaqua Development Corridor are intended to see these plans come to fruition. The Northern Cape is divided into five district municipalities: Frances Baard District Municipality Towns: Kimberley, Barkly West, Warrenton, Hartswater, Jan Kempdorp. This district is the smallest but with a population of approximately 325 500, it is the most densely populated. Although Kimberley is historically renowned for diamond mining, its economy is now driven by its role as the administrative headquarters of the province. Strategically located and with good infrastructure, Kimberley is the leading centre in the province for retail, financial services, education, commerce and light industry. While the district is driven mainly by tertiarysector activities in the Kimberley area, primary activities in mining and agriculture are more prominent in rural municipalities. Agriculture in the region comprises crop cultivation and stock and game farming. The Vaalharts Water Scheme is the largest irrigation project of its kind in the southern hemisphere. John Taolo Gaetsewe District Municipality Towns: Kuruman, Kathu, Hotazel. Kuruman is the headquarters of local government in this region. The local spring produces 20-million litres of water every day. Most of the district is situated on the Ghaap Plateau, over 1 000 metres above sea-level, and can experience extreme temperatures. Most agricultural activity is limited to grazing, although game hunting is growing. Kathu has a well-developed CBD. The Sishen iron-ore mine outside Kathu is a vast undertaking, providing employment for thousands of people. Samancor’s Mamatwan and Wessels manganese mines and plants are situated at Hotazel. Almost half of the population in the Kgalagadi’s district live in rural villages. Namakwa District Municipality Towns: Springbok, Calvinia, Niewoudtville, Garies, Williston, Fraserburg, Sutherland, Pofadder, Okiep, Port Nolloth, Alexander Bay. The province is home to an abundance of fauna and flora. 15 The Namakwa District is situated in the north-western corner of the province, and the country, bordering on Namibia and the Atlantic Ocean. The district is sparsely populated, and predominantly rural. Northern Cape Business 2013/14 special feature ZIMBABWE Limpopo NAMIBIA North West Mpumalanga Gauteng SWAZILAND KwaZuluNatal Free State NORTHERN CAPE LESOTHO Eastern Cape Western Cape MOZAMBIQUE BOTSWANA the municipal headquarters, has national significance as a railway junction. The district is home to three of South Africa’s major dams. Agricultural production includes wheat, maize, peanuts, grapes, beans, potatoes, nuts and sheep farming. Pixley Ka Seme is the largest woolproducing district in South Africa, but most of what is produced is processed in the Eastern Cape. As a consequence, opportunities exist for the establishment of a cotton mill, a tannery and a facility to add value to semiprecious stones. Horse breeding is a valuable contributor to the regional economy. The mining and agricultural sectors provide most employment, while tourism and small- Siyanda District Municipality scale manufacturing are also present. The region’s economy gets a great boost every spring Towns: Upington, Kakamas, Kenhardt, Groblershoop, Postmasburg. when tourists flock to see the veld in bloom. The climate and soil support certain niche The Orange River supports a thriving agricultural crops, and the sites and sights are unique to sector and a growing tourism sector. The investthe region, offering opportunities in agriculture ment climate is ripe for tourism along the Orange and tourism. Niewoudtville is the site of a new River and around unique physical attractions such as the Augrabies Falls. rooibos-tea factory. Mining activities take place in Kgatelopele, The /Ai/Ais/Richtersveld Transfrontier Park, the Namakwa National Park and the where diamonds and lime are found. Together Tankwa Karoo National Park have the poten- with sheep and cattle farming, mining provides tial to grow as travel destinations, as does the most of the employment to be found in Siyanda. The diamond mine at Finsch is Petra Diamond’s western coastline. newest and largest acquisition. Most of the population of the //Khara Hais Pixley Ka Seme District Municipality Local Municipality lives in Upington. The town is one of the economic hubs of the Northern Towns: De Aar, Hanover, Carnarvon, Cape: it has an airport and good infrastrucDouglas, Marydale, Prieska, Hopetown, ture. Agriculture is a prominent feature of the Richmond, Noupoort, Norvalspont, local economy, as well as wholesale and reColesberg. tail services in and around the town. The The district covers 102 000 square kilome- processing of wine and dried fruit represents tres in the central Karoo and has four national one of the biggest manufacturing activities in roads passing through it. De Aar, the site of the province. Northern Cape Business 2013/14 16 special feature Motorway NORTHERN CAPE PROVINCE Main Road Railway N BOTSWANA Union’s End North West N18 Rietfontein NAMIBIA Van Zylsrus Askham Vryburg Hotazel N14 Kuruman R31 Sishen Upington Onseepkans Augrabies Alexander Bay Port Nolloth Steinkopf Pofadder R31 Campbell Groblershoop N10 Kenhardt N14 Marydale Nababeep Barkly West R64 KIMBERLEY Ritchie Douglas N8 Hopetown Prieska Okiep Kleinsee Springbok N12 Ulco Postmasburg Keimoes Kakamas N14 Vioolsdrif WarrentonChristiana N14 N10 Hartswater Free State N12 Strydenburg N7 Kamieskroon Brandvlei Hondeklipbaai Garies Van Wyksvlei Vosburg Williston R27 Calvinia Vanrhynsdorp R63 Loxton R48 Colesberg N10 Hanover N12 R63 Nieuwoudtville Vredendal De Aar Carnarvon Loeriesfontein Petrusville Britstown Victoria West Fraserburg Middelburg N1 Three Sisters Clanwilliam R63 Beaufort West Sutherland R27 Somerset East N12 Western Cape R75 Willowmore N7 Worcester R44 Paarl CAPE TOWN N9 Graaff-Reinet Eastern Cape N1 Saldanha Noupoort Richmond N7 R45 N1 N9 N1 Stellenbosch Oudtshoorn R62 N9 George N15 N2 Knysna Mossel Bay N2 Caledon Hermanus 17 Uitenhage PORT ELIZABETH Jeffreys Bay Northern Cape Business 2013/14 focus An abundance of opportunities The Northern Cape Department of Economic Development and Tourism seeks to provide potential visitors to and investors in the Northern Cape with a socioeconomic overview and a compelling business case of existing opportunities in the province. Mining and mineral beneficiation play huge roles in the provincial economy. Provincial growth and development strategy The following key economic sectors are focused on to realise the socioeconomic priorities of the province: • Agriculture and agri-processing • Fishing and mariculture • Mining and mineral processing • Manufacturing • Tourism • Knowledge economy • Energy Demographics The Northern Cape has the smallest population, 1 096 731 (Statistics South Africa – midyear population estimates 2011) in South Africa. This constitutes 2.17% of the population of South Africa. The Northern Cape has a population density of three Northern Cape Business 2013/14 20 persons per square kilometre (2011), which is the lowest in the country. Economic growth Looking at the real annual economic growth rate per region for 2010, all of the provinces had positive growth, in contrast to all of the provinces showing negative growth in 2009. The national growth rate is not as high as was previously projected, which shows a slower recovery from the recent economic crisis. The Gauteng Province focus recorded the highest provincial 2008 and 2009, but positive growth in 2010. This was maineconomic growth rate (3.2%) for ly because of the positive growth in mining and quarrying. In 2010. The Northern Cape had a 2010, there was again negative growth in agriculture, forestry growth rate of 1.9%. The nation- and fishing. Both the secondary and tertiary industries showed al growth rate for 2010 was 2.9%. positive growth in 2010. The biggest contributor to the Northern The South African economy Cape GDPR is mining and quarrying. The smallest contributor recorded growth of 3.6%, bet- is construction. tered only by the Western Cape (3.7%) and Gauteng Province (4.1%). All of the other provincial economies recorded The unemployment rate of all of the provinces except the Northern growth rates lower than that Cape increased from the fourth quarter of 2011 to the first quarter of of the South African economy. 