SOUTH AFRICAN BUSINESS SOUTH AFRICAN BUSINESS
THE GUIDE TO BUSINESS AND INVESTMENT IN SOUTH AFRICA
THE GUIDE TO BUSINESS AND INVESTMENT IN SOUTH AFRICA
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BUY LOCAL INVEST LOCAL Let’s come together and heal as a nation. Let’s focus on Renewing, Restoring and Rebuilding successful partnerships and investment opportunities so we can get back to promoting our city as the ideal destination for business and pleasure to the rest of the world. Your support coupled with our world-class infrastructure, innovative business environment and ever evolving investment opportunities, means we can get back to ‘connecting continents’ in no time.
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Tel: +27 31 311 4227 Email: email@example.com web: invest.durban
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Extensive first-world road, rail, sea and air
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The city of Durban (eThekwini Municipality) is South Africa’s second most important economic region
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Building the South African Nation Brand
South AfricaActing of today is definitely not Officer the same country administration can be achieved, i Brand he South Africa Chief Marketing Mpumi Mabuza outlines the that emerged from a tumultuous history only 25 years ago in viewed against the background strategic steps being taken to position the country in the region and the world.
1994. During 2019, the country’s sixth democratically elected of the broader competitive and administration took office,active understeps the leadership President South comparative advantages up its economicof infrastructure. Africa is also one of the rand South Africa is taking highest-ranking developing proverbial economies and surpasses to take a critical look at the current state Cyril Ramaphosa. sleeve. countries such as Hungary, andAfrica Thailand. the country and propose possible As theofcountry completes its first quarter century of democracy, the Italy, Brazil South is, for example Diverse sectors: South Africa has the most solutions on how we can successfully strategic objectives of the sixth administration weredynamic made clear during one of the most transparen economy on the continent, with key navigate our way to a better tomorrow in terms of hispositively first State of the Nation Address new administration state sectors ranging from governance finance, mining,systems in positioning the Nation Brand.(SONA) of the productive (20 June In hosted this SONA, the President stated that, “As we enter this thepharmaceuticals world. Ranking manufacturing, agriculture, andsecond ou We 2019). recently the Nation Brand Forum healthcare, transport and logistics, under the theme #BelieveinSA. Brand Africa new administration, we will focus onSouth seven priorities: of 102communications countries in the Open and information technology to create a platform for that forward • sought Economic transformation andkind jobofcreation Budget Index, and also ranking Ease of doing business: According to the World thinking. It also aimed to highlight the objectives • Education, skills and health as first out of 141 countries fo Bank, it costs just R175 to start a business in South of the Reconstruction and Recovery Plan, in order • Consolidating the social wage through reliable and quality basic Budget Transparency, in the Africa, which is cheaper than 90% of the rest of the to reassure South Africa and the world that we are World Forum Globa world. Reserving a company nameEconomic and registering aservices country committed to rebuilding and creating a • better Spatial integration, Index (WEF GCI) withgovernment the Companies andCompetitiveness Intellectual Property country for all. human settlements and local Commission (CIPC) can cost less than R200. South systems it is Southcohesion Africans have themselves as a very • Social andproven safe communities In terms of its financial start-up affordability, nation. We pride on our ability • resilient A capable, ethical andourselves developmental state Africa is ranked 10th for its evident that the country is a world with a total cost relative to the monthly average to overcome adversity. Brand South Africa has to • A better Africa and world.” leader in that it ranks 19th in the income of 3%. Most neighbouring countries have remind the world, and sometimes South Africans, The Africa the inspiring sixth administration is a country with Finance percentages. pillar of the WEF GCI. Bu considerably higher cost-to-income that weSouth continue to be aof nation new ways. much to offer its citizens, and the world. Objectives set by the current it does not stop there.
Covid-19 collaboration We have highlighted the cross-sectoral collaboration 4 has taken place with a broad spectrum of that stakeholders who have found innovative solutions to the health, economic and social challenges caused by the pandemic. South Africa has reiterated the importance of equitable access to vaccines which will ensure that
South Africa’s unique selling points Economic prowess: South Africa is the economic SOUTH AFRICAN BUSINESS 2020 with a Gross powerhouse of the African continent, Domestic Product (GDP) of R1.9-trillion (US$283bn) – four times that of its Southern African neighbours and comprising 30% of the entire GDP of Africa. South Africa has strong entrepreneurial and dynamic investment environment due to highly developed SOUTH AFRICAN BUSINESS 2022
if d d s
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we end the pandemic sooner and then we can build-back-better. We also firmly believe that our call for the World Trade Organisation to waive intellectual property rights tied to Covid-19 vaccines would be the correct decision for humanity, and if implemented it would allow more pharmaceutical companies, including our own, to manufacture life-saving vaccines. Encouraging active citizenship and Nation Brand Advocacy Play Your Part was in its 10th year in 2021 and continues to encourage all South Africans to be active citizens, placing it upon themselves to be the change that they want to see and impact those around them to do the same. Play Your Part has been successful in highlighting what ordinary South Africans are doing to change the social and material conditions of the most vulnerable sections of South African society. The most impactful projects through the PYP campaign are those related to education and gender-based violence. PYP has become an important slogan, an essential part of South African society, where we are all tasked with contributing positively in order to create the country that we all deserve. Equally important is the Global South Africans programme which aims to build Nation Brand advocacy among South Africans in the diaspora. South African living abroad are encouraged to be patriotic and fly the South African flag high wherever they are. Brand South Africa’s role is to create opportunities and platforms for Global South Africans to connect and also empower them with messages and information about key issues in the country. Promoting South Africa in the region and beyond Regional forums such as SADC and the AU are hugely important for South Africa in that they continue to highlight the role we play as a key player, especially in terms of regional governance, peace and security. Health and climate diplomacy are proving to be key pillars of foreign policy for many states. Through our TRIPS (Trade-Related Aspects of Intellectual Property Rights) waiver request to the World Trade Organization, South Africa showed its commitment to ensuring equitable access to vaccines for African countries. South Africa is a country brand that is synonymous with championing causes that seek to improve the lives of all Africans.
Mpumi Mabuza, Brand SA Acting Chief Marketing Officer The BRICS nations (Brazil, Russia, India, China and South Africa) have identified the need to strengthen cooperation among themselves to support economic recovery, ensure financial stability and guard against future uncertainties, such as those brought about by Covid-19. The strengthening of international cooperation and establishing a crossborder regulatory mechanism for further improving the investment environment and enhancing capital flows is the next goal for BRICS countries. Some notable outcomes are the New Development Bank and the Contingent Reserve Arrangement which have marked significant progress in expanding the tangible financial cooperation among BRICS nations. The fact that the Secretary General of the African Continental Free Trade Area (AfCFTA) is South African is a great selling point for the country and Brand South Africa. We have a well-established relationship with the Secretariat and we aim to collaborate on a number of strategic projects that will seek to better educate South Africans and the rest of the continent on what opportunities are available through the AfCFTA. We are also keen to bring the Nation Brand message to the continent by proposing that African nations adopt Nation Brand strategies with the aim of creating carefully curated narratives that seek to position them better as key destinations for trade and investment under the AfCFTA. We believe that our experience as the oldest Nation Brand agency in Africa will be of great benefit to our brothers and sisters on the continent. ■
CONTENTS South African Business 2022 Edition
A unique guide to business and investment in South Africa.
Special features An economic overview of South Africa
Provinces of South Africa
Special Economic Zones
Gas exploration is reaping dividends – mining could be next
Growing the economy while simultaneously paying off debt presents a huge challenge but infrastructure plans and green financing options offer opportunities.
Several SEZs are focussing on green energy and green technology. A snapshot of South Africa’s provinces.
A vital refinery could start receiving new feedstock to prolong its life.
Economic sectors Agriculture 40 Rooibos has won the battle for unique regional status.
Mining 44 Record earnings for miners have been good for the national Treasury.
Energy 48 Generation exemption has changed the energy landscape.
Oil, gas and petrochemicals
Offshore gas discoveries could boost South Africa’s economy.
Water 58 A three-year programme will tackle dam storage problems. SOUTH AFRICAN BUSINESS 2022
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Engineering 62 Renewable energy projects are coming on stream.
Construction and property
Covid-19 has shaken up sector priorities.
Manufacturing 65 Vaccine manufacturing is accelerating.
Transport and logistics
The private sector is set to play a bigger role in transport.
Automotive 72 Total manufacture and exports rebounded well in 2021.
ICT 73 Covid-19 has increased demand for faster data speeds.
Tourism 74 The summer of 2021/22 will be vital for the sector.
Banking and financial services
Development finance and SMME support
120 years on, Cape Town has a stock exchange again. The IDC has assets of R144-billion.
References Key sector contents
SOUTH AFRICAN BUSINESS
Overviews of the main economic sectors of South Africa.
SOUTH AFRICAN BUSINESS
THE GUIDE TO BUSINESS AND INVESTMENT IN SOUTH AFRICA
THE GUIDE TO BUSINESS AND INVESTMENT IN SOUTH AFRICA
ABOUT THE COVER: The Deepsea Stavanger oil drilling rig has been active off South Africa’s coast (PASA). Top right to bottom left: Rooibos is now protected (SA Rooibos Council); the Port of Richards Bay (TNPA); zebras (Sifiso/Brand SA); a farmhouse near Clarens in the Free State (Flickr/SA Tourism); the zinc project in the Northern Cape (Kevin Wright/Vedanta Zinc International).
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SOUTH AFRICAN BUSINESS 2022
South African Business A unique guide to business and investment in South Africa.
Credits Publishing director: Chris Whales Editor: John Young Managing director: Clive During Online editor: Christoff Scholtz Designer: Tyra Martin Production: Aneeqah Solomon Ad sales: Gavin van der Merwe Sam Oliver Jeremy Petersen Gabriel Venter Vanessa Wallace Shiko Diala Tahlia Wyngaard Administration & accounts: Charlene Steynberg Kathy Wootton Distribution and circulation manager: Edward MacDonald Printing: FA Print
elcome to the 10th edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa, supported by an e-book edition at www. southafricanbusiness.co.za. Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provinces. This issue has a focus on Special Economic Zones which are being rolled out across the country with specific economic areas of focus. The importance of the revival of minerals exploration and the significance of onshore and offshore gas discoveries is the subject of another special feature. South African Business is complemented by nine regional publications covering the business and investment environment in each of South Africa’s provinces. The e-book editions can be viewed online at www.globalafricanetwork. co.za. These unique titles are supported by a monthly business e-newsletter with a circulation of over 23 000. In 2020, the inaugural African Business joined the Global African Network stable of publications. ■ Chris Whales Publisher, Global Africa Network | Email: firstname.lastname@example.org
South African Business is distributed internationally on outgoing and incoming trade missions, through trade and investment agencies; to foreign offices in South Africa’s main trading partners around the world; at top national and international events; through the offices of foreign representatives in South Africa; as well as nationally and regionally via chambers of commerce, tourism offices, airport lounges, provincial government departments, municipalities and companies.
Global Africa Network Media (Pty) Ltd Company Registration No: 2004/004982/07 Directors: Clive During, Chris Whales Physical address: 28 Main Road, Rondebosch 7700 Postal address: PO Box 292, Newlands 7701 Tel: +27 21 657 6200 | Fax: +27 21 674 6943 Email: email@example.com | Website: www.gan.co.za
Member of the Audit Bureau of Circulations COPYRIGHT | South African Business is an independent publication published by Global Africa Network Media (Pty) Ltd. Full copyright to the publication vests with Global Africa Network Media (Pty) Ltd. No part of the publication may be reproduced in any form without the written permission of Global Africa Network Media (Pty) Ltd. PHOTO CREDITS | Addo Elephant National Park; Bosch Holdings; BTE Renewables; Council for Geoscience; Dedisa Peaking Plant; Dominic Bonnesse Architects; Eskom; Fortress REIT; Gestamp Renewable Industries; Glencore; Harmony; Kristof Basson Architects; PASA; PG
ISSN 2221-4194 Bison; Pilanesberg Platinum Mines; Primocane Capital; Renergen; Seda; Sun International; Thungela Resources; Transnet National Port Authority. . DISCLAIMER | While the publisher, Global Africa Network Media (Pty) Ltd, has used all reasonable efforts to ensure that the information contained in South African 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.