2012. Comparing the national unemployment rate to the first quarter The Northern Cape posted an of 2011, an increase of 0.2 of a percentage point can be observed. average economic growth rate of 2.1% over the period. The Northern Cape growth slowed down from a rate of When comparing the first quarter of 2012 with the first quarter 1.8% in 2008 to -1.5% in 2009 of 2011, there has been an increase in employment in all sectors and then increased to 1.9%, (mining, manufacturing, utilities, construction, trade, finance and showing some recovery after community and social services) except for agriculture, transport the recent financial crisis, at and private households. The highest employing sectors are constant 2005 prices. This community and social services, and agriculture. Between the fourth quarter of 2011 and the first quarter of 2012, can be attributed to the net growth in the primary, second- the largest employment losses could be observed in the construcary and tertiary industries of tion and manufacturing industries. Employment increased most the Northern Cape. The key in private households and agriculture industries. Comparing the first quarter of 2011 to the first quarter of 2012, attribute here is the fact that the Northern Cape is a primary employment increased by 304 000 jobs. Finance and other busiproducer whose products are ness services, trade, and community and social services together exported through the Western accounted for 88% of the rise in employment. Cape, Eastern Cape and KwaZulu-Natal harbours and Province 1995 2005 2010 the OR Tambo Airport. Western Cape 14.6 14.6 14.1 There was negative growth in the primary industries in Eastern Cape 8.3 7.9 7.7 Labour market Employment by industry population groups African 537 688 White 123 399 Coloured 431 834 Asian 3 810 Total 1 096 731 Table 1: Northern Cape population by population group Northern Cape 2.3 2.2 2.3 Free State 5.7 5.2 5.5 16.8 16.2 15.8 6.1 6.4 6.7 KwaZulu-Natal North West Gauteng 33.9 34.3 33.7 Mpumalanga 6.7 6.6 7.0 Limpopo 5.7 6.6 7.2 Table 2: Provincial percentage contributions to national output 21 Northern Cape Business 2013/14 focus In the Northern Cape, about 95 000 of the labour force are unemployed (quarter one, 2012) i.e. 24.9%, down from 26.7% in the previous quarter. From the first quarter of 2011 to the first quarter of 2012, 25 000 jobs were created provincially. There are 34 000 discouraged job seekers in the province (a decrease of 5 000 quarter-on-quarter). The labour force participation rate has decreased to 52.6%, indicating that 47.4% of the working-age population are not economically active (they depend on social grants or other income earners). The absorption rate (percentage employed of the labour force) and labour force participation rate (percentage of population forming part of the labour force) stayed fairly constant at low levels. and tobacco products. Other mining and quarrying suffered a significant decrease in 2008 and decreased further in 2009. Agriculture and mining increased significantly annually. There has been a significant decrease in the export of furniture and other items. Forestry and logging exports increased dramatically from 2006 to 2010. Exports Top Northern Cape export destinations In South Africa there was positive growth in exports from 2006 to 2008 and again from 2009 to 2010. However, the exports reached a high in 2008. The Northern Cape had negative growth The UK was the largest imin exports from 2006 to 2009 with positive growth from 2009 to porter of Northern Cape 2010. The monetary value of the Northern Cape exports was still goods and services for 2006 and 2007, the US for 2008 and much lower in 2010 than in 2006 and 2007. The biggest export sectors in the Northern Cape are ag- the Netherlands for 2009 and riculture and hunting, mining and quarrying, food, beverages 2010. From 2006 to 2008, Bel- Industry % Change 2008 2009 2010 % Contribution 2008 2009 2010 Primary industries -2.9 -7.9 4.1 35.1 33.2 32.3 Agriculture, forestry and fishing 10.7 -2.6 -0.1 7.5 7.4 6.0 26.2 Mining and quarrying -6.0 -9.4 5.3 27.5 25.8 Secondary industries 3.4 0.1 2.4 6.8 7.4 7.3 Manufacturing 3.6 -5.5 7.3 3.0 2.3 2.3 -0.4 0.2 1.4 2.2 3.0 3.1 Construction Electricity, gas and water 8.0 12.8 -5.9 1.6 2.1 1.9 Tertiary industries 4.0 -0.7 0.8 48.5 50.0 51.0 Wholesale, retail and motor trade; catering and accommodation 1.5 -5.4 1.5 9.5 10.0 10.8 Transport, storage and communication 3.0 -0.9 1.3 7.5 7.4 6.6 Finance, real estate and business services 6.9 -1.1 1.2 12.4 12.4 12.5 Personal services 4.2 0.9 -2.9 7.1 8.0 8.8 General government services 3.6 2.7 2.2 11.9 12.1 12.3 Table 3: Northern Cape industry contributions Northern Cape Business 2013/14 22 focus gium was the second-largest importer, in 2009 it was the UK and in 2010 it was the US. The third-largest value of exports went to Germany in 2006, Israel in 2007, the United Arab Emirates in 2008, Belgium in 2009 and again the United Arab Emirates in 2010. The fourth-largest value of exports went to Israel in 2006, the US in 2007, the Netherlands in 2008, the United Arab Emirates in 2009 and the UK in 2010. The fifth-largest importer of Northern Cape goods and services was the Netherlands from 2006 to 2007, Israel in 2008 and Hong Kong (China) from 2009 to 2010. Exports to SADC countries Country 2008 2009 2010 Belgium 138 786 975 67 174 656 89 721 407 Germany 18 568 723 12 000 251 18 116 146 Hong Kong (China) 42 653 604 44 087 809 93 443 436 Israel 91 004 940 29 028 428 28 584 765 Netherlands 108 056 943 190 296 970 133 214 726 United Arab Emirates 108 091 157 65 953 594 104 555 986 United Kingdom 57 595 008 88 277 629 101 253 538 United States of America 183 701 200 33 640 994 120 110 843 Table 4: Top Northern Cape export destinations (in Rands) Country 2008 2009 2010 Brazil 138 800 1 229 310 3 755 374 China 34 737 653 4 425 209 15 973 603 India 1 902 739 70 000 332 025 8 806 989 13 225 887 6 410 278 Russia / Russian Federation National exports to South African Development Community Table 5: Northern Cape exports to BRICS countries (in Rands) countries increased annually from 2006 to 2008 but de- machinery and household appliances. These two sectors made creased significantly in 2009. up 65% of the total exports to these countries in 2010. Some recovery was, however, This is also based on the fact that the Northern Cape is a made in 2010. The two sec- key access point to Namibia and linked to the south-western parts tors with the highest value of of Botswana. exports for 2006 to 2010 were fuel, petroleum, chemical and rubber products; and metal products, machiner y and The competitive and comparative advantages of the Northern household appliances. These Cape can be summarised as follows: sectors made up for more than • Mineral resources 50% of the national exports to • Climate and air quality the rest of the SADC countries • Open spaces and distances every year from 2006 to 2010. • Astronomy In 2010, the biggest export- • Coastline ing sectors in the Northern Cape to the rest of the SADC The way to approach these opportunities is through the key countries were wood and wood economic sectors and these are as follows: products; and metal products, • Mining and mineral beneficiation Economic potential and investment profile 23 Northern Cape Business 2013/14 focus Exciting new astronomy projects are boosting the already well-established sector. Agriculture and agri-processing Fishing and mariculture Manufacturing Tourism Knowledge economy Energy supplied by the Northern Cape which has 80% of the world’s • manganese reserves, most of • which are concentrated in the • John Taolo Gaetsewe District. • Granite processing shows major potential in the Namaqua district of the province. Tigers eye: All South Africa’s The Northern Cape has an abundance of mineral resources and reserves of this semi-precious this stretches throughout the province. These include diamonds, stone are concentrated in the iron ore, manganese, copper, granite and semi-precious stones Northern Cape. to mention just a few. Sugilite: The Northern Cape Diamonds account for 27% of the Northern Cape’s mining out- is the primary producer of this put. A total of 95% of South Africa’s diamond production currently semi-precious stone. passes through Kimberley and is processed in Kimberley; 97.6% of all South African alluvial diamond mining activities take place in a 200km2 radius from Kimberley; and these are mostly traded and processed in Kimberley. Deposits of lead, manganese, iron, zinc, limestone and gypsum are plentiful. Lead: The Northern Cape produces 13.4% of the world’s ex- Agriculture is the second-most important economic activity ports of lead. Iron: Most of South Africa’s iron-ore production comes from the in the province. The Northern Northern Cape. The Sishen Mine is the biggest source of iron ore in Cape is generally drier than South Africa and is the third-biggest iron-ore producer in the world. the rest of South Africa, but Manganese: More than 25% of the world’s manganese is has fertile soil, several rivers • • Mining and mineral beneficiation Agriculture and agri-processing Northern Cape Business 2013/14 24 focus and produces some of the Extensive canal systems have been constructed for irrigation countryâ€™s finest-quality ag- purposes to supply water to more than 60 000 hectares of ricultural products. The arid irrigation land. Agriculture and agri-processing are important conditions have benefits for economic production sectors and sources of employment and livestock producers in that income (commercially as well as a source of subsistence income). the nutritional value of the According to Statistics South Africa, livestock sales were the veld remains relatively high most significant contributor to the Northern Cape agricultural throughout the year. Two of sector (40.1%). Livestock sales were followed by horticultural the biggest rivers in South produce and field crops which contributed 25.9% and 23.9% Africa, namely the Orange respectively to the sector. and the Vaal, run through the Northern Cape and form the backbone of approximately 140 000 hectares of irrigation The Northern Cape offers favourable biological conditions, in the province. Irrigation is excellent shore-based infrastructure, the presence of a number also taking place from the of pioneering private-sector mariculturalists, a strong research Harts, Riet and Modder rivers. and development base and an ideal environment for investment Fishing, aquaculture and mariculture DISTRICT MUNICIPALITY FOCUS POINTS John Taolo Gaetsewe DM Hotazel: Development of a manganese ore smelter Kuruman: Semi-precious stones Sishen: Development of a pig iron-ore smelter The rehabilitation of mines Sand Industrial minerals Namakwa DM Okiep: Development of a copper refinery. Aggeneys: Development of a zinc smelter at Gamsberg Small-scale mining Industrial minerals Pixley ka Seme DM Douglas: Alluvial diamond-mining opportunities. Niekerkshoop: Semi-precious stone mining De Aar: Dolerite mining Hopetown and Marydale: Salt-mining opportunities. Industrial minerals Siyanda DM Mier LM: Diamond-mining opportunities. Frances Baard DM Kimberley: Diamond mining Lutzputs: Iron, copper and silver mining potential Barkley West: Alluvial diamond-mining opportunities. Barkley West: Semi-precious stones Table 6: Mining opportunities in the Northern Cape 25 Northern Cape Business 2013/14 focus and growth in this industry along the West Coast. The following trade and investment opportunities are available: • Port Nolloth Community Cooperative Fish Factory • Four abalone ranching rights – possible joint venture with local partners • Possible mariculture partners in fishing, abalone ranching, mariculture, kelp and kelp processing • Infrastructure for oil and gas industry services: revitalisation of the Port Nolloth and Hondeklipbaai Fish Factories • Ranching rights being issued • Setting up Port Nolloth as the service centre for the coastline in terms of ranching. Community group and Benquila Investments as possible JV or partnership • Kelp processing and export • The establishment of an oyster and abalone hatchery in order to cater for the growing demand for oyster and abalone spat Mining • • • Agriculture • • • • • • • • • Projects • capture and manage the economic boom • Kathu Industrial Supplier Park Apply for mining licence Depending on preferred commodity, explore joint venture or merger Establish a service office in the Gamagara Mining Corridor to Livestock production and development programme Lesotho irrigation project Beef production Commercialisation of goats Mutton/lamb production Aquaculture Orange River Smallholder Farmer Settlement and Development Programme Vaalharts revitalisation programme Oranje-riet development programme Game breeding and hunting Science, technology, BPO and ICT • SKA-related goods and services The fishing, aquaculture and mariculture sectors are all the focus of investment programmes. Northern Cape Business 2013/14 26 focus The province has a plethora of natural tourism assets. • • Business process outsourcing and offshoring call centre New Nor thern Cape University Manufacturing • • • • • • • Infrastructure • • • • • Port Nolloth Harbour Upington cargo hub and mothballing De Aar rail cargo hub 35 000+ houses to be built in Gamagara Mining Corridor Kathu Industrial Supplier Park Kathu Industrial Supplier Energy Park: mining, transport, • Upington Solar Park construction and renew- • Independent Power Supplier: wind, gas, solar, hydro, biomass • Goods and services able energy Upington cargo and elec- • Fracking and uranium/nuclear energy to be explored tronics hub: SKA, renewable energy and aircraft Tourism • Bloodhound SuperSonic Car Project mothballing Kimberley: jewellery and • Adventure sport • Commercialisation of nature reserves diamonds, food Heineken malt production • Resorts: De Beers and Douglas Holiday Resort, Boesmansput and plant Diving Resort De Aar: Renewable energy • SKA Tourism Centre Upington vehicle testing: • Big Hole Custom built high-speed • Formula Drift World Cup vehicle-testing track Kimberley International read more Diamond and Jewellery Visit: http://economic.ncape.gov.za Academy 27 Northern Cape Business 2013/14 special feature Square Kilometre Array telescope The world’s greatest radio-astronomy project is heading for a Karoo home. S outh Africa’s bid to host the Square Kilometre Array (SKA) telescope, the biggest development in radio astronomy in history, was capped with success in May 2012 when the international committee announced that South Africa was a joint winner with Australia. There was some disappointment that the R15-billion was being shared with the country’s big sporting rival, but much more excitement about the scope of the project that lies ahead for South Africa’s scientists. Northern Cape Business 2013 30 There will be big spin-offs for manufacturing companies, universities, students and researchers, service and infrastructure providers, among others. The presence of such a vital project on South African soil should make it easier for bodies such as the Technology Innovation Agency to motivate young scientists and entrepreneurs. The SKA telescope is an aperture-synthesis instrument. Signals from each of 3 000 radio telescopes (half of which will be located at Carnarvon and the balance of which will be distributed special feature around the continent) will be combined in such a way that the telescope’s diameter will in effect be the distance between the radio telescopes furthest apart from one another – in this case, a distance of some 3 000km! The site furthest north will be located in Ghana. The central computer for the system will have the power of one billion PCs. The speed of the computers will be so fast as to defy belief. Dr Bernie Fanaroff, director of the South Africa SKA Project, says, ‘SKA is expected to collect more data in one week than humankind has collected in its entire history.’ Mankind will have its first clear pictures of what the universe looked like 13.7-billion years ago. According to the skatelescope.org website, the data collected by the SKA in a single day would take nearly two million years to play back on an iPod. To facilitate all of this data transfer, the Council for Scientific and Industrial Research (CSIR) has given notice that a R100-million second network, with speeds of 10 gigabytes a second, would be installed at the astronomy site. Neotel will install the network in a partnership with Broadband Infraco. The existing astronomical facilities at Sutherland will also benefit from this faster network. Broadband Infraco laid a network infrastructure from Cape Town to Carnarvon in 2011. SKA South Africa’s engineering and monitoring office is in the Cape Town suburb of Pinelands. and the project to be complete by the end of 2016. The intention is that MeerKAT will develop technologies appropriate to the SKA. This will include the use of composite, one-piece reflectors, single-pixel wideband receivers, low-cost, high-reliability cryogenic systems, and reconfigurable digital-processing systems. The South African Research Chairs Initiative (SARChI) of the National Department of Science and Technology (DST) and the National Research Foundation (NRF) has put about R240-million into the creation of five university chairs in support of the SKA project. More than 300 university students have also received support for studies in science and engineering through the SKA project and about 700 jobs have been created. Rhodes University has an SKA research chair and the Centre for Radio Astronomy Techniques and Technologies at the university will house two post-doctoral candidates and three students in 2014. This will grow to a team of six as the project progresses. Two professors are currently located at the centre, which is housed in the university’s Department of Physics and Electronics. Construction of infrastructure to support MeerKAT and SKA is underway with the foundations of buildings being the responsibility of Group Five Coastal, and the buildingmanagement system being overseen by Schneider Electric South Africa. By late 2012, more than R2-million worth of goods had been supplied by local businesses to the SKA South Africa project. The 64 antennas that will make up the comMeerKAT plete MeerKAT are being constructed by South African company Stratostat Datacom, with In bidding for the ambitious project, there have technical help from General Dynamics SATCOM been considerable benefits for astronomy in Technologies. The R632-million contract is set to South Africa. In the first phase, a single dish be completed by the end of 2016, with the first (XDM) was built at Hartebeesthoek Radio As- dishes set to be up and running by January 2014. tronomy Observatory (HartRAO) near Pretoria. Some 75% of the total contract will be spent in By 2010, the seven dishes required for the sec- South Africa. ond phase of the project (KAT-7) had been built in the Karoo. MeerKAT is the final phase of the local project read more – and the first phase of the larger SKA scheme. This will entail 64 dishes being established in Visit: www.frontiermarketnetwork.com/ the Karoo, with the first to be in place by 2013 article/1752 31 Northern Cape Business 2013/14 special feature Space to roam Game ranching in the Northern Cape has become increasingly popular, and increasingly lucrative. I nvest R5-million in cattle and in five years you will earn a return of 4.8% on your money. Invest the same amount of money in sable antelope, and the value of your investment could go up by 45.2%. Is it any wonder that the game-ranching business is booming? These figures are drawn from the 2013 Absa Agriculture Outlook. The wildlife-ranching sector in South Africa now encompasses more than Northern Cape Business 2013/14 32 10 000 farms (from about 3 500 in 1992) and covers more than 20-million hectares. This means that there is in private hands about three times more conservation land than there is under the protection of national and provincial parks. Twice as many animals are on these private farms than in the public parks. Commercial wildlife ranches cover 16.8% of the countryâ€™s landmass, with about 20% located special feature in the Northern Cape Province (Mail & Guardian). calf were sold in April 2012 for R20-million. The Provincial Premier Hazel Jenkins, speaking at the auction brought in a total of R146-million. opening of the 7th International Wildlife Ranching Hunting is a lucrative market, with the largest Symposium in Kimberley in 2011, said that the number of trophy hunters coming from the US. province has about 1 500 ranches. Limpopo The National Department of Environmental Affairs Province has about half of the country’s ranches. calculated that the revenue generated directly by Premier Jenkins went on to say that hunting, hunting in 2009 was R650-million. and its economic multipliers, contributed about The African Sky website lists a daily price of R1-billion to the provincial economy on an annual $450 for a hunter accompanied by a professional basis. Employment opportunities in the sector hunter. Trophy prices range from $35 000 for