SOUTH AFRICAN BUSINESS 2022
AN ECONOMIC OVERVIEW OF
SOUTH AFRICA Growing the economy while simultaneously paying off debt presents a huge challenge but infrastructure plans and green financing options offer opportunities. By John Young
but in his first budget presentation, the midterm budget in November, he did not present any new items of expenditure. Rather, he presented a budget that reflected the fact that there is currently no money to spend on new programmes. There has to be less spending, fewer borrowings and the public debt has to be controlled. Finding a way to grow the economy in that environment will be tough. As to signals of what the new Finance Minister intends doing in the future, one commentator found significance in how Godongwana spent the unexpected windfall of R120-billion that came the way of Treasury because of the high prices of commodities in 2021. Professor Haroon Bhorat of the University of Cape Town broke down “every R1 of tax revenue the government received from this lottery” as follows: 51 cents on debt; 17 cents to civil servant wages; 32 cents on relief packages.
wo numbers came to the fore in 2021, one quite modest, the other ex tremely large. Both the 100MW extension granted on the ability of private power generators to go ahead with a project without the need for licensing and the R130-billion pledged in green financing to South Africa by several rich countries at the COP26 conference could have farreaching consequences for the trajectory of South Africa’s economy. South Africa’s economy has to grow and the country’s debt has to be reduced. How to do these things simultaneously is the challenge for the country’s new Minister of Finance, Enoch Godongwana, who was appointed in August 2021, replacing Tito Mboweni, who asked to be relieved of his duties. Like many of his cabinet colleagues and the president, Godongwana cut his political teeth in the trade union movement SOUTH AFRICAN BUSINESS 2022
SPECIAL FEATURE The plan intends to unlock R1-trillion in private investment. Furthermore, a commitment is made to improving the capability of the state and to remove barriers to doing business or investing in the country. Enabled in 2020 by an amendment to legislation that allowed them to work with the evidence presented to the state capture commission, National Prosecuting Authority (NPA) prosecutors quickly finalised cases and arrests started happening. After a decade in which it seemed that immunity was guaranteed for corrupt officials and employees of state-owned enterprises, the tide started to turn. In 2021 expresident Zuma’s refusal to appear before the commission led to him spending time in jail. His trial on substantive corruption charges lies ahead. The outbreak of looting and violence that appeared to be triggered by Zuma’s jailing probably had more to do with the frustration felt by many South Africans at the culture of impunity which has surrounded many politicians and thieving business people than it did with the specifics of the Zuma case. The looting happened at supermarkets after all, not where Zuma was incarcerated. Prosecutions obviously do not provide certainty against future corruption, but at least the prospect of arrest might be a deterrent. One of the biggest obstacles to economic recovery is South Africa’s level of debt, and that is caused largely by the state electricity utility, Eskom, where corruption was rife for years. The government’s directory lists 131 stateowned entities but there are said to be about 700 altogether, at various levels of government. Entities include the Central Energy Fund, the Commission for Conciliation, Mediation and Arbitration, the Commission for Employment Equity and the Companies and Intellectual Property Commission (CIPC) but the three biggest, all of which fall under the Department of Public Enterprises, are Eskom, South African Airways (SAA) and Transnet, with five large divisions covering ports, railways and logistics. Eskom and SAA are significant drains on the country’s finances and getting control of all of the country’s SOEs is another major priority. At municipal level, the decision by Clover to relocate their large cheese factory away from
Bhorat’s conclusion was that government is committed to fiscal consolidation “while being willing to spend within limits on direct transfers”. Which is why the two numbers mentioned above become so critical. When President Ramaphosa announced that private power investors could create up to 100MW of power without having to wait for licensing, he potentially opened up a path to growth, a path that has been constrained for some time by the limitations of the national utility, Eskom. Eskom’s inability to provide enough electricity to power the economy (and its huge debt) rank as the biggest risks to the South African economy. Opportunities for private consortiums such as the Dedisa Peaking Power Plant at the Coega SEZ (pictured) will expand. Eskom’s unbundling will be another spur to growth. The legal separation of transmission is expected to be completed by December 2021 with the other two elements, generation and distribution, to follow. The idea is not to privatise the entities but to find private partners and to allow for competition within the various fields. The R130-billion pledged by the EU, the US, Germany, France and the UK is not straightforward; it comes as a mixture of grants, risk-sharing instruments and concessional finance but it will allow South Africa to fund projects that will help the country to move away from fossil fuels without further stretching Eskom’s precarious finances. The commodities attracting the most attention are those which have the potential to power the green economy, platinum group metals (PGMs) and chrome among them. In August 2021, exports were reportedly 44% higher than the year before. Covid obviously had a lot to do with that figure, but R166.5-billion still represented a good number. Recovery plan The government’s recovery plan is called the Economic Reconstruction and Recovery Plan (ERRP) and it has a focus on expanding and improving infrastructure, a public employment stimulus, local industrial development and the expansion of energy generation.
SOUTH AFRICAN BUSINESS 2022
The Council for Geoscience is running a passive water remediation pilot project in Mpumalanga. Credit: CGS South Africa’s traditional strength in minerals still holds good. Although gold mining is declining in volumes (even while prices rise), the major investment of Vedanta Zinc International in a project in the Northern Cape and SibanyeStillwater’s acquisition drive in the PGM sector are significant economic drivers. Coal and iron ore continue to be exported in large volumes through the Richards Bay Coal Terminal on the east coast and the Port of Saldanha on the west coast. Automotive manufacturing and automotive components remain vital sectors, with major investments by most of the major marques and increased exports a feature of recent activity. There has been inward investment in recent years, most notably by the Beijing Automotive International Corporation (BAIC) in the Coega Special Economic Zone outside Port Elizabeth. The Tshwane Automotive Special Economic Zone (TASEZ) has been launched at Silverton in Pretoria. A new SEZ has been formally declared in the northern part of Limpopo, the Musina-Makhado SEZ. The Namakwa SEZ in the Northern Cape is awaiting its license, as is the Fetakgomo-Tubatse SEZ in eastern Limpopo. ■
Lichtenberg in the North West to Queensburgh in KwaZulu-Natal had everything to do with a dysfunctional local government unable to supply basic services. If South Africa’s rural areas and smaller towns are to thrive, more interventions at this level are needed. Agriculture was another industry that saw some positives during the Covid-19 lockdown. Although sectors like wine suffered badly, a reported increase in maize exports, as well as greater international demand for citrus fruits and pecan nuts, helped the industry expand by 15% (StatsSA). Grain crops such as maize, wheat, barley and soya beans are among the county’s most important crops. Only rice is imported. Wine, corn and sugar are other major exports. Basing economic growth on a devaluing currency is not always the best long-term method of boosting economic growth, but high-value agricultural exports and increased numbers of high-spending international tourists hold some promise for helping to get the South African economy back on a growth path. Horticulture in particular is seen as holding great potential not only for increased earnings, but for creating jobs. SOUTH AFRICAN BUSINESS 2022
Provinces of South Africa A snapshot of South Africa’s nine provinces.
Eastern Eastern Cape Cape
Free Free State State
Capital: Bhisho Bhisho Capital: Maintowns: towns:Port Gqeberha (formerly Main Elizabeth, East Port Elizabeth), East London, London, Uitenhage, GraaffKariegaMthatha, (formerlyGrahamstown Uitenhage), Reinet, Graaff-Reinet, Mthatha, Makhanda (Makhanda) Population: 6 916 200 6 916 200(2015) (2015) Population: Area:168 966km² 168 966km²(13.8% (13.8% Area: ofSouth South Africa) Africa) of
Capital: Bloemfontein Bloemfontein Capital: Maintowns: towns:Welkom, Welkom, Sasolburg, Sasolburg, Main Parys, Kroonstad Kroonstad Parys,
Capital: Johannesburg Johannesburg Capital: Main towns: towns:Tshwane Tshwane (including Main Pretoria), Ekurhuleni, Vanderbijl(including Pretoria), Ekurhuleni, park, Roodepoort Vanderbijlpark, Roodepoort
Population: Population: 2 817 900 2 817 900(2015) (2015) Area: Area:129 129825km² 825km²(10.6% (10.6% of of South South Africa) Africa)
Population: 13 200 300 13 200 300(2015) (2015) Population: Area: 18 18178km² 178km²(1.5% (1.5% Area: of South South Africa) Africa) of
Premier: Premier: Lubabalo Oscar Oscar Mabuyane Mabuyane (ANC) (ANC) Lubabalo
Premier: Premier: Sefora Sefora Hixsonia Hixsonia Ntombela Ntombela (ANC) (ANC)
Premier: Premier: David Makhura Makhura (ANC) (ANC) David
Keysectors: sectors: Automotive, Automotive, Key agriculture, agri-processing, agro-processing, agriculture, forestry, finance, finance, retail, retail, tourism, tourism, forestry, renewable energy. energy. renewable Infrastructure: Coega Coega Industrial Industrial Infrastructure: Development Zone, Zone, East East London London Development IndustrialDevelopment DevelopmentZone, Zone, Industrial ports of of East East London, London, Port Port ports Elizabeth and and Ngqura, Ngqura, airports airports at at Elizabeth Gqeberha andand EastEast London. Port Elizabeth London.
Key sectors: sectors: Financial Financial and and banking, Key manufacturing, trade, creative banking, manufacturing, trade, industries, media. media. creative industries,
Notable tourism tourismassets: assets:Addo Addo Notable ElephantNational NationalPark, Park, Mountain Mountain Elephant Zebra National National Park, Park, Wild Wild Coast, Coast, Zebra Jeffreys Bay, Bay, National NationalArts Arts Festival. Festival. Jeffreys
Key Keysectors: sectors: Agriculture, Agriculture, agri-processing, agro-processing,chemical chemical manufacturing, manufacturing, mining, transport and and logistics. logistics. Infrastructure: Infrastructure: Maluti-A-Phofung Maluti-A-Phofung Special Special Economic Economic Zone, Zone, Bram Bram Fischer International InternationalAirport, Airport, Fischer University of of the the Free Free State, State, University Central University University of of Technology, Central N8 Corridor. Corridor. N8 Notable tourism tourism assets: assets: Vaal Vaal Notable River, Gariep GariepDam, Dam,Golden Golden Gate Gate River, HighlandsNational NationalPark, Park,Cherry Cherry Highlands Festival, Mangaung African Festival, Cultural Festival Festival (Macufe). (Macufe). Cultural
Provincial government government website: website: Provincial www.ecprov.gov.za www.ecprov.gov.za Eastern Cape Cape Development Development Eastern Corporation: www.ecdc.co.za www.ecdc.co.za Corporation:
Provincial government government website: website: Provincial www.freestateonline.fs.gov.za www.freestateonline.fs.gov.za Free State StateDevelopment Development Free Corporation: www.fdc.co.za www.fdc.co.za Corporation:
SOUTH SOUTH AFRICAN AFRICAN BUSINESS BUSINESS 2021 2020
Infrastructure: OR Tambo Infrastructure: InternationalAirport, Airport, Gautrain, ORT Special International Economic Zone, Gautrain, major major universities and research universities and instituinstitutions, largeresearch convention tions, large centres, centres, FNBconvention Stadium (Soccer City). FNB Stadium (Soccer City). Notable tourism assets: Cradle of Notable tourism assets:Museum, Cradle of Humankind, Apartheid Humankind, Hill, Apartheid Museum, Constitution Magaliesberg, Constitution Magaliesberg, Soweto tours,Hill, Dinokeng. Soweto tours, Dinokeng. Provincial government website: Provincial government website: www.gauteng.gov.za www.gauteng.gov.za Gauteng Growth and Gauteng Growth and DevelopDevelopment Agency: ment Agency: www.ggda.co.za www.ggda.co.za
FEATURE SPECIALSPECIAL FEATURE SPECIAL FEATURE
Capital: Pietermaritzburg Pietermaritzburg Capital: Main towns: towns: Durban, Durban, Newcastle, Newcastle, Main Ballito, Port Port Shepstone, Shepstone, Ballito, Empangeni, Ulundi Ulundi Empangeni, Population: 10 919 100 10 919 100(2015) (2015) Population: Area: 125 125755km² 755km²(7.7% (7.7% of Area: South Africa) of South Africa) Premier: Sihle Zikalala (ANC) Premier:
Capital: Polokwane Polokwane Capital: Main towns: towns: Musina, Musina, Ba-Phalabora, Main Bela-Bela, Steelpoort, Tzaneen, Ba-Phalabora, Bela-Bela, Thohoyandou Steelpoort, Tzaneen, Thohoyandou Population: 5 726 800 5 726 800 (2015) (2015) Population: Area: 125 125 755km² 755km²(10.2% (10.2% of Area: South Africa) of South Africa) Premier: Chupu Stanley Mathabatha (ANC) Premier:
Sihle Zikalala (ANC) Key sectors: Chemicals, dissolving pulpsectors: manufacture, forestry, Key Chemicals,sugar, dissolving automotive, textiles and footwear, pulp manufacture, sugar, forestry, mining, oil textiles and gas, logistics. automotive, and footwear, Infrastructure: King Shaka mining, oil and gas, logistics. InternationalKing Airport, Infrastructure: ShakaDube TradePort, Richards Bay Industrial International Airport, Dube TradePort, Development Zone,Development ports of Richards Bay Industrial Richards and Durban, Albert Zone, portsBay of Richards Bay and Luthuli International Convention Durban, Albert Luthuli International Centre Complex. Convention Centre Complex. Notabletourism tourism assets: HluhluweNotable assets: HluhluweiMfolozi Park, the Drakensberg iMfolozi Park, the Drakensberg mountains,iSimangilso iSimangaliso Wetland mountains, Wetlands Park,Durban Durbanbeaches, beaches, South Park, South Coast, Coast, Zulu heritage, cultural historical heritage, Zulu cultural historical battlefields. battlefields.
Chupu Stanley Mathabatha (ANC) Key sectors: Mining, agriculture, tourism, logistics. Key sectors: Mining, agriculture,
Notable tourism tourism assets: assets: Kruger Kruger Notable National Park, Mapungubwe National Park, Mapungubwe World Heritage Site, Makapans Heritage Site, Makapans Valley, Valley, Marula Waterberg Marula Festival,Festival, Waterberg Biosphere. Biosphere.