an include tracking, skinning, taxidermy, tour-guiding elephant and $13 500 for a buffalo to $450 for and professional hunting. a bushpig. Concerns about conservation ensure that there Venison and biltong are the key products deis always a debate about the role that hunting rived from game hunting. South Africans are should play in the tourist offering. The first national more likely to hunt for biltong than for trophies. Hunting Indaba was held at The Palace, Sun City, The Absa Agricultural Outlook states that the in October 2012. This brought together leading fig- world supply of venison is 60 000 tons short ures in national and provincial government, wildlife of demand. With South Africa exporting less ranchers and representatives of the hunting sector. than 2 000 tons annually, there is clearly a big National Minister of Water and Environmental opportunity in this market. Affairs Edna Molewa told the indaba that the huntEco-tourism is a broad category encompassing and game-farming sectors were important ing leisure tourism, game viewing and the gamepartners in ‘conservation, tourism and economic lodge market. South Africa has large numbers development’. of lodges catering to the high end of the market The Professional Hunters’ Association of and there is scope for the development of more South Africa has put the overall value of the eco-tourism venues that are more suited to the wildlife industry to the national economy at budget of the local traveller. R7.7-billion. The industry is said to employ Premier Jenkins told the Kimberley symposium, 140 000 people. The Confederation of Hunting ‘Eco-tourism has become one of the leading and Associations of South Africa says that the sector fastest-growing sectors with an annual growth of is now bigger than the sugar and dairy sectors. approximately 10%.’ She linked the growth of the sector to the fact that only 17% of South Africa’s agricultural land has high production potential, and Segments noted that on marginal land, of which there is a good deal in the Northern Cape, wildlife ranching The wildlife-ranching sector comprises four main is one of the few economic activities that can components: breeding and auctions, hunting, contribute to economic growth and employment. processing and eco-tourism. Wildlife ranching is sure to grow in significance South Africa in 2013 has 60% more wildlife in the economic profile of the Northern Cape. than it did in 1900, and a total of about 19-million Game animals need space to roam, and there’s game animals now inhabit the land. The value of no shortage of space in the Northern Cape! game has also increased exponentially. Rare animals such as the sable antelope can read more bring returns of over 45% on investment, while a buffalo with a good pedigree can attract incredible prices at auction. A buffalo cow with an Visit: www.frontiermarketnetwork.com/ impressive horn spread and its four-month-old article/1343 33 Northern Cape Business 2013/14 special feature Commodities and logistics Major rail projects are redefining mining prospects in the Northern Cape. T he Northern Cape has two of the most Rail is responsible for only 14% of the consignificant railway structures in South tainers that are delivered to destinations around Africa. The junction at De Aar binds the South Africa, with the balance being carried on whole western side of the country and the roads. State-owned company Transnet is leading Sishen-Saldanha railway line is one of the biggest a shift from road to rail. At a grain symposium in of its kind in the world. De Aar could soon be the 2012, Transnet’s agricultural freight executive site of a new Freight Intermodal Terminal. stated that turnaround times had improved from Sishen-Saldanha is one of the technological 40 days in May 2010 to 20 days in November 2011. wonders of the world, having broken a world re- Where 8 000 tons of agricultural produce had cord for the longest and heaviest train ever as- been carried by rail in 1992, the 2010 figure was sembled. The line’s key task is to transport iron just 3 000 tons. Logistics planners are hoping ore from mines in the Northern Cape to the port that the former statistic can help change the latter. of Saldanha. One of the Northern Cape’s other big comThere are a number of iron-ore expansion pro- modities is manganese. Several new operations jects underway, most significantly the multi-billion- have started already, or will go into production rand schemes at Kolomela (Kumba) and Khumani in coming months. Vital to the economics of (Assmang). Line operator Transnet Freight Rail these mining enterprises is transport cost and (TFR) has committed to an R8.7-billion upgrade efficiency. of the rail corridor. The iron-ore channel is being At the moment, the province’s manganese extended from 38-million tons-per-year to 60- is transported via the general freight line to Port million tons-per-year. Some form of private-public Elizabeth. Transnet has pledged to upgrade partnership might be created to expand the line. this channel. Northern Cape Business 2013/14 34 photo: Shaun Loureiro-Railways Africa special feature Another railway development that could have a big impact on logistics in the Northern Cape is the reopening of the Douglas-Belmont line. The opening in December 2012 of a similar branch line, Orkney-Vierfontein, in the neighbouring province of North West, is expected to more than double grain cargo volumes transported out of that region. Once the Douglas-Belmont line is operational, it would be economically viable to build foodprocessing plants in the area. Transnet’s expansion plan is based on its Market Demand Strategy: the manganese of the Northern Cape that markets are demanding is an example of how the process works. Other mooted projects in the transport, logistics and infrastructure sphere that have the potential to make a big impact on the provincial economy are: • De Aar Freight Transpor t Hub: A detailed proposal has been put to the provincial Freight Logistics Forum with regard to The existing capacity of four-million tons per upgrading De Aar’s already important status annum (mtpa) will grow to between 7-12 mtpa by as a major railway junction. De Aar has 110km 2013 and possibly as much as 22 mtpa by 2017. of existing rail lines. A plan is being investigatTransnet successfully tested a 208-wagon ed to turn De Aar into a freight-transport hub. train from a manganese mine to Port Elizabeth in This is in line with national government plans September 2012. The 2.2km train weighed 16.6 to get the bulk of the country’s freight off the tons and was powered by 18 diesel locomotives, overused road network and back onto trains. using the same distributed power system that is • Upington International Airport Cargo Hub: Upington Airport has one of the longest runused on the iron-ore line. ways and is capable of accommodating most Until the line is fully functional and able to cope aircraft. A planned public-private partnership with all the manganese, Transnet has identified will run the airport as a transport cargo hub. Bloemfontein as an intermodal hub: manganese The hub could deal with commodities such will be taken to Bloemfontein by rail and then be as citrus, grapes, fish and meat. transferred to trucks for delivery to Durban. The running of the test train was also a chance • Port Nolloth Harbour development: The Northern Cape does not have a major to inaugurate a new rail siding at Tshipi é Borwa, harbour, although Port Nolloth is registered a new project of the Tshipi é Ntle Manganese as a commercial port. The provincial governMining company, a joint venture between ment is working with national government to Pallinghurst Co-Investors and a black empowget the port upgraded. erment company, Ntsimbintle Mining. Another new venture that has great significance is the Kalagadi manganese project, led by Kalagadi Manganese Ltd. It is this company read more (in which the Industrial Development Corporation holds 10%) that intends building a smelter at Visit: www.frontiermarketnetwork.com/ article/1391 Coega in Port Elizabeth. 