Capital: Mbombela Capital: Mbombela Main towns: Emalahleni, Main towns: Emalahleni, Middelburg, Sabie,Lydenburg Middelburg, Sabie, Lydenburg Population: 4 283 900(2015) (2015) Population: 4 283 900 Area: 76 495km² (6.3% of Area: 76 495km² (6.3% South Africa) of South Africa) Premier: Refilwe Premier:Mtshweni-Tsipane (ANC) Refilwe Mtshweni-Tsipane (ANC) Key sectors: Agriculture, forestry, mining, steel manufacturing, Key sectors: Agriculture, forestry, petrochemicals, pulp and paper, mining,generation, steel manufacturing, power tourism. petrochemicals, pulp and paper, power generation, tourism. Infrastructure: Nkomazi Special Infrastructure: Nkomazi Special Economic Zone, Mbombela Economic Zone, Mbombela International Fresh Produce International Fresh Produce Market, Maputo Development Market, Maputo Corridor, KrugerDevelopment Mpumalanga Corridor, Kruger Mpumalanga International Airport. International Airport. Notable tourism tourismassets: assets:Kruger Kruger National Park,Blyde BlydeRiver RiverCanyon, National Park, Canyon, Barberton Makhonjwa Barberton Makhonjwa Mountains Mountains (a UNESCO World (a UNESCO World Heritage Site). Heritage Site).
Provincial government website: Provincial government website: www.limpopo.gov.za www.limpopo.gov.zaLimpopo Limpopo Economic Economic Development Agency: Development Agency: www.lieda.gov.za www.lieda.gov.za
Provincial government website: Provincial government website: www.mpumalanga.gov.za www.mpumalanga.gov.za Mpumalanga Economic Growth Mpumalanga Economic Growth Agency: www.mega.gov.za Agency: www.mega.gov.za
Provincial government website: Provincial government website: www.kznonline.gov.za www.kznonline.gov.za Trade and Investment KwaZuluTrade and Investment KwaZuluNatal: www.tikzn.co.za Natal: www.tikzn.co.za
tourism, logistics. Infrastructure: Musina-Makhado Special Economic Zone, Infrastructure: Musina-Makhado Fetakgomo-Tubatse Special Special Economic Zone, N1 Economicand Zone, highway and highway rail N1 network, new rail network, new Medupi power Medupi power station. station.
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SOUTH AFRICAN BUSINESS 2021 SOUTH AFRICAN BUSINESS 2020
Capital: Kimberley Main towns: Douglas, Upington, Capital: Kimberley De Aar, Port Nolloth, Main towns: Douglas,Colesberg Upington, De Aar, Port Nolloth, Colesberg Population: 1 185 600 (2015) Area: 372 889km² (30.5% of Population: 1 185 600 (2015) South372 Africa) Area: 889km² (30.5% of South Africa) Premier: Dr Zamani Saul (ANC) Premier: Dr Zamani Saul (ANC) Key sectors: Agriculture, mining, renewable astronomy. Key sectors:energy, Agriculture, mining, renewable energy, astronomy. Infrastructure: Upington Special Economic Zone, Sol Plaatje University, Vaalharts Irrigation Infrastructure: Upington Special Scheme, Square Economic Zone, Kilometre Sol PlaatjeArray telescope project, Namakwa University, Vaalharts Irrigation Special Economic Zone Scheme. (proposed). Notable tourism assets: Six national tourism parks including the Notable assets: Six Kgalagadi Transfrontier national parks includingPark, the Orange River, spring flower Kgalagadi Transfrontier Park, displays,River, diamond routes. Orange spring flower
displays, diamond routes. Provincial government government website: website: Provincial www.northern-cape.gov.za www.northern-cape.gov.za Department of of Economic Economic Department Development and and Tourism: Development Tourism: www.northern-cape.gov.za/dedat www.northern-cape.gov.za/dedat
Capital: Mahikeng Main towns: Klerksdorp, Capital: Mahikeng Rustenburg, Brits, Potchefstroom Main towns: Klerksdorp, Rustenburg, Brits, Potchefstroom Population: 3 707 000 (2015) Area: 104 882km² (8.6% of South Africa)3 707 000 (2015) Population: Area: 104 882km² (8.6% of South Africa) Premier: Bushy Maape (ANC) Premier: Professor Tebogo Job Mokgoro (ANC) Key sectors: Mining, agriculture, agri-processing, automotive Key sectors: Mining, agriculture, components. automotive agri-processing, components. Infrastructure: Hartbeespoort Dam, Pelindaba nuclear research Infrastructure: Hartbeespoort unit, North Westnuclear University, Dam, Pelindaba research Bakwena Highway. unit, NorthPlatinum West University, Bakwena Platinum Highway. Notable tourism assets: Sun City, Mmbatho Palms Hotel Casino Convention Resort, Pilanesberg Notable tourism assets: Sun City, National Park, 18 Hotel luxuryCasino lodges in Mmbatho Palms Madikwe Game Reserve. Convention Resort, Pilanesberg
National Park, 18 luxury lodges in Madikwe Game Reserve. Provincial government website: www.nwpg.gov.za Provincial government website: North West Development www.nwpg.gov.za Corporation: www.nwdc.co.za North West Development
15 SOUTH SOUTH AFRICAN AFRICAN BUSINESS BUSINESS 2021 2020
Capital: Cape Town Main towns: Capital: CapeStellenbosch, Town George, Plettenberg Bay, Beaufort Main towns: Stellenbosch, West, Oudtshoorn, Worcester, George, Plettenberg Bay, Beaufort Malmesbury West, Oudtshoorn, Worcester, Population: 6 200 100 (2015) Malmesbury Area: 129 462km² (10.6% of Population: 6 200 100 (2015) South129 Africa) Area: 462km² (10.6% of South Africa) Premier: Alan Winde (DA) Premier: Alan Winde (DA) Key sectors: Agriculture, agriprocessing, and grapes, Key sectors: wine Agriculture, agrifinancial services, manufacturing, processing, wine and grapes, tourism, oil and gas, boatbuilding. financial services, manufacturing, Infrastructure: Cape Town, tourism, oil andPorts gas, of boatbuilding. Saldanha and Mossel Mossgas Infrastructure: Ports ofBay, Cape oil-to-gas refinery, Cape Town Town, Saldanha and Mossel Bay, International Airport, Cape Town Mossgas oil-to-gas refinery, Cape International Convention Town International Airport,Centre, Cape Koeberg nuclear power station. Town International Convention NotableKoeberg tourism nuclear assets: Table Centre, power Mountain, Garden Route National station. Park, Karoo National Park, West Notable tourism assets: Table Coast National Park,Route Kirstenbosch Mountain, Garden National Botanical Gardens, Park, Karoo NationalCape Park,Point, West V&A Waterfront, Plettenberg Coast National Park, Kirstenbosch Bay, RouteGardens, 62, ZeitzCape Museum Botanical Point,of Contemporary V&A Waterfront,Art. Plettenberg
Bay, Route 62, Zeitz Museum of Provincial government website: Contemporary Art. www.westerncape.gov.za Wesgro: www.wesgro.co.za Provincial government website: www.westerncape.gov.za Wesgro: www.wesgro.co.za SOUTH AFRICAN BUSINESS 2022
Special Economic Zones Several SEZs are focussing on green energy and green technology.
play to regional strengths. Limpopo has two SEZs, both of which aim to use the province’s rich mineral resource as a base for other economic activities. One is already attracting investors and the other is in the process of being registered. The Musina-Makhado SEZ (MMSEZ) in the far north and the Fetakgomo-Tubatse SEZ (FTSEZ) in the east are central to the strategy of expanding Limpopo’s manufacturing capacity. Building new industrial parks and reviving existing areas support the same goal. As of February 2020, Shaanxi CEI Investment Holdings had committed to a $5-billion investment in a vanadium and titanium smelter project at the MMSEZ and a further $1.1-billion had been pledged from other sources. The first-phase focus is on energy and metallurgical processes but agroprocessing, logistics and general manufacturing are expected to follow. The FTSEZ is located in the heart of the one of the most mineral-rich localities on earth, the
key component of the strategy to boost the value of South African mineral and agricultural products is to develop infrastructure where manufacturing can take place, namely Special Economic Zones (SEZs) and industrial parks. South Africa has 12 registered SEZs and several more are in the planning or registration phase. National and provincial incentives are in place to attract investors to the SEZs, with the added benefits of existing infrastructure and access to companies relevant to an investor’s value chain. A 2021 report by the Centre for Development and Enterprise has suggested that the zones are not sufficiently special, and that experimentation with greater flexibility in terms of labour regulations would reap dividends. The CDE notes that if companies were exporting, the issue of competing with local concerns would not arise. The CDE has suggested the Coega SEZ as the site for such an experiment. Each province has been allocated SEZs that
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Auto-catalysts from PGMs. Components for vehicle and trucking industry (and assembly of the same).
Investors in education and skills are invited to collaborate with MERSETA, the Limpopo Economic Development Agency (LEDA) and companies in the mining sector. Green focus One of the unique selling propositions of the FTSEZ is in its potential as a hub for green technology, both in terms of energy generation and in terms of manufacturing. It is being billed as a “Centre of Excellence on advanced energy technology”. Several minerals and metals mined in the area are vital components for the manufacture of items that the world needs to transition away from a fossilfuel economy to a greener, renewable future. This includes hydrogen fuel cells and battery technology. A pre-feasibility study related to battery minerals is underway at the Burgersfort Nickel Project. Another SEZ that is tackling the challenges of the green economy is the Atlantis SEZ, about 40km north of Cape Town. The focus at Atlantis is green manufacturing such as solar panels, wind turbines and battery storage. With the South African automotive manufacturing sector heavily dependent on exports, it will have to comply with tougher environmental requirements being implemented in Europe, the US and the UK. The year 2030 has been designated as the last for the petrol car in Europe. Atlantis intends to be the site for the manufacture of the components that will cater to the new market for cleaner vehicles. Two of the earliest investors at Atlantis SEZ are Kaytech, manufacturers of construction sheeting made out of recycled plastic, and GRI Towers South Africa, a subsidiary of the giant international renewable energy company, Gestamp Renewable Industries. Making industrial parks themselves greener is the focus of a programme of the National Cleaner Production Centre (NCPC) in partnership with the National Department of Trade, Industry and Competition (the dtic) and the United National Industrial Development Organisation (UNIDO).
GRI Towers South Africa is making wind turbine towers in the Atlantis SEZ, a green technology hub. Credit: Gestamp Renewable Industries eastern limb of the Bushveld Igneous Complex which includes the Merensky reef. Dozens of mining operations are in the Sekhukhune District, all of which need mining supplies. A Mining Input Suppliers Park has been developed and a budget of R20-million has been allocated for the integration of that facility into the SEZ. The existence of the mines and the supplier park will be leveraged to create opportunities to industrialise the manufacturing of these supplies and also to beneficiate the mined product. The broader aim is to build the regional economy with strong upstream and downstream links in the mining value chain, particularly with regard to platinum group metals (PGMs). Within the Fetakgomo-Tubatse SEZ there are opportunities for investors in the manufacture of: • Vehicle components designed for green hydrogen fuel cells and electrolytes energy from PGMs. • Vehicle batteries and related components.
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The Glencore Magareng Chrome Mine opened in 2011 and is one of the many mines in the vicinity of the Fetakgomo-Tubatse SEZ. Credit: Glencore (formerly Port Elizabeth) in the Eastern Cape and it too has an automotive component, recently strengthened by the large investment of the Beijing International Automobile Corporation (BIAC). East London’s Industrial Zone has many companies that sell to and service the nearby Mercedes-Benz plant while both coastal SEZs have a strong suite in logistics and are planning expanded aquaculture parks. Energy is a key infrastructural requirement for the growth of any economy, and SEZs are playing a role. The Coega SEZ has been named as the site for one of two liquefied natural gas (LNG) plants to be built (if partners can be found) in terms of the national gas-to-power plan. The Richards Bay Industrial Development Zone (RBIDZ) in KwaZulu-Natal is the other site designated for a LNG plant, with the capacity planned for 2 000MW. RBIDZ is also the location of a new biomass plant. The OR Tambo SEZ in Gauteng underscores Ekurhuleni’s strengths in manufacturing and logistics. The OR Tambo SEZ has launched the biggest food processing operation in the southern hemisphere (and the world’s second-largest refrigeration plant). With a special focus on exportoriented value-added industry, the OR Tambo SEZ leverages its connection to the country’s busiest airport. The focus of this SEZ is on agro-processing, jewellery manufacturing and mineral beneficiation as well as the development of hydrogen fuel cell technology. The SEZ is a subsidiary of the Gauteng Growth and Development Agency (GGDA). ■
The Global Eco-Industrial Parks Programme (GEIPP) aims to create eco-industrial parks out of older, dirtier facilities. The first three parks to be targeted are the state-owned parks in East London (ELIDZ) and in the Free State (Phuthaditjhaba Industrial Park) and Gauteng (Ekandustria). The key components of the GEIPP are: • Park management services and governance. • Resource-efficient and cleaner production. • Industrial and infrastructure synergies. • Healthy and integrated workforce and industryurban synergies. • Special planning and zoning. Areas of focus Fairly near to Atlantis is the Saldanha Bay SEZ, where the focus is oil and gas and marine engineering and related activities. As of October 2021, the SEZ had 35% occupancy and has launched a facility to support small, medium and micro-enterprises (SMMEs) in terms of workspace and Internet connectivity. In the Pretoria area, already home to several Original Equipment Manufacturers (OEMs), the Tshwane Automotive Special Economic Zone (TASEZ) has been launched. It is a joint project of the Gauteng Province, the Department of Trade, Industry and Competition, and the City of Tshwane. The implementing agent is the Coega Development Corporation (CDC), the developer and operator of the Coega Special Economic Zone. Coega SEZ is at the Port of Ngqura near Gqeberha SOUTH AFRICAN BUSINESS 2022
10 REASONS WHY YOU SHOULD INVEST IN SOUTH AFRICA
HOT EMERGING MARKET Growing middle class, affluent consumer base, excellent returns on investment.
MOST DIVERSIFIED ECONOMY IN AFRICA
South Africa (SA) has the most industrialised economy in Africa. It is the region’s principal manufacturing hub and a leading services destination.