35 Northern Cape Business 2013/14 special feature Rare-earth elements Rare earths are bringing a sparkle to the mining sector. W ith South Africaâ€™s mining industry experiencing a number of upheavals in the course of 2012, there was good news out of Namaqualand. There is great interest in the land between the villages of Garies and Bitterfontein, and this time Northern Cape Business 2013/14 36 the flowering of the Namaqualand daisies is not the focus â€“ this area contains reserves of rareearth elements, and this is something the world needs badly. There are 15 rare-earth elements (REE) and many parts of the modern economy special feature depend on them. David Gleason of Business Day suggests that the list of uses of REE is ‘almost endless’ and cites yttrium (in high-temperature superconductors), promethium (nuclear batteries), holmium (lasers), thulium (X-ray machines) and lutetium in PET scan detectors. Applications related to fuel cells, hybrid cars and wind turbines are among other uses to which REEs can be put. China controls 95% of the global supply of REEs and is in the process of reducing the amount that it exports. This makes it critical to find new sources. According to REE miner Galileo Resources, world demand of 120 kilotonnes (kt) in 2010 is expected to grow to between 180kt and 240kt by 2014. Southern Africa is the site of many explorations for REEs and there are two active projects in South Africa: Steenkampskraal in the northwestern Western Cape and the Zandkopsdrift project in the Northern Cape. The projects in two different provinces are in fact not very far apart. Galileo bought a 70% stake in Rare Earth International in 2012, thereby gaining exposure to properties in Zambia and Mozambique. The company is also developing the Glenover project near Thabazimbi in Limpopo Province. Frontier Rare Earths (listed on the Toronto Stock Exchange) is the company developing the Zandkopsdrift mine in the Northern Cape. It has secured an offtake agreement with South Korean parastatal Korea Resoures Corp (Kores) and signed a memorandum of understanding relating to Korea buying shares in the firm and the mine as the project develops. Engineering News reported in February 2012 that $48-million was available for all feasibility studies. The 450 000 tons of total rare-earth oxides contained in the B zone of Zandkopsdrift is the biggest and best grade of its kind outside of China, according to Engineering News. The mine will produce 20 000 tons per year of rare-earth oxides. The other project that is moving along is at Steenkampskraal, about 70km from Vanryhnsdorp. Rights to mine were granted in 2010 to Steenkampskraal Monazite Mine Ltd, a subsidiary of Rare Earth Extraction Company Ltd (Rareco), which has its base in Stellenbosch. 37 Since then, Canadian giant Great Western Minerals Group (GWMG) has taken ever-increasing stakes in Rareco. The mine was mined for thorium by Anglo American many years ago for the nuclear-fuel industry. A Rareco director told Business Times in 2010 that the mine had ‘the richest rare-earth deposit in the world’, and said that the mine’s average ore grade was 20%. The main REE at the mine is cerium, an important component in catalyticconverter manufacture. GWMG has an offtake agreement with a company in the Toyota Group, Aichi Steel, and is investigating a joint venture with the Chinese company Ganzhou Qiandong Rare Earth Group for the construction and operation of a REE seperation plant at Steenkampskraal. An REE plant in this area would further boost the growth of the West Coast as a mining destination. A R40-million prefeasibility study is underway to investigate the possibility of constructing a large minerals-beneficiation plant at Saldanha. A consortium called Rare Minerals Industries (not to be confused with rare earths) is proposing that titanium, zirconium, silicon and magnesium be processed at the plant, the construction of which might cost as much as $1.5-billion. An attempt to prospect for rare earths south of the two sites currently under development (and relatively near to Saldanha) was halted in April 2012 when the Cape High Court ruled against prospecting activity near Piketberg. An interim interdict was granted against Bongani Minerals to stop the company looking for rare earths, tungsten and molybdenum. The main mineral in the area is tungsten, and the deposit being targeted is the largest in the world, according to the company. read more Visit: www.frontiermarketnetwork.com/ article/1424 Northern Cape Business 2013/14 special feature Bloodhound SuperSonic Car Project The Northern Cape is preparing for a bid to set a new world land-speed record A n airport hangar in a small British town rocked to the roar equivalent to several Boeing 747s taking off together when the Bloodhound project’s hybrid rocket was tested for the first time in October 2012. Weighing in at 450kg, the rocket is the key to the attempt on the world land-speed record that will happen on Hakskeen Pan in the Northern Northern Cape Business 2013/14 38 Cape in the second half of 2013. Liquid oxidiser was fired into the rocket at a pressure of 820lb per square inch, the ‘equivalent to holding a large family car in the palm of your hand’ (www. bloodhoundssc.com/rocket). The decision by the Northern Cape Department of Roads and Public Works to employ local community members to clear the site for the world-record bid has created many work photos: Stefan Marjoram special feature opportunities for previously unemployed people in Loubos and Rietfontein. The project is part of the Extended Public Works Programme (EPWP) and 315 workers have received the necessary equipment to do the work and appropriate clothing, including wide-rimmed hats. An extensive worldwide search was conducted (using space-shuttle radar data and satellite imagery) to find the perfect site. Hakskeenpan is 200km north of the Northern Andy Green is the daredevil that plans to break the record. Cape’s second-biggest town, Upington, and about 400km north of Verneukpan, the site of the 1929 attempt to break the record by British daredevil Captain (later Sir) Malcolm Campbell. Hakskeen Pan is ideally suited to the bid by the Bloodhound SuperSonic car to set a new land-speed record. Criteria included being long enough (at least 16km), flat enough and firm enough to support 6.5 tons of motor car. Wing Commander Andy Green is the current holder of the world record The surface of Hakskeen Pan has to be completely clear of debris. but intends setting a new one in the Northern Cape. The car will be fitted with two jet engines and have power equivalent to the and beverage, and business support and engipower of 180 formula-one motor cars. neering sectors. Television images of the unspoilt The Northern Cape Provincial Government is beauty of the Northern Cape will massively boost including 50 schools in the Bloodhound Project, the efforts of the tourism authority to market the leveraging countless opportunities for learning province’s assets. about science, mathematics, engineering and technology. The schools chosen include the province’s 17 Dinaledi schools, which already read more specialise in mathematics and science. The huge technical team that will descend on the Northern Cape to support the project will Visit: www.frontiermarketnetwork.com/ undoubtedly boost the accommodation, food article/1749 39 Northern Cape Business 2013/14 focus Locals are a proud part of Bloodhound project The Northern Cape Department of Roads and Public Works has used the record-breaking project to curb unemployment. ‘H ardworking, eager, proud of his work, and an inspiration to others’: these words best describe Hendrik Kortman. He is one of 317 Expanded Public Works Programme workers that has been employed by the Northern Cape Department of Roads and Public Works to work on a daily basis at Hakskeenpan, preparing the track for the Bloodhound SuperSonic land-speed record. Hendrik is differently abled and does not allow his disability to stand in the way of earning a living. He works independently, using a spade and bucket to clear the track of cobbles and pebbles. In light of the growing problem of unemployment in the region, Hendrik regards himself as fortunate to work at the pan. ‘I do not have a wife or any children, but the amount of money that I receive allows me to purchase food and clothes.’ This job opportunity gave hope to Hendrik, as he believes the government has given him a better life. Like Hendrik, approximately 300 families from five towns (namely Loubos, Rietfontein, Klein Mier, Groot Mier and Philandersbron) now have an income for the first time in many years. Regarding the high rate of unemployment in the Northern Cape Province and low levels of literacy and education, the Department of Roads and Public Works is turning the tables for the socioeconomic status of individuals – once again pushing back the frontiers of poverty. The Department of Roads and Public Works stands central with the implementation of its Expanded Public Works Programme (EPWP) and pays a wage of R850 every two weeks, thus giving hope to previously jobless and marginalised individuals. Families no longer have to struggle to make a day-to-day living. The Northern Cape Provincial Government will spend close to R7.5-million on creating the world’s best land-speed track. MEC for Roads and Public Works Dawid Rooi stated: ‘A bulldozer would read more Visit: www.northern-cape.gov.za Northern Cape Business 2013/14 40 have done this job within a short period of time, but we deliberately choose to make it an EPWP project so that we could create job opportunities for the local communities.’ The Department of Roads and Public Works is proud to announce that a total of 317 jobs have been created, consisting of 300 workers and 17 team leaders. The Northern Cape agreed to clear all obstacles on the pan and create a 20km x 1.1km surface that is completely level, has no obstacles including stones, dips or bumps on it, and has a surface quality that will enable the Bloodhound SSC (SuperSonic Car) to reach a speed of 1 600km perhour safely. focus Providing healthcare and creating jobs The New Referral Hospital in Upington, constructed and managed on behalf of Northern Cape Department of Roads and Public Works for the Department of Health, is set to improve the quality of healthcare services. T he new 267-bed referral hospital with modern and advanced medical equipment and a larger medical and specialist team will replace the former Gordonia Hospital. The hospital facility consists of theatres, an emergency unit, renal unit, burns unit, pharmacy unit, oncology unit, a 72-hour psychiatric facility, and other units such as a maternity unit and a forensic mortuary. On the same premises, there is a tuberculosis hospital, an EMS unit and six blocks of staff housing that will attract and accommodate the best specialists and nurses. During the construction of the health facility, many local SMMEs were afforded business opportunities, such as landscaping, bricklaying and paving of internal roads and the parking area. These opportunities created several jobs and simultaneously skilled jobless people in the Upington community. The internal roads and landscaping contractors subcontracted four local enterprises to work on various sections of the external roads. The new hospital, with its upmarket, private-hospital appearance, was constructed taking various green concepts into consideration read more to reduce the impact on the environment. The air-conditioning system makes use of an ice bank that cools at night, and during the day the air conditioner uses the accumulated cool air. Autoclaves (the water that has been used to sterilise medical utensils and equipment) and steam will be used for irrigation purposes in the garden. In terms of construction, the size of the windows was reduced to be more energy efficient as smaller windows allow for less air conditioning. In the staff housing units, heat pumps that use 70% less electricity have been installed instead of electrical geysers. The medical facility aims to improve the standard and quality of healthcare services of Upington and the surrounding communities. Upon completion, the hospital will be handed over to the provincial Department of Health which will be responsible for advertising all medical and administrative posts. The new hospital, having more units and sub-units, will contribute to curbing unemployment in the area. Visit: www.northern-cape.gov.za. 41 Northern Cape Business 2013/14 special feature Overview of the South African economy Key facts and figures on South Africa’s demographics, economy, trade and investment. South Africa fact file Capital: Pretoria Population: 51.8 million Area: 1 220 813km2 GDP: R2 964-billion (2011) GDP growth: 3.1% (2011) Income per capita: R58 549 (2011) CPI: 6.1% y/y (April 2012) PPI: 6.6% y/y (April 2012) Unemployment: 25.5% (Q3 2012) Gini Index: 57.8 (2009 UN Report) Gross domestic product Year Q1 Q2 Q3 Q4 Annual 2004 6.2 5.7 6.7 4.3 4.6 2005 4.1 7.4 5.6 2.7 5.3 2006 6.2 6.7 4.8 6.4 5.6 2007 6.5 3.1 5.0 6.0 5.5 2008 2.9 4.5 1.8 -1.7 3.6 2009 -6.3 -2.8 1.8 3.5 -1.5 2010 4.0 2.8 3.1 4.5 2.9 2011 4.6 1.0 1.7 3.2 3.1 2012 2.7 3.2 Table 1: GDP growth per quarter, 2003–2011. Source: Statistics South Africa South Africa’s real gross domestic product (GDP) growth slowed to a 2.7% increase on a quarteron-quarter seasonally adjusted annualised (q/q saa) basis – 2.1% year-on-year (y/y) in the first quarter of 2012 from 3.2% q/q saa (2.9% y/y) – in the fourth quarter of 2011 (Table 1). The largest industries, as measured by their nominal value added in the first quarter 2012, were finance, real estate and business services, making up 19.3% of the economy, and general government services making up 14.6%. The q/q saa changes in value added by the primary, secondary and tertiary sectors were -11.2%, 6.4%, and 3.0% respectively, during the first quarter of 2012. What is noteworthy, however, is that the mining sector – the number-one export industry in the country – declined by 16.8% q/q saa in the first quarter, due in part to a six-week illegal strike at Impala Platinum, the world’s second-largest platinum miner. Northern Cape Business 2013/14 Year GDP (R-m) GDP per capita (R) 2001 1 020 007 22 899 2002 1 168 699 25 831 2003 1 260 693 27 631 2004 1 415 273 30 297 2005 1 571 082 33 176 2006 1 767 422 36 844 2007 2 016 185 41 525 2008 2 262 502 46 072 2009 2 398 155 48 318 2010 2 661 434 53 088 2011 2 964 261 58 549 Table 2: GDP and GDP per capita at current prices, 1998–2009. Sources: www.thedti.gov.za, www.reservebank.co.za, World Bank, Statistics SA 42 special feature Sector Value in millions (R) % Real change from 2010 % of GDP 63 984 2 260 381 357 756 78 532 120 420 -.04 0.2 2.4 1.3 0.8 2.2 8.8 12.1 2.6 4.1 386 430 4.4 13.0 220 060 3.3 7.4 Agriculture, forestry and fishing Mining and quarrying Manufacturing Electricity and water Construction (contractors) Wholesale and retail trade, catering and accommodation Transport, storage and communications Finance and insurance, real estate and business services Personal services General government services Total value added at basic prices Taxes less subsidies on products 565 224 3.5 19.1 183 493 434 224 2 670 504 293 757 2.4 3.9 3.0 4.4 6.2 14.6 90.1 9.9 GDP at market prices 2 964 261 3.1 100 Table 3: Breakdown of South Africa’s GDP at current prices, per sector, 2011. Source: statistics south africa African Customs Union (non-SACU) trading partners in April 2012, after a deficit of R5.5-billion in March, taking the cumulative trade deficit in April 2011 to R36.5-billion, compared with R7.5-billion in the first four months of 2011. A record R17.4-billion deficit was set in January 2009, but as exports began to improve, so the deficits narrowed in 2009 to become surpluses in 2010. South Africa recorded its first annual trade surplus in seven years in 2010 of R4.8-billion, following a few stronger than expected surpluses on the trade account during the year. In 2012, however, the rise in the oil price in the first few months, coupled with a sharp reduction in platinum exports, saw the non-SACU foreign trade balance firmly in the red. The old myth that a weaker rand leads to more exports is once again disproved by the facts, as import growth was 23.5% in 2011, while export growth was 19.9% when the rand was weaker due to a R15-billion deficit. Prior to November 2011, when the rand had been stronger, export growth had exceeded import growth. In 2010, when the rand was strong because export growth of 14.9% exceeded import growth Trade: imports and exports South Africa’s international trade has risen sharply over the last 10 years (table 4). In 2004, the value of imports rose above that of exports. Tables 5 and 6 show the largest import and export sectors respectively, for April 2012. Important import sectors in April 2012 were machinery (R15.9-billion), mineral products – chiefly crude oil (R13-billion), transport equipment (R10.9-billion) and chemicals (R5.4-billion). On the export side, the most important sectors were mineral products, chiefly coal and iron ore (R14.8-billion), precious metals and diamonds (R10.2-billion), base metals (R7-billion) and transport equipment (R4.6-billion). Most of South Africa’s foreign trade takes place with Asia, the United States and Germany (tables 7 and 8). In 2011, China, the United States and Japan were, in descending order, the country’s top export markets, while top import-source countries were China, Germany and the US. South Africa recorded a trade deficit of R9.9-billion for its trade with non-Southern 43 Northern Cape Business 2013/14 special feature Year Imports in R-m Exports in R-m Sector Value in R-m 1999 147 356 165 555 2000 187 608 210 373 1. Machinery, mechanical and electrical 15 903 2001 216 033 251 330 2. Mineral products 12 991 2002 275 427 314 102 3. Transport equipment 2003 258 839 275 581 4. Chemical products 5 420 2004 306 927 296 246 5. Base metals 3 190 331 405 6. Plastics, rubber 2 591 396 529 7. Textiles 1 726 8. Optical, medical, photographic 1 579 2005 2006 351 665 465 040 2007 561 194 491 253 2008 727 632 663 099 2009 541 173 513 864 2010 585 219 590 207 2011 722 637 707 511 10 880 9. Foodstuffs, beverages 1 433 10.Vegetable products 1 045 Total 62 028 Table 5: South Africa’s top 10 import sectors, April 2012. Table 4: Annual value of South African non-SACU imports and exports, 1998–2011. Source: www.sars.gov.za Source: www.sars.gov.za. of 8.1%, there was a R4.8-billion surplus, the first annual surplus since 2003. In the first four months of 2012, when the rand was substantially weaker than in the same period in 2011, exports only grew by 7.4% y/y, while imports surged by 20.6% y/y. In mid-2009, South Africa ranked 61 out of 121 countries, from 59th out of 118 in 2008 in the World Economic Forum’s Global Enabling Trade Report. But in 2010, it slipped to 72 out of 126 countries. It ranks above Zimbabwe (122), Ivory Coast (123), Kenya (105), Tanzania (97), Argentina (95) and India (84). Sector 1. Mineral products 92 269 3. Vehicles, aircraft, vessels 49 938 4.Machinery, mechanical electrical 47 748 5. Chemical products 31 203 6. Vegetable products 21 204 7. Foodstuffs, beverages 19 660 8. Paper, pulp 10 931 9. Plastics, rubber 9 504 Total 5 230 590 207 Table 6: South Africa’s top export sectors, April 2012. South Africa’s privately held business (PHB) owners’ intentions to grow through acquisition seem to align with expectations of BRICS (Brazil, Russia, India and China) countries in the upcoming 12 months, according to Grant Thornton’s 2011 International Business Report (IBR) on M&A activity. SA was invited to join the BRIC grouping in 2011. Northern Cape Business 2013/14 126 512 2. Base metals 10. Animals, animal products Foreign direct investment and public investment Value in R-m Source: www.sars.gov.za South Africa also fared well in a number of other indices. It was ranked 45th out of 133 on the World Economic Forum’s Global Competitiveness Index for 2009/10, and improved to 54 out of 139 countries in 2010/11. It was 32nd out of 181 countries in the World 44 special feature Bank and International Finance Corporation’s Doing Business 2009 report, and 34 out of 183 in 2010. This study measures the time, cost and hassle for businesses to comply with legal and administrative requirements. South Africa was at number 35 in 2008. Public-sector infrastructure investment, the expansion of electricity generation and distribution capacity by electricity supplier Eskom, upgrades to ports and railways by state-owned enterprise Transnet, and major road-construc- Country 1. China Value in R-m 103 174 2. Germany 77 396 3. USA 56 944 4. Japan 34 377 5. Saudi Arabia 32 294 6. India 29 220 7. UK 28 965 8. Iran tion projects remain the major challenges for the economy, but government continues to invest strongly in all areas. The ratio of fixed capital investment to GDP rose consistently over the five years to the end of 2008, to reach 24.6%, just below the government’s target of 25%. A cut-back in both government and private-sector fixed investment saw the ratio drop to 18.9% in the fourth quarter of 2010, before starting a slow recovery. General government fixed investment had the first quarterly increase in the second quarter of 2011 after nine quarters of decline. Total fixed investment has now increased for