LARGEST PRESENCE OF MULTINATIONALS ON THE AFRICAN CONTINENT SA is the location of choice of multinationals in Africa. Global corporates reap the benefits of doing business in SA, which has a supportive and growing ecosystem as a hub for innovation, technology and fintech.
FAVOURABLE ACCESS TO GLOBAL MARKETS
The African Continental Free Trade Area will boost intra-African trade and create a market of over one billion people and a combined gross domestic product (GDP) of USD2.2-trillion that will unlock industrial development. SA has several trade agreements in place as an export platform into global markets.
SA has a progressive Constitution and an independent judiciary. The country has a mature and accessible legal system, providing certainty and respect for the rule of law. It is ranked number one in Africa for the protection of investments and minority investors.
ABUNDANT NATURAL RESOURCES
SA is endowed with an abundance of natural resources. It is the leading producer of platinum-group metals (PGMs) globally. Numerous listed mining companies operate in SA, which also has world-renowned underground mining expertise.
ADVANCED FINANCIAL SERVICES & BANKING SECTOR SA has a sophisticated banking sector with a major footprint in Africa. It is the continent’s financial hub, with the JSE being Africa’s largest stock exchange by market capitalisation.
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A massive governmental investment programme in infrastructure development has been under way for several years. SA has the largest air, ports and logistics networks in Africa, and is ranked number one in Africa in the World Bank’s Logistics Performance Index.
YOUNG, EAGER LABOUR FORCE SA has a number of world-class universities and colleges producing a skilled, talented and capable workforce. It boasts a diversified skills set, emerging talent, a large pool of prospective workers and government support for training and skills development.
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EXCELLENT QUALITY OF LIFE
SA offers a favourable cost of living, with a diversified cultural, cuisine and sports offering all year round and a world-renowned hospitality sector.
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Limpopo’s Special Economic Zones to drive industrialisation MEC for Economic Development, Environment and Tourism Thabo Mokone invites investors to be part of an exciting journey to creating a green energy supply to bolster localised manufacturing.
MEC Thabo Mokone
he Provincial Government of Limpopo invites investors to partner with us in developing a low-carbon green economy while at the same time enhancing energy security and developing local industries. Special Economic Zones (SEZs) are the key tools within our Economic Reconstruction plans to ensure that we create sustainable job opportunities for all. This applies to both the Fetakgomo-Tubatse SEZ as well as the Musina Makhado SEZ. True development is about people When South Africa achieved democracy nearly three decades ago, who would have dreamed of a Special Economic Zone in the Steelpoort area. But today, a Special Economic Zone is our new reality. The proposed FTSEZ is gearing up to become a centre of excellence for green energy manufacturing, agro-processing and mineral beneficiation. The SEZ is positioned to be a game-changer in shaping and adding momentum to the industrialisation growth path as espoused in the socio-economic recovery plan of Limpopo Province. It is strategically located in the industrial hub of Steelpoort between two huge mining establishments, the Samancor smelter and the Lion ferrechrome smelter, which are strategic landmarks for the establishment of the SEZ. The Fetakgomo-Tubatse SEZ will not only play the role of a consumer of hydrogen in the Special Economic Zone but will strive to become a producer of hydrogen and other clean energy technologies.
In Limpopo we see the Hydrogen Economy as a potential game-changer to reindustrialise the provincial economy. For the Fetakgomo-Tubatse SEZ, the Hydrogen Valley platform has the potential to drive the demand for mining inputs supplies, thereby creating an opportunity for large-scale industrialisation for both the manufacturing of mining inputs and the beneficiation of mining outputs. The efforts which we have put into FetakgomoTubatse SEZ have so far led to us acquiring: • 1 220ha of land. • An EIA process is currently underway. • The application for a Record of Decision (RoD) process has commenced. • The SEZ Master Plan (Development Framework) and layout is complete with full infrastructure designs and costs in readiness for infrastructure roll-out. • 16 companies have shown a keen interest in the SEZ by signing letters of intent (combined investment value of approximately R38-billion). • Four companies have shown a readiness to locate inside the SEZ by 2022. A due diligence process is underway. We envisage creating 8 000 jobs in the short term and 20 000 jobs in 10 years. The main objective of this SEZ is to develop a low-carbon green economy which will offer promising opportunities not only to fight climate change, but to enhance energy security and develop local industries. The strategic aim of the SEZ is to develop a green primary energy supply for localised manufacturing of both upstream and downstream activities of the platinum group metals and chrome value chains. Our passion in ensuring operational Special Economic Zones within local municipalities as well as working with various private partners is a clear indication that we are committed to “Building better communities together”. ■
Deputy Minister oversight visit highlights SEZ potential The Fetakgomo-Tubatse Special Economic Zone will establish a centre of excellence for green energy technology and mineral beneficiation as well as manufacturing of mining equipment.
he Deputy Minister of Trade, Industry and Competition, Mr Fikile Majola, conducted an oversight visit to the proposed Fetakgomo-Tubatse Special Economic Zone in Steelpoort, Limpopo, in October 2021. Deputy Minister Majola was joined by the MEC for Economic Development, Environment and Tourism in Limpopo, Mr Thabo Mokone, MEC for Finance in Limpopo, Mr Seaparo Sekwati, the Executive Mayor of Sekhukhune District Municipality, Councillor Stanley Ramaila, and the Acting Mayor of FetakgomoTubatse Local Municipality, Councillor Hlatsoayo. The purpose of the oversight visit was to assess progress registered in the implementation of the proposed Special Economic Zone (SEZ)
project and to meet with potential private sector partners. According to Mr Majola, the visit was part of a consultative process on the SEZ Programme. Information on the new approach in the implementation of the Programme was also shared. “This new approach encourages collaborative engagements through which the implementation of the SEZ Programme is aligned with national, provincial and local objectives, as well as planning strategies to maximise synergies and promote cooperation. This will result in provinces and municipalities benefiting from strong National Government support in areas of limited capacity,” said Mr Majola. He added that the South African Government was seeking to transform the economy into a globally competitive economy, built on the full potential of all citizens and regions. “To achieve this, the government is driving a robust industrialisation agenda supported by Spatial Industrial Development Programmes such as the SEZ Programme. Our department is driving the SEZ Programme as one of the strategic interventions to catalyse economic and industrial development in the country,” he added. ■
Solly Kgopong, Executive Manager Solly Kgopong is the Executive Manager of the FetakgomoTubatse SEZ. Before joining the Department for Economic Development, Environment and Tourism, he was General Manager of Absa Bank. His work experience started as Business Analyst at Trade and Investment Limpopo until he became Executive Manager Strategic and Economic Planning. During this period, Solly was a part-time lecturer at the University of Limpopo. A USA-Mandela Scholar Alumni, Solly holds a MSc in Economics degree from the Ohio State University. He was recently seconded to Head the Fetakgomo-Tubatse SEZ Project Management Unit by the Provincial Government.
Bunjiwe Gwebu, Project Executive Bunjiwe Gwebu is the Project Executive for the Fetakgomo-Tubatse Special Economic Zone, having joined the Limpopo Economic Development Agency in 2014 when the Special Economic Zones programme was being rolled out nationally. She is an Economic Development Specialist who holds a Master’s in Development Studies from the University of KwaZulu-Natal. She has held positions at executive and senior management levels in government and nongovernmental institutions such as eThekwini Municipality, Slum Dwellers International, uTshani Fund and the Housing Development Agency where she was responsible for strategy, programme planning and management, implementation and monitoring and evaluation.
Tel: 082 455 4220 Email: Solly.Kgopong@lieda.co.za
Tel: 076 521 5077 Email: Bunjiwe.Gwebu@lieda.co.za
SEZ project pipeline A globally recognised Centre of Excellence for Green Energy Technology and Mineral Beneficiation
Tubatse SEZ – Getting Platinum Moving- A world centre of excellence for PGMs.”
Fetakgomo-Tubatse SEZ, as depicted in the SEZ Master Plan.
DSI | Turner & Townsend | LEDA 08 November 2021
designs and costing for the perimeter fence, site clearance, Eskom cost estimation and acceptance of quote, engineering designs for an Eskom switching station, water allocations (assessment of demand per industry), an Implementation Readiness Study and engineering designs. The whole R35-million is committed to the enlisted projects.
he Fetakgomo-Tubatse Special Economic Zone received from the Limpopo Department of Economic Development, Environment and Tourism an allocation of R35-million (FY 2021/22) which was earmarked for the following activities and projects: District Skills Audit, environmental impact assessments (EIAs), township establishment (land rezoning), engineering Existing and current projects in the District Project
Steelpoort Wastewater Treatment Works
DBSA/Sekhukhune District Municipality
Existing WTW on private land. Construction at Steelpoort.
Steelpoort Water Treatment Works
Ga-Malekana Water Treatment Works upgrade
Sekhukhune District Municipality
Technical report approved; planning stage.
R37 and R555 main roads
Steelpoort railway siding
Regional External Master Plan
Sekhukhune District Municipality
Steel Bridge upgrade
Roads Agency Limpopo and mining companies
SEZ human settlement scoping report
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Why businesses locate in the FT-SEZ
astructure supporting the SEZ
Outstanding incentives and world-class facilities. • • •
State-of-the-art top infrastructure Water provision Reliable road and rail network
Generic SEZ incentives • Vat and customer relief • Employment tax incentives • Building allowance • Reduced corporate income tax (15% corporate tax) • 12i tax allowance and incentives • One Stop Shop Facility
The 348-million cubic metre capacity De Hoop Dam ensures reliable water supply for investors in the Special Economic Zone.
• to Infrastructure (water, roads and elec Distances key points • Port•of Maputo 380km space is availa 11419(Mozambique) m2 of industrial 2 of developable land is av • Port•of Richards Bay m 600km 130 000 • Musina Beit Bridge Border Post 400km
he Fetakgomo-Tubatse SEZ provides a secure business environment 17and is designing a world-class manufacturing and logistics platform that will be positioned to support transportation efficiencies through road, rail and heliport connectivity to ports and border posts. As part of the SEZ Master Plan, the environmental impact assessment (EIA) is expected to be ready for 2022. A number of infrastructure new builds and upgrades are underway, including: • Security and site clearance • Extension of rail link to the SEZ industries and to the Musina-Makhado SEZ (Beit Bridge) • Electricity substation designs underway for substation • Upgrading of R37 and R555 roads • Building of new steel bridge • Engineering works for piping water from the De Hoop Dam to the SEZ site
The Mining Inputs Supplier Park has more than 11 000m² of industrial space available now with a further 130 000m² of land available for development and ready for top structures to be installed. Water, roads and electricity are in place.
For more information contact: Fetakgomo –Tubatse SEZ PMU Address: Southern Gateway Extension 4, N1 Main Road, Polokwane, Limpopo Tel: +27 82 455 4220 and +27 76 521 5077
Why businesses locate to the FTSEZ • Enabling infrastructure and warehouses • Close proximity to mining operations • Carbon credits • Reduced carbon tax • Reliable and low-carbon green energy • Global leadership in production of chrome and huge resources of platinum group metals • Land and security
Limpopo Economic Development Agency (LEDA) Address: PO Box 760, Enterprise House, Lebowakgomgo 0737 Tel: +27 15 633 4700 | Email: firstname.lastname@example.org Website: www.lieda.co.za
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Prime location in LOCATION Limpopo’s mining hub OF THE SEZ Special Economic Zone will catalyse economic growth.
DSI | Turner & Townsend | LEDA
8 November 2021
he proposed Fetakgomo-Tubatse SEZ
E FETAKGOMO-TUBATSE SPECIAL (FTSEZ) is located in the south-east of ONOMIC ZONE/INDUSTRIAL HUBof South Africa. the Limpopo Province
It is hosted by the Fetakgomo-Tubatse Municipality in Sekhukhune District and is located atse Special Economic Zone is hosted by the Fetakgomowithin the Bushveld Igneous Complex (Eastern atse Municipality in the Sekhukhune District and is located Limb), which hosts the well-known Merensky Reef hin the Bushveld Igneous Complex (Eastern Limb), which in the Limpopo Province. ts the well-known Marensky reef in the Limpopo Province. The area boasts one of the highest demand for mining input supplies createdresources an opportunity concentrations of rich mineral in the arge-scaleworld industrialization for both the manufacturing of and is a global leader of platinum group ing inputs metals and theand beneficiation of mining outputs. chrome resources, hosting The overaim 40 o support amining broader-based industrialization growthvanadium, path, operations which also includes anced regional industrial growth battery and development of more iron ore and selected minerals. The FTSEZ mpetitive and productivetoregional economies with strong upis projected be a catalyst for economic growth, downstream links in strategic chains, especially inby industrialisation andvalue mineral beneficiation localising the various links of the value chain, both MS. upstream and downstream. The proposed FTSEZ forms part of the South 0 ha of land has been identified for development of this African Government’s SEZtheProgramme which is e-of-the-artaiming Centretoofenhance Excellence advanced energy theon country’s manufacturing
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and export capabilities and attract foreign direct investment. Anchored in the Limpopo Development Plan (LDP), the FTSEZ is positioned and designed to be a top investment destination for companies seeking to be at the forefront of pushing the green energy “Just Transition” frontier outward, towards communities, towards local and international firms and markets seeking to build lowcarbon economies. The priority industries in the FTSEZ will enhance local manufacturing capacity and contribute toHUB a low-carbon FETAKGOMO TUBATSE SEZ/INDUSTRIAL green economy which will offer socio-economic opportunities (for jobs and small businesses), not only to fight climate change, but to enhance energy security and develop local industries over the next five to 10 years. The FTSEZ is being developed in a quadripartite partnership between the Department of Trade Industry and Competition (dtic), the Limpopo Provincial Government, Sekhukhune District Municipality and Fetakgomo-Tubatse Municipality. ■
Targeted commodity clusters at Fetakgomo-Tubatse SEZ Varied investment opportunities. Identified Cluster Opportunities Agro-processing Development of ICT infrastructure Mineral Beneficiation • Chrome, platinum group metals, iron ore and magnetite • Development of platinum refinery Green Energy • Production of solar and biomass energy • Hydrogen energy from fuel cells as part of the South African Hydrogen Valley led by the Department of Science and Innovation
Green automotive technology is a key focus of the FTSEZ. Construction Phases of FTSEZ The Fetakgomo-Tubatse SEZ will cover a total area of 1 220ha of land. Phase 1 consists of 316ha which is reserved mainly for a mix of light and heavy industrial use and other hydrogen energy related uses, while Phases 2 and 3 will be developed in line with market demands and will include: • Renewable energy • Heavy industry • Additional light industry space • Mixed use and residential
Manufacturing • Production and refurbishment of batteries • Auto-catalysts • Green energy automotive components and electric vehicles (manufacture and assembly) • Trucking components • Mining machinery, equipment and components FTSEZ Implementation Approach The Tubatse Hydrogen Valley and Mineral Beneficiation Journey Phase 1: West of R555: Integrate the 36ha Mining Integrated Supply Park (MISP), set up top infrastructure, fence and clear 280ha site. Anchor Investments: Input manufacturing suppliers and green vehicle components cluster. Phase 2: East of R555: Clear site and fence the 980ha site and provide bulk services and begin housing development. Anchor investments: Renewable energy companies, smelter and refinery and chrome products. Phase 3: Design and build a logistics hub for export markets. Just-on-time delivery and efficiencies. Anchor investments: Logistics Hub Station with a strong 4IR platform.
More than six tenants have already committed to setting up operations for Phase 1 implementation in chrome-related beneficiation, hydrogen energy components assembly, electric vehicles, solar energy and pharmaceuticals. ■
Smelting operations will serve to beneficiate the many minerals found in the area. Credit: Amplats
SOUTH AFRICAN BUSINESS 2022
Green technology manufacturers welcome at Atlantis SEZ
Business Development Executive Jarrod Lyons explains how the ASEZ offers a great location to trade with Africa and to benefit from South Africa’s renewable energy procurement programme.
location and clustering. Our partners’ competitive advantage rests on making more productive use of inputs, which requires continual innovation. We achieve this through the Living Lab by providing our partners with a platform to share knowledge, resources and outputs in a manner which promotes profitability through resource efficiency. Our established partnerships with tertiary institutions contribute to our ability to provide our partners with well-curated skills driven by their needs, as well as the needs of a transitioning, traditional, coal-based economy to a green economy. The ASEZCo has enterprise development initiatives in place, which provide our partners with a suitable list of entities from which they can procure goods and services. Integration into our Living Lab bodes well for new partners, as we assist them in identifying collaborative opportunities with existing partners and facilitating engagements, which will lead to an
he Atlantis Special Economic Zone (ASEZ) for green technologies is located on the West Coast of South Africa, in the Cape Town Metro. The zone is dedicated to manufacturing and provision of services in the green technology space. Wind turbines, solar panels, insulation, biofuels, electric vehicles, materials recycling and green building materials are examples of green technology that are welcomed. The Atlantis Special Economic Zone SOC (ASEZCo) has undertaken over the past few years to establish itself as a globally-competitive company operating state-of-the-art infrastructure in Cape Town. The ASEZCo is equipped to assist both local and foreign investors in landing their green technology manufacturing investment in a seamless, well-managed process which eliminates unnecessary red tape and promotes a fast-tracking to market. As a value proposition, the ASEZ offers Greentech manufacturers benefits from coSOUTH AFRICAN BUSINESS 2022
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tip of Africa close to two ports with capabilities of landing and exporting bulk goods, as well as containers filled with sub-components. With the awarding of 25 projects in Round 5 of the REIPPPP, and the stringent localisation requirements associated with the REIPPPP, the ASEZ is well positioned to capitalise on component manufacturing opportunities to service the IPP projects recently awarded. The ASEZCo is utilising this market opportunity to coordinate a collaborative sales pitch to partners which can establish their manufacturing facilities in the ASEZ. This collaborative approach encompasses InvestSA (the dtic), Wesgro, InvestCT and GreenCape and has demonstrated significant success in the past. We continue to engage with potential partners with our ASEZ and are adamant that we will achieve significant success in this regard over the next 12 to 18 months. ■
improvement in the overall triple-bottom-line of all partners located in the ASEZ. New partners sought The Business Development Unit of the ASEZCo has placed a tremendous amount of its marketing energy in the community-focused communications and events for the direct benefit of the community. There comes a time, however, when community expectations need to be met. This can only be done through the landing of new and expansion of existing partners in the ASEZ with the view to create jobs and employment opportunities for the broader SMME network in the Atlantis and surrounding areas. The Business Development Unit has taken the stance of a more commercially-focused entity by reaching out to specifically targeted investors who want to benefit from integrating into the Living Lab of the ASEZ. The unit benefits from expertise in the green economy and leverages relationships with organisations like Wesgro and GreenCape to remain relevant in green economy investment promotion. With ASEZCo’s comprehensive understanding of Greentech value chains, the unit has the ability to identify partners with capabilities of servicing the needs of the South African and African Greentech markets. Servicing the growing African market with green technologies which contribute to sustainable infrastructure development is a superb way in which SEZs can make a difference. The ASEZ for green technology manufacturing is perfectly suited to enhance trade opportunities with Africa and the rest of the globe as it is well located on the southern
CONTACT For additional information on investing in Atlantis Special Economic Zone and understanding the Greentech landscape in South Africa, please contact Jarrod Lyons at email@example.com
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Harnessing the green economy for growth and increased job opportunities The Atlantis SEZ has dedicated Infrastructure and Integrated Ecosystem (IES) teams. Integrated Ecosystem Executive Ellen Fischat explains how they help to create shared value. contexts, as opposed to closed laboratory settings. The task of convening and connecting the multi-disciplinary stakeholders falls mostly on the Infrastructure and Integrated Ecosystem (IES) teams, both supporting the ASEZCo’s establishment as a resource-efficient, carbonneutral and socially-inclusive industrial hub. Through its positioning as this eco-industrial park the ASEZ aims to attract Greentech investors who embody the elements and ethos of green technology manufacturing. It also means bringing the principles of the green economy into how the Atlantis SEZ is run and how the utility service needs of the investors are ultimately met and delivered. In recent years, purpose has gained momentum in business. With societal issues on the rise, government and community resources are under pressure. And increasingly, consumers expect organisations to step in and play a greater role in advancing social or environmental issues. But, while companies understand the moral imperative in delivering value for all stakeholders, a huge opportunity exists in seeing the business imperative. This can be explained through a simple but powerful idea: a company’s success and social progress are interdependent. This is the key principle of shared value. Tourism companies can’t thrive if a pandemic prevents us from travelling. Food suppliers can’t thrive if extreme weather events spoil farmers’ crops. Farmers can’t thrive if supply chains are fragmented. And communities go hungry when there is limited access to food supplies. And financial services can’t thrive amid financial hardship.
The IES team, left to right: Christelle Brown, Ellen Fischat (Integrated Ecosystem Executive), Michael Webster, Ursula Wellmann, Charlotte Perang and Florenchia Solomons.
he Atlantis Special Economic Zone Company (ASEZCo) for green technologies aims to harness the green economy for growth and increased job opportunities. It does this by driving sustainable, socioeconomic development and job creation, while positioning itself as a world-class eco-industrial park through its Living Lab. A Living Lab (LL), in contrast to a traditional laboratory, operates in a real-life context with a user-centric approach. The physical or organisational boundaries of a Living Lab are defined by purpose, scope and context. The scope, objectives, activities, resources and degree of participation and boundaries of a living laboratory are open for definition by its participants. These participants consist of multi-disciplinary stakeholders, from public to private sector, tertiary to research institutions and most importantly the local community and civic society. Industries adopting Living Labs share an approach to finding innovative solutions to open and real-world SOUTH AFRICAN BUSINESS 2022
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community integration. This is done to enable the Atlantis community, notably its youth, to tap into increased job opportunities, locally as well as in the buoyant green economy. Green skills development and growing technical capabilities within the community form part of the ASEZCo’s strategic objectives, aligned to the legislative requirement of the SEZ Act to grow the regional economy and drive socio-economic impact. This includes a range of interventions to support the skills development pipeline, some starting at foundational level, going through to school, college and ultimately at the workplace. The IES programmes are anchored by intentional, continuous and wider stakeholder community engagement, through our Community Stakeholder Network (CSN). This elected group of community leaders hail from a variety of sectors, such as small business and informal traders, education, youth, women and people with disabilities, Early Childhood Development, faithbased and traditional council and cultural groups. The CSN serves as a conduit for meaningful communication between the ASEZCo and the Greater Atlantis Community, therefore ensuring dialogue between the public and private sector and the community at large. The principles of multi-stakeholder engagement and collaboration provide a feeding ground for fostering local innovation, the co-creation of solutions and a conducive business environment.
In this context, purpose has an important place within business strategy. When used to its full potential, it can reach beyond risk mitigation – or doing no harm – to actually create new value for business (and society). Shared value is a framework designed to create business solutions to social and environmental problems. Put differently, it’s a means to deliver on your purpose, profitably. Shared value The creation of both societal and business value is integral to shared value. Societal value comes from vastly improving the conditions in which we live; advancing health outcomes, education, employment, financial or digital inclusion, service access and participation and/or helping to reduce our impact on the environment. Meanwhile, business value can range from increased revenue or market share to improved productivity, greater efficiency, reduced costs, improved quality, a more secure supply chain or a more skilled or productive workforce. The principle of striving towards shared value in our work with the local community, existing industrialists and new investors is underpinned by commitment to positive contribution towards the United Nation’s Sustainable Development Goals (SDG). The SDGs form a blueprint of addressing global inequities and achieving a more sustainable future for all. Working in close collaboration with the Infrastructure team, the IES team supports the Atlantis community through skills and enter pr ise development, coupled with
References https://sharedvalue.org.au/about/shared-value/ https://www.un.org/sustainabledevelopment/ sustainable-development-goals/
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Sectoral strengths of South African provinces SECTORAL STRENGTHS OF SOUTH AFRICA’S PROVINCES
A wide variety of investments are available.
Gauteng: • Financial and business services • Information and communications technology • Transport and logistics • Basic iron and steel, steel products • Fabricated metal products • Motor vehicles, parts and accessories • Appliances • Machinery and equipment • Chemical products, pharmaceuticals • Agro-processing
North West: • Mining • Agriculture and agro-processing • Tourism • Metal products • Machinery and equipment • Renewable energy (solar)
Limpopo: • Mining • Fertilisers • Tourism • Agriculture • Agro-processing • Energy, including renewables (solar)
KwaZulu-Natal: • Transport and logistics • Tourism • Motor vehicles, parts and accessories • Petrochemicals • Aluminium • Clothing and textiles • Machinery and equipment • Agriculture and agroprocessing • Forestry, pulp and paper, wood and wood products
Northern Cape: Mining Agriculture and agro-processing Fisheries and aquaculture Renewable energy (solar, wind) Jewellery manufacturing
• • • • •
Western Cape: • Tourism • Financial and business services • Transport and logistics • ICT • Agriculture and agro-processing • Fisheries and aquaculture • Petrochemicals • Basic iron and steel • Clothing and textiles • Renewable energy (solar, wind)
Mpumalanga: • Mining • Tourism • Forestry, paper and paper products, wood and wood products • Agriculture and agroprocessing • Metal products
Eastern Cape: Motor vehicles, parts and accessories • Forestry, wood and wood products • Clothing and textiles • Pharmaceuticals • Leather and leather products • Tourism • Renewable energy (wind)
Free State: • Agriculture and agro-processing • Mining • Petrochemicals • Machinery and equipment • Tourism
Source: Industrial Development Corporation (IDC); The Case for Investing in South Africa, Executive Summary Source: Industrial Development Corporation (IDC) (South African Investment Conference, 2018). Page | 40
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At Atlantis SEZ tenants can expect energy and waste security and efficient management of waste Matt Cullinan, Infrastructure Executive of the Atlantis Special Economic Zone, outlines the importance of combining a high standard of service with green principles.
he Atlantis Greentech SEZ is there to support gre e n t e c h n o l o g y industrialisation and job creation in South Africa. The ASEZ represents South Africa’s leading foray into green industrialisation and is a tool to unlock green industrial development. Good-quality and reliable utility infrastructure underpins any good industrial zone. We are building the zone around worldclass utility services that offer energy and water security and resource-efficient management of waste – all done in a manner that contributes to sustainable development. A well-maintained and security-conscious operating environment is also important. Our aim as the Atlantis SEZ is to work together with our tenants to create mutually-supportive systems that ensure production efficiency and continuity. The ASEZ long-term infrastructure plan envisages four green utility infrastructure goals. These are:
Net Zero Carbon: This involves using renewable energy embedded into the zone and servicing the industrial manufacturing plants. We aim to offer a high degree of energy security while reducing carbon emissions. This plan is complemented by an existing City of Cape Town load-mitigation programme, provided that load-reduction targets are met. This is resource efficiency in action. Net Zero Water: This aims to ensure long-term water security and efficient water use in what is a water-stressed region. This includes steps to enhance on-site water capture and re-use. Our programmes will also focus on helping to improve production efficiency and, through that, reduced use of water and/or water recycling. Net zero waste to landfill: There is growing recognition of the importance of the circular economy to sustainable development. Exploring how the waste of one production process can act as an input resource for another is another way of reducing waste to landfill. The City of Cape Town and the Western Cape already have high standards and targets for waste that cannot be sent to landfill. This creates opportunities to find ways to reduce costs of our tenants’ waste management and possibly even create new revenue opportunities. Working with nature: The Atlantis industrial area is located within an important fynbos biodiversity corridor, one of the largest green lungs remaining in Cape Town. It contains both endangered and critically endangered lowlands vegetation fynbos types. There is an ongoing process of removing invasive aliens, searching for and rescuing endangered and critically endangered species and relocating these to a land bank. The aim is to use some of these same species for landscaping the zone once factories have been built, doing as much as possible to work with the natural features and flora in the area. The ASEZ has an indigenous landscaping plan to support this objective. These goals aim to create low-carbon, resource-efficient operations for the zone and the tenants. We subscribe to UNIDO’s Eco-Industrial Park (EIP) principles and are constantly exploring ways to be more resource efficient and reduce carbon. These are also crucial contributors to the Sustainable Development Goals and meeting the objectives of significant global protocols, such as that COP26. In future, all industrial development should be done this way, especially if we are to achieve a semblance of sustainability, grow the circular economy and tackle the drivers exacerbating the climate crisis. ■
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Gas exploration is reaping dividends — mining could be next A vital refinery could start receiving new feedstock to prolong its life. A similar focus is needed in the mining sector to unlock the country’s resources for economic growth. Studies have shown that South Africa is currently attracting just 1% of global spending on mining exploration, a figure that normally reaches R160-billion annually. Several industry leaders have expressed concern about the low level of exploration activity but in 2020 they were joined by the Economic Transformation Committee (ETC) of the African National Congress (ANC), the country’s majority political party. The ETC sees exploration as a way of broadening the scope of ownership within the mining industry. Gwede Mantashe, South Africa’s Minister of Mineral Resources and Energy, wants to see South Africa attracting at least 5% of global exploration. For exploration to expand a reliable cadastre is required. A cadastre is a record of property boundaries and ownership. Drone technology could take the mapping process forward, allowing for more exploration at a lower cost. In his 2019/20 budget vote, Mantashe noted that about 4 000 permanent jobs would be created by the recent investment of about R45-billion through projects such as Exxaro’s Belfast expansion (coal), Sasol’s coal mine replacement programme and Vedanta Resources’ huge zinc mine in the Northern Cape. The Council for Geoscience, another of the agencies of the Department of Mineral Resources and Energy (DMRE), develops and maintains the national geoscience knowledge infrastructure for both the onshore and offshore environment. The Council for Geoscience provides data which is used in exploration for minerals and has found signs that there might be a future for gold mining in Mpumalanga. In addition, the council is actively involved in several projects which could help to take mining into the cleaner energy future. These
elkom in the Free State used to be a thriving town, based on gold mining, but it lasted only four decades. The economy of the coastal town of Mossel Bay relied heavily on the gas-to-liquids refinery on the town’s outskirts before the gas ran out. The depletions were expected in both cases but when the gold price experienced a drop of $600 in 1989, the writing was on the wall sooner rather than later for many gold mines. The lack of feedstock for Mossgas, the refinery run by the country’s national oil company, PetroSA, came to a head when the Central Energy Fund reported to parliament that reserves were expected to run out by December 2020. The Fund stated, “there is still no sustainable techno-economic long-term solution for the gas-toliquid refinery”. Since that gloomy report, two gas drilling projects have indicated that both towns could boom again. Petroleum Agency South Africa (PASA) is in charge of oil and gas exploration and one of its goals is to increase the percentage of gas used in the South Africa energy mix. Licences issued for offshore drilling off the southern coast off Mossel Bay and onshore at Virginia near Welkom have both paid off, with discoveries indicating significant reserves.
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SPECIAL FEATURE Renergen has signed an agreement with TotalEnergies for distribution and sales. The exciting offshore discovery was made by Total and its partners at a site called Brulpadda off the coast of Mossel Bay. The nearby Luiperd prospect in Block 11B/12B delivered more exciting news when gas condensate was also found there. The block, in the Outeniqua Basin 175km off the southern coast, covers an area of about 19 000km² in water depths of 200m-1 800m. The exploration was done by the semi-submersible rig Deepsea Stavanger (pictured), which journeyed twice from Norway to lead the exploration projects. The two finds raise the odds of Total investing in what it calls a “world-class” offshore gas site. The drilling campaign employed 195 South Africans with specialist skills but the potential spinoff is enormous for the Western Cape and South Africa, if the find leads to drilling and commercialisation. PASA has noted the significance of international oil companies committing to exploration off South Africa’s coast. In the context of the great interest caused in the global market by discoveries in the Rovuma Basin off Mozambique in 2020, South Africa’s potential is sure to be in the spotlight. More exploration will guarantee that interest is maintained. ■
include a carbon capture project and a scheme to treat polluted water in such a way that the finished product is useable. New gas finds Gold mining started in the Welkom area in 1949 and started tapering off from 1989. Renergen, through its company Tetra4, has made good progress on its Virginia Gas Project (pictured) which covers 187 000ha of gas fields across Welkom, Virginia and Theunissen. The company has exploration and production rights and recent finds have confirmed the earlier, very positive, reports about the size and quality of the resource. Hiring has increased rapidly since 2019 as the project ramps up from the first phase in which a pilot compressed natural gas (CNG) plant was constructed in 2016. The second phase encompasses liquid natural gas (LNG) and helium. Production of helium is expected to grow from 350kg per day to five tons in the second phase. The first sector to respond to the potential of this gas find was the logistics sector. Bulk Hauliers International Transport (BHIT ) has signed an agreement to take LNG to fuel 50 of its trucks, which should lead to lower operating and maintenance costs. South African Breweries is another client.
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An intensive new geological mapping programme is underway
nding new ways of ducing and reusing carbon
Spending on geology is an investment in the country’s economic future, explains Council for Geoscience CEO Mosa Mabuza. What is the mandate of the Council for Geoscience (CGS)?
cil for Geoscience CEO, Mosa Mabuza, is excited about new research on Our legislative mandate is to be the custodian of geoscientific on capture and is intent on expanding his organisation’s relevance to theto our work. knowledge in the Republic. There are five dimensions The first one is minerals and energy. Society always suspects h African economy.
that we are an exploration company of sorts but we are much more than that. The second one relates to(CGS) seismic events capture such as the tremors How will the Council for Geoscience carbon and the felt between Johannesburg and Alberton. It is the responsibility storage project in Mpumalanga expand South Africa’s energy mix and of the Council for Geoscience to record those events, to study decrease the country’s carbon footprint? them, communicate with the public and to indicate the risks and We abbreviated theclosely project tothe CCUS: Carbon Capture for the Committee. two Cs, U work with National Disaster Management for utilisation, storage as istheanlast stage. Once is captured There example of thisthe in carbon the Carltonville area.it has Our preliminaryNot results mighttohave to bethe a relocation numerous applications. onlysuggest wouldthat youthere be able reduce carbon of a village. a smallbut place, areapply villages were content that is emitted intoIt’s ournot climate, you those can also it inthat fertiliser supporting the gold mines. The nexus between deep gold mining, manufacturing and in a number of other applications. acid mine drainage well as of water Mosa Mabuza, CEO We see it asdolomites, a scientific intervention thatasgets usnon-maintenance as a country to breathe infrastructure, all of that is causing this proliferation of sinkholes. life into the climate mitigation measures, in terms of the international Now you can’t apportion the blame on this one alone or that one climate protocol that have committed theit’sscience proven, alone andwe I don’t think blaming willto. helpIf but good to is know what not only will South Africaismeet will replicated. go far beyond the minimum the problem so thatbut it isitnever commitments that weare have made as aa land country. We also doing susceptibility mapping exercise. But we’ve got to we let the takerain place, we’ve got to letthere the were pilot When hadscience continuous in KwaZulu-Natal BIOGRAPHY manyindeed, properties road infrastructure that collapsed. that If youthe do project prove that it isand a sensible scientific intervention, After qualifying as a geologist from the study today, not when and it rains, then you eitherare don’t develop economics make sense, that science the intentions met. Only Wits University, Mosa held various it here orallif of youthose were three to develop it here,would then make sure that you once we have proven attributes, we be confident positions at De Beers and Anglo reinforce the infrastructure. indeed, we can continue. We think that, if it is proven, Mabuza, CEO American and worked inenough jurisdic- to say that, Environment and water management is the third main area thenand coal can continue to play a critical role in our energy mix. tions as varied as West Africa of our brief. Then we have Geosciences Innovation where we are Canada. From his appointment as now beginning to use artificial intelligence applications. It is a Is this pilot at one site new or isarea. it multiple the Director of Mineral Economics fantastic The lastsites? one is “geosciences for diplomacy” – first one is on site.toWe have chosen a pilot very close the major in the former Department The of Minerthisone relates exchanges in geosciences where we to connect with als and Energy, he was promoted to sites our international counterparts. emission in Mpumalanga where there is a higher concentration of Deputy Director-General ofpower Mineralstations, as well as the Sasol plant. If we get that right we can What are your priorities at the CGS? Policies and (Investment) Promotion have our contribution to carbon pollution reduced by between 60% We have not yet mapped the country at the right scale of 1:50 000. ifying as a geologist Witsbeen CEOand in 2012. from He has of CGS 80%. Our predecessors have done a fantastic job of mapping the entire 2017. , Mosa heldsince various positions
rs and Anglo American and What are the other priorities of the CGS in Mpumalanga? n jurisdictions as AFRICAN varied asBUSINESS The2022 CGS mandate is that34 we are the custodians of geoscientific information SOUTH ca and Canada. From his and knowledge in the country so we have quite a number of programmes in ment as the Director of Mineral Mpumalanga. One of them which is really very exciting and is at an advanced
country at a scale of 1:250 000. They have handed the baton to us and we have now made the political leaders appreciate the importance of mapping the country at that scale. Our key priority is what we call the integrated multi-disciplinary mapping programme. If an area does not have water, we can quickly look at the geology at that scale and say that you can complement your water resources supply with groundwater. Until we get there, these are the kinds of questions that are difficult to answer. The team is moving at an incredible pace. When we started, we were just under 5% coverage and we are targeting to reach 9.5% at the end of this financial year.
Schematic illustration of a proposed CCUS plant near Leandra, Mpumalanga Province The same would apply to Department in Fisheries vessels. We have amazing expertise of marine geology at the Council for Geoscience, and we are beginning to unleash that potential.
Do you have the necessary resources? The political leadership has started to appreciate the importance of science so that they can make science-based decisions. I have the utmost support of the Minister. We recently presented in parliament and they are fully behind us. They are arguing on our behalf that the social programme is not sustainable if we are not investing in economic catalysing activities today. Geology is a national investment; it is not a cost.
How important is the CGS carbon capture and storage project in Mpumalanga? We have abbreviated it to CCUS, with the U representing utilisation, and storage as the last stage. Once the carbon is captured it has numerous applications. Not only would you be able to reduce the carbon content that is emitted into our climate, but you can also apply it in fertiliser manufacturing and in a number of other applications. We see it as a scientific intervention that gets us as a country to breathe life into the climate mitigation measures, in terms of the international climate protocol that we have committed to. If the science is proven, not only will South Africa meet, but it will go far beyond the minimum commitments that we have made as a country. But we’ve got to let the science take place, we’ve got to let the pilot project prove that, indeed, it is a sensible scientific intervention, that the economics make sense, that science and the intentions are met and only once we have proven all of those three attributes, would we be confident enough to say that, indeed, we can continue. We think that, if it is indeed proven, then coal can continue to play a critical role in our energy mix.
Do you have other priorities? The blue economy. We have not even begun to map our oceans. If there is one thing that embarrasses us as a nation it is that we do not have a single map from our oceans. For the first time, we published a number of marine geology maps. Marine research is showing us exciting things, and once you have the information then you can make informed choices. We are opening our eyes to a whole frontier economy right under our noses which we have not exploited optimally. When we looked at the geological work that has been done, we found that there was limited information there. We have put forward an aggressive plan to map offshore. I recently had a very productive meeting with the chief of the navy. We have struck a partnership with the navy so that we can have a collaboration to leverage their vessels so that we can fast-track the mapping. That will help us to accelerate the mapping and help us to catch up.
Is this pilot at one site or is it multiple sites? The first one is on one site. We have chosen a pilot very close to the major emission sites in Mpumalanga where there is a higher concentration of power stations, as well as the
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INTERVIEW a particular position that takes into account South Africa’s specific societal circumstances. What are your goals with regard to staff? Our biggest competitive advantage is our human capital. We have around 500 people in total and two thirds of them are geoscientists. We intend to create at least 10 A-rated geoscientists on the global scale in the next five to 10 years because once you have created a capable institution then all these other things become very easy. Anything and everything is possible when you have competent, agile, committed world-class rated scientists. Currently, 37% of our scientific staff have Master’s degrees and doctorates. We have a very ambitious target of 60%.
A geo-environmental baseline study for gas in the Karoo has recently been completed and the report is being compiled. Sasol plant. If we get that right we can have our contribution to carbon pollution reduced by between 60% and 80%. What role is the CGS playing in the debate over the just transition? We will not be driving the whole debate but the carbon capture utilisation and storage is a scientific intervention that asks the fundamental question – does transition necessarily mean transition from coal or does the transition mean we are making a commitment to transition from high carbon to low carbon? Over many years we have developed the capacity to generate our base load from coal, we still have vast of resources of coal in South Africa and we have installed generation infrastructure. On the other hand, we have correctly made commitments to be part of climate change protocols. There is no debate on the contribution of carbon in accelerating the climate change, there’s absolutely no debate there. As the Council for Geoscience, our contribution in the main is limited to the science. The Council for Geoscience must also play a prominent and critical role as a leader in mobilising society around SOUTH AFRICAN BUSINESS 2022
What is CGS doing in terms of regulating the sector? We have realised that since the current legislation that governs us was enacted we have not developed the regulations to provide the framework for how to handle that data. Regulations clarify the provisions of the legislation. Historically, we have a disconnect where mining companies were collecting geological information and very few of them were making it available to the state. Now some of them have closed shop and left South Africa and that information is nowhere to be found. We are trying to correct that. Draft regulations were published in April 2021 and we requested comments. An absolute priority is to have the regulations finalised in the current financial year. Where information is commercially sensitive for active projects, we will give reassurance that the information is treated as such. We are not nationalising geoscience. It is global best practice that a condition of your right is that you must provide the geological information you have collected. You bank the information with the “library” and the library promises not to sell it to someone else until such time as your project is finished. Are your teams finding new areas of potential? Unless we study the geology, we will not be able to know what we have. Our scientists have now confirmed rare earth element (REE)-
The Council for Geoscience has launched its own research vessel, RV Nkosi, named for a renowned mineralseparation technician who passed away in 2019. Mapping the oceans is being done in support of the national Blue Economy programme. Are discussions taking place about a new Cadastre for SA mining? The Cadastre is the responsibility of the Department of Mineral Resources and Energy (DMRE) but we are having conversations as to where is the best place for it. Now a Cadastre without geological information is not complete. People want to be able to go onto that system and click there within your right and say well let’s see what geology is there. That currently doesn’t exist. We are not legislators, we are a science council. But we have geological information which is a critical component. Bridging that gap is what we have to resolve but we are having a conversation around that. The goal would be to have a geologically informative Cadastre. ■
bearing rocks in the Northern Cape. Rare earth elements are vital in new industries such as renewable energy. We are looking at Northern Cape base metals like nickel, copper and chrome by adopting a mineralising system approach. We are investigating findings suggesting that the Wits Basin extends further into Mpumalanga and possibly the Free State area. The geo-environmental baseline study for gas in Beaufort West in the Karoo is complete and is being written. An environmental baseline study does not cover economic modelling but if the amounts of shale gas that we believe we have are indeed present, this may have a huge impact on our national fiscus.
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KEY SECTORS Overviews of the main economic sectors of South Africa Agriculture 40 Mining 44 Energy 48 Oil and gas 54 Water 58 Engineering 62 Construction and property 64 Manufacturing 65 Transport and logistics 66 Automotive 72 ICT 73 Tourism 74 Banking and financial services 75 Development finance and SMME support 76
The eMendi building at Port of Ngqura is within the Coega Special Economic Zone (Coega SEZ) and is shown with the busy port and Algoa Bay behind it. The building, designed by Dominic Bonnesse Architects and completed in 2017, became the national headquarters of the TNPA in 2021. Credit: Credit: Dominic Bonnesse Architects
Agriculture Rooibos has won the battle for unique regional status SECTOR INSIGHT Mohair is making a comeback via the Responsible Mohair Standard.
Blueberries are a good investment. Credit: Primocane Capital.
outh Africa has a number of unique agricultural products but winning the right to exclude other global producers from using the name of the product is a tough task. In June 2021 rooibos became the first South African crop to win from the EU the status of protected designation of origin (PDO). Champagne or Port wine are the best-known products that fall into the protected category. The PDO identifies and links a product to a region, making sure that the consumer will get “the real thing” that is specific to that area. Products that are included in the Geographical Indication Register of the EU currently generate about R1.24-trillion annually. The Western Cape Provincial Government is investigating ways in which other products such as Aloe Ferox, Buchu and various types of flora unique to the province can be added to the list. Karoo lamb is another sought-after delicacy with its own distinct flavour. With about 350 commercial farmers cultivating 70 000ha (and a further 100 small-scale farmers), the industry produces about 15 000 tons of rooibos, about half of which is exported, mostly to Europe and Japan. The EU designation could lead to higher prices being available to producers. Another product of the Karoo is mohair. Although more than half the world’s mohair is produced in a relatively small geographical area
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north of the small Karoo town of Jansenville, there is no chance of getting a PDO for the fleece of the Angora goat because the first animals were imported into South Africa. However, a certificate of another kind has had a big effect in recent months in helping to revive the sector. The mohair industr y took strain after a television documentary claimed that animals were routinely abused. This was denied at the time but the introduction of the Responsible Mohair Standard allows consumers to have peace of mind that animals have been well treated. The RST was set to confirm with standards established by a non-profit organisation, Textile Exchange. A unique product that is generating a lot of interest is the marula fruit, found in large quantities in Mpumalanga and Limpopo. A Marula Industrial Hub is envisaged for the Palaborwa area which will provide a platform to further exploit the tasty marula fruit, which has a high vitamin C content and is already produced as a beer and a liqueur. The Limpopo D epar tment of Economic Development and
OVERVIEW Tourism (LEDET) is encouraging research into the uses of marula and the development of commercial products such as cosmetics and jams. The University of Limpopo is making good progress with a marula wine.
Horticulture is growing Wandile Sihlobo of Agbiz promotes the idea of South Africa focussing on horticulture, partly because it is so labour intensive. He cites blueberries, which need 2.64 workers for every hectare planted. Signs are promising; gross value rose from R15.8-million in 2008 to R1.25billion in 2018 with the total area planted expanding four times. More than 70% of the blueberry crop is exported as blueberries are growing in popularity globally as a “superfood”. In Mpumalanga an agri-focussed private equity firm, Primocane Capital, manages a large blueberry farm near Barberton on behalf of a mining company, Pan African Resources, which has set up the farm as part of its corporate social responsibility programme. Another subsector to experience rapid export growth is oranges. As a source of vitamin C, oranges grew in popularity as the Covid-19 pandemic spread. South Africa is the world’s second-largest citrus exporter, after Spain, and the number 11 in the world in terms of production. Citrus exports earned South Africa about R20-billion in 2019. By contrast, flower growers were badly hit by the effects of the global shutdown. Normally, Europe accounts for 80% of exports with the Americas and Japan accounting for the balance. Wool exports suffered too, although this was mostly related to China stopping imports due to a foot-and-mouth disease scare. About 70% of South Africa’s export of this commodity are to China in a normal year. Avocado exports were worth about R4.3-billion in 2019, with more than 1 000ha of new plantings taking place every year to try to meet growing demand. South Africa is among the top three countries exporting to Europe and the Chinese market is growing at a rapid rate. Total South African agricultural exports reached R175-billion in 2019 with about 40% going to other African countries and 25% to Europe. The grain and fruit harvests in 2020 were good with the maize return of 15.5-million tons the second-largest ever and 38% better than the previous year’s figure.
ONLINE RESOURCES Agricultural Research Council: www.arc.agric.za Grain SA: www.grainsa.co.za National Department of Agriculture, Forestry and Fisheries: www.daff.gov.za SA Table Grape Industry: www.satgi.co.za South African Berry Producers’ Association: www.berriesza.co.za
Rice and palm oil are 100% dependent on imports and half of the maize that South Africans consume comes from abroad. South Africa imports 80% of its fertiliser and 98% of its agri-chemicals. While agriculture’s contribution to national GDP is variously given in the range of 2.0%-2.5%, the upstream and downstream links to agriculture through processing and logistics mean that the real contribution is more like 15%. AgriSA states that the amount of agricultural land in South Africa in 2016 stood at 93.5-million hectares. This represents 76.3% of South Africa’s total land mass of 122.5-million hectares and about 3% less than in 1994. A total of 70% of South Africa’s grain production is maize, which covers 60% of the cropping area of the country. KwaZulu-Natal and Mpumalanga produce sugar, but volumes are down. The Free State Province supplies significant proportions of the nation’s sorghum, sunflower, potatoes, groundnuts, dry beans, and almost all of its cherries. South Africa is famous for its fruit, of which 35% is citrus, 23% subtropical and nuts, 26% pome fruit, 11% stone fruit and 9% table grapes. Most of South Africa’s citrus and subtropical fruit comes from the eastern part of Limpopo. There are about 3 500 wine producers in South Africa, with the majority located in the Western Cape. The Eastern Cape is the largest livestock province. South Africa has a beef herd of 14-million. South Africa’s milk producers normally produce about 3.3-billion litres of milk every year (Milk Producers Association). ■ SOUTH AFRICAN BUSINESS 2022
The Responsible Mohair Standard has restored trust South African mohair is once again popular with global fashion brands.
he mohair industry has embraced the Responsible Mohair Standard as we are all aware that the consumer of today is rightfully far more conscious, not only of the impact of their purchases on the environment, but also the impact their purchases have on the people producing the goods. The Responsible Mohair Standard is all-inclusive and is very specific as to its requirements in respect of the environment and welfare of the animals and all individuals employed in the production of mohair products. There is no doubt that having Samil’s manufacturing operations certified under the Responsible Mohair Standard has opened new opportunities for trade throughout the world. However, the dynamic team at Samil feels compelled to ensure that not just the Samil manufacturing operations but all mohair operations owned or run in partnership with Samil, must also be RMS certified. Samil therefore embarked on a concerted drive to have all the Angora goat farms which are either owned or run in partnership with Samil Farming were also certified as RMS. This was no mean task as there are more than 30 farming operations in the Samil Farming portfolio in and around the Karoo region. However, the Samil Farming Manager, Andries Coetsee, and his very able assistant, Nienke Scholtz, embraced the challenge and Samil is proud to announce that, as of the end of August 2021, all Samil mohair operations are proudly RMS certified.
Through the determined efforts of Mohair South Africa, in conjunction with The Textile Exchange, in ensuring the development of the Responsible Mohair Standard, the mohair industry has been able to regain the trust, not only of the big fashion brands, but also of the world. This can clearly be seen in the record mohair prices currently being achieved as brands the world over are scrambling to reintroduce RMScertified mohair articles into their product ranges. The knock-on effect is that jobs that had previously been in jeopardy are now secured and, due to the new-found appetite for mohair, more jobs have been created.
The benefits of RMS certification After the PETA exposé in 2018, the South African mohair industry became a pariah and many of the top fashion brands vowed to no longer use mohair in their products. This put nearly 30 000 people at risk of being unable to earn a living and feed their families.
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Sharing Africa’s beauty with the world SAMIL produces and processes mohair, the noble fibre.
• • • •
outh African Mohair Industries Limited (SAMIL) is the link between mohair producers, processors and consumers. Our vision is to be an innovative South African company specialising in the production and processing of natural fibres, as well as speciality spun yarns. Mohair, the fleece of the Angora goat, is: the noble fibre, known as the diamond fibre lustrous, resilient and offers exceptional colour reflection one of the world’s most beautiful sustainable natural fibres a symbol of luxury and exclusivity.
African Expressions Our local brand African Expressions was born of the desire to share Africa’s natural beauty with the rest of the world. Through our unique range of yarns, we express the essence of that which makes Africa magical. Our network of local farmers, who farm in optimal Angora goat conditions, breed stock which bear excellent fibres. This ensures that our yarns are naturally soft to the touch, easy to knit and luxuriously versatile. SAMIL divisions Farming: SAMIL Farming was established with the primary objective of stabilising and possibly increasing mohair supply to the processors. Combing: SAMIL Natural Fibres Combing is in Berlin, outside East London in the Eastern Cape. As mohair processing has decreased in other parts of the world, SAMIL Combing has become one of the world’s leading processors. Unlike many processing plants SAMIL Combing focusses on and is committed to processing only mohair. Trading: Through a strong support base of affiliated companies, partners and agents, SAMIL has established strong connections throughout the world for the purchase and sale of raw materials and finished goods. South Africa processes in excess of 80% of the world’s mohair production. The advantage of having both top-making and spinning operations in South Africa, as well as access to raw material produced within the company, is that SAMIL is able to offer lots guaranteed from origin, a rare luxury in today’s business environment. Spinning and dyeing: SAMIL Spinning is a global manufacturer of outstanding quality mohair yarns, producing a wide and exclusive range of mohair and mohair blended fancy and fine-spun yarns in both fine-count and coarser varieties. We are internationally renowned for our superior product range and cater for the hand knitting, machine knitting, weaving, hosiery and decor markets. Although we specialise in pure mohair, we also blend mohair with a range of other natural and man-made fibres. Yarns can be custom dyed to any shade at SAMIL’s state-of-the-art dye house. Genetic research: The latest venture under the SAMIL umbrella is the research project called ANGELA which aims to enhance Angora goats and the mohair kidding rates to the improvement of the different hair qualities. The project will make available its results to all in the mohair community. Contact details Tel: +27 41 486 2430 | Email: firstname.lastname@example.org | Website: www.samil.co.za
Mining Record earnings for miners have been good for the national Treasury.
Credit: Pilanesberg Platinum Mines
ommodity prices buoyed the South African mining sector in 2021. Rhodium palladium, platinum and gold collectively rose in price by more than 50% at one stage during 2021. Increased demand for platinum group metals PGMs has been a trend for some years, driven by the vital role played by PGMs in reducing pollution in the automotive sector. This was boosted more recently by applications for renewable energy and by supply constraints brought about by Covid-19 with production volumes down and shipping made more difficult throughout 2020 and into 2021. More than R23-billion in dividends was paid out to Kumba Iron Ore shareholders in July 2021. Interim earnings reached record highs on the back of a commodity price surge that followed the lifting of many pandemic restrictions around the globe. The company paid R9.2-billion in taxes and royalties in the six months to the end of June. With other mining companies recording similar figures, the government was able to keep paying social grants beyond the time when it thought it would have to scale down on support for people afflicted by the Covid lockdown and the slowing economy. Share prices seldom deal in irony, but when the coal company that was hived off from Anglo American in 2021 greatly improved its share price in just four months, some wry smiles might well have been exchanged by traders. Thungela Resources listed on the JSE in June and by early October its share price had increased fourfold to almost R100, giving the company a market value of R13-billion. There was irony in this result because Anglo American had gone to the trouble to promise to support Thungela financially until the end of 2022 if thermal coal prices did not hold up. With many companies getting out of coal and the global investor community under pressure to divest from fossil fuels, a new coal company seemed like a long shot. But the economic growth surge that followed the lifting of lockdown regulations caught energy planners by surprise. With not
SOUTH AFRICAN BUSINESS 2022
SECTOR INSIGHT Northam buys a stake in Royal Bafokeng Platinum. enough renewable energy yet on stream, the world started scrambling for energy sources. Cue Thungela Resources, the new owner of Anglo American’s thermal coal assets in South Africa. Other news in 2021 from Kumba Iron Ore was the appointment as CEO of Mpumi Zikalala, currently the managing director of De Beers Managed Operations, who became the first woman to head the company. In 2020, Amplats announced the appointment of Natascha Viljoen as CEO. An organisation called Women in Mining (WiMSA) aims to empower women in the South African industry, giving them a platform and a network. Current chairperson Petro Du Pisani is Head of Business Improvement Projects at Anglo American. A previous chairperson, Thabile Makgala, is the Executive: Eastern Limb at Implats.
Sales and profits PPC Lime has changed hands. A transaction for R515-million was expected to be concluded by the end of 2021, with the Kgotelopele consortium taking over ownership. The new owners see the green economy as advantageous to the company’s future. Harmony Gold expects to spend Coal prices surged in 2021. Credit: Thungela Resources R2.3-billion in 2022 on capital Nkomati and followed this with expenditure in South Africa. The Zaaiplaats project in Limpopo and a the purchase of Coza Mining, tailings project between Klerksdorp and Potchefstroom in the North an iron ore and manganese West are the major areas of focus. Together with a project in Papua company in the Northern New Guinea, the new initiatives will allow Harmony to continue to Cape. Afrimat’s first foray into produce 1.4-million ounces of gold until FY 2027 (Mining Weekly). commodities was also in that Coal giant Exxaro has disposed of its stake in Tronox Holdings province, the R322-million (mining and processing of titanium ore, zircon and other minerals) acquisition of the Diro mine. but has taken full ownership of renewable energy company In 2020 Afrimat applied for Cennergi, owner of two wind farms in the Eastern Cape. Exxaro has Nkomati to be placed under tasked Cennergi with installing renewable energy plants at its mines. business rescue because of the In March 2021, Implats announced headline earnings of R14.5-billion, Covid-19 lockdown but stated an increase of 328% over the previous year and a reflection of all of these that it believed the business trends. Implats intends expanding production at its Two Rivers PGM mine could indeed be resuscitated. by 180 000oz. The project will take four years and cost R5.7-billion. When phase three is reached, In the fourth quarter of 2021 Northam Platinum Holdings announced the biggest new mining project in a deal to secure a one-third stake in Royal Bafokeng Platinum. South Africa will deliver 600 000 tons The sale in 2020 by AngloGold Ashanti of its Mponeng mine of zinc for Vedanta Zinc International. and Mine Waste Solutions to Harmony Gold for $300-million (about Located at Aggeneys in the R4.4-billion) marks the end of an era. Harmony Gold’s acquisition Northern Cape near the border strategy, including the purchase from AngloGold of Moab with Namibia, the Gamsberg Khotsong mine in 2017, will result in it being the country’s biggest zinc project has so far attracted gold producer. With 350 000 new ounces coming from Mponeng, $400-million in investment from it could produce an annual total of 1.7-million ounces. the company and has started De Beers is expecting its Venetia underground project to start trucking product to the Port of delivering its first ore in the second half of 2022. Investment in Saldanha. Phase one of the openthe project will amount to about $2.1-billion. The investment pit operation will deliver an annual is expected to extend the life of the mine to 2045 and possibly load of 250 000 tons of zinc. If it beyond that date. proceeds to phase three, it will Afrimat continues to expand its commodities portfolio. likely go underground. Previously focussed on construction materials, Afrimat bought The Northern Cape Province a 27.27% stake in a high-grade anthracite mine in Mpumalanga, is planning for a deep harbour at Boegoebaai. Part of the ONLINE RESOURCES strategy involves the creation of Council for Geoscience: www.geoscience.org.za a commodities corridor linking Minerals Council South Africa: www.mineralscouncil.org.za the Upington Industrial Park National Department of Mineral Resources and Energy: www.dmr.gov.za with the port. ■
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Finding the right pace to transition to clean energy DMRE Deputy-Director General Ntokozo Ngcwabe explains how a drive to promote exploration is proving that mining is the opposite of a sunset industry. What are the Department of Mineral Resources and Energy’s main priorities? Energy security is at the very top of our list in terms of electricity and fuel. The minister has been announcing bid windows and those are all geared towards increasing megawatts that flow into the grid. We are adding megawatts to the grid to support Eskom and to support our economic growth goals. With fuel, we have to ensure that we keep a certain level of strategic fuel stock at all times for the country. We are doing a lot of work on the policy front to ensure that as we drive energy security, we also follow the just energy transition path.
BIOGRAPHY Ntokozo Ngcwabe is the Deputy Director-General in the Department of Mineral Resources and Energy. She is responsible for Policy, Global Relations and Investment Promotion and has 22 years of experience in the minerals and energy sector. Her responsibilities include promoting investments into the entire value chain in both mining and energy, and building and growing partnerships in the two industries. SOUTH AFRICAN BUSINESS 2022
What are other policy issues? The minister recently gazetted regulations for clean fuels. We need to be investing in clean energy technologies and clean coal technologies to ensure that as we exploit our resources, we do so in a responsible manner that ensures that we meet our sustainable development commitments. Is a commitment in terms of local content something you expect from bidders? It definitely is. At this point renewable energy generation components are not manufactured locally. As we progress with this programme, localisation is something we want to see as opposed to components just being brought in for assembling in South Africa. Our aim is to ensure that we create jobs as we walk our just energy transition journey. Further down the line, we then want to move into industrialisation and massifying in terms of job creation. What are the opportunities in respect of the world’s demand for minerals and metals that will assist the transition? We are ranked the highest country in the world with the biggest resources of platinum group metals (PGMs). We are looking to drive the markets for PGMs but we are also following what is happening with electric vehicles. State-owned entities like the CSIR and Mintek have done a lot of work and are investing in fuel cell technology. The entire Minerals Council building in Johannesburg is powered by fuel
INTERVIEW cells. How do we massify commercialisation of that technology so that we drive demand for PGMs but also make our own contribution in terms of the clean energy revolution? Our research institutions are at the very front of that work. The Council for Geoscience is also undertaking a mapping programme that is focused on minerals of the future, ie battery minerals. What are some concrete steps? We are in the early stages of looking at how we advance on the implementation of these technologies, for example powering our government buildings using smart clean technologies. From there, the aim would be to massify and grow. With greater demand you bring the price down as price is still a challenge. We know that as we invest more and more we will create and grow the market thus driving accessibility and affordability of these technologies. What is the future of coal in South Africa? Interesting question. South Africa is well endowed with coal and we are not going to wish it away. Let’s look at this subject holistically and realistically. South Africa’s energy generation basket is over 90% coal fired. It’s not realistic for South Africa to say in the short term we’ll get rid of all 16 power stations. There is provision for coal in the IRP, but the main focus is that new capacity is going to be in clean technologies. Our position is that as we mine and burn this coal to generate power, let’s deploy clean technologies; this will provide the baseload which we can never have from renewable energy sources. Pace is important in this conversation. The very essence of “just transition” is that it’s a process of moving from one stage to the other. It’s not a flip over that will happen overnight. The burning issue for me is I’d really love to see us having a balanced conversation about the just energy transition and the fact that South Africa needs to work on a South African solution at a rate and scale we can effectively manage and afford. We are signatories to the Paris agreement, and we remain committed to climate change and fulfilling our obligations. But let’s take a balanced view on this subject. How does the DMRE see the zinc operations in the Northern Cape? The Northern Cape is a strategic province in that it is under-explored. It can drive growth and help increase the
contribution of mining in job creation and percentage of GDP. We are really putting our energies into driving exploration in that province. But it’s not only the zinc projects. A huge deposit of copper has been discovered in that area. These are commodities that are also critical for the future. Is the DMRE taking steps to expand exploration? DMRE, the Minerals Council and other stakeholders have developed an exploration map for South Africa which is currently going through the approval processes. It’s a specific goal to attract 5% of global spend on exploration, because we currently attract about 1%. If you don’t explore you won’t create new mines and will therefore not grow. Some people say mining is a sunset industry but that’s based on gold mining that is declining. There are other areas and new minerals and we want to turn our focus to those. The saying that if it’s not grown, it’s mined cannot be over emphasised, therefore if we want to grow our economy, we must invest in new mining projects. How is the process going towards regularising Zama Zamas? There are two aspects to it. There are criminals and the South African Police Service is dealing with them, but there are also so-called “illegal” miners where you find old ladies with picks and shovels who don’t know that this is an illegal activity. We want to assist people we are calling artisanal miners. We have drafted an artisanal mining policy which will be gazetted for public comments before the end of this financial year. We want to have a specific set of rules that’s customised and where they don’t have to meet the same requirements as the big mining houses. They will have their own processes and we’ll make sure they are regulated. They could contribute hugely to job creation and to the fiscus in terms of taxes and royalties. Does the department have a graduate placement programme? The DMRE has an extensive programme that covers a whole range of skills. Our SOEs like the Council for Geoscience also take graduates and mining companies are giving them experiential learning at their operations. This has been the tradition in the mining sector in South Africa; for example, the new CEO of Kumba Iron Ore, Mpumi Zikalala, started as a bursar and today she sits at the very top of the company. ■
SOUTH AFRICAN BUSINESS 2022
Energy Generation exemption has changed the energy landscape. Medupi power station is one of the largest engineering projects in South Africa’s history. Credit: Eskom
n June 2021 President Cyril Ramaphosa announced that private entities could go ahead and produce electricity without a licence, raising the threshold from 1MW to 100MW at a stroke. Intensive energy users such as mining houses had been arguing for this policy initiative for a long time, as had manufacturers in the sugar and timber milling industries, which produce vast amounts of biomass which can be turned into energy. The presidential announcement was almost universally welcomed by interested parties, including the CEO of national utility Eskom, which is struggling to keep South Africa supplied with sufficient power. Mining companies such as Sibanye-Stillwater and Gold Fields want to marshall renewable energy resources to power their own operations. Another big game-changer in the South African energy landscape will be the unbundling of Eskom. An Independent Transmission System and Market Operator was set to be established by 31 December 2021, assuming that all the documents are signed by that date. Companies such as Earth & Wire are preparing to become independent utilities in a more flexible energy environment. However, the move away from fossil fuels is not as straightforward as might be assumed. Despite the emphasis on renewables in South Africa’s latest integrated resources plan (IRP), South Africa’s energy mix is still weighted towards coal. Two huge new power stations, Kusile and Medupi, are being built by Eskom and 1 000MW has been allocated to private producers to build coal-powered stations. Koeberg nuclear power station is due to be decommissioned soon after 2045. The Minister of Mineral Resources and Energy, Gwede Mantashe, is a former coal miner and he has unapologetically argued the corner of the coal
SOUTH AFRICAN BUSINESS 2022
SECTOR INSIGHT A green hydrogen industry could transform South Africa. industry, pointing out that South Africa still has vast reserves of coal. This fact, and the need to make what has been called a “just transition” to green energy, underpin the creation of the Presidential Climate Change Coordinating Commission (PCCCC). Led by Valli Moosa, a former minister of the environment who famously campaigned against the proliferation of shopping bags, the PCCCC aims to look beyond the jobs lost by a switch to greener energy options and consider issues such as the effects of climate change on vulnerable communities. Renewable energy development zones (REDZ) are intended to contribute to mine rehabilitation and to support a just energy transition.
Hydrogen and hybrids One of Earth & Wire’s projects intends producing e-methanol by combining green hydrogen with a synthesis gas. Instead of using fossil fuels to make the e-methanol, this process will be powered by renewable energy and use elements such as seawater, biomass and solid waste. ENERTRAG South Africa, with experience around the world and in partnership with Sasol, are the technical partners on the project, which will be located in Humansdorp in the Eastern Cape where a number of wind farms are situated. South Africa’s huge reserves of platinum group metals (PGMs), allied to plentiful sun and wind, gives the country a headstart in terms of establishing a green hydrogen industry. Daily Maverick 168 ran a story at the end of July 2021 titled “Hydrogen economy may be a saviour”. The news article reported on the establishment of a R103-million PGM manufacturing facility in Gauteng by Isondo Precious Metals. The article quotes the acting chief director for Special Economic Zones (SEZs) in the Department of Trade, Industry and Competition (the dtic), Thami Klassen, welcoming the facility as it would be hosting “manufacturing processes of platinum group metal components for the fuel cell and electrolyser industries that underpin the emerging green hydrogen industry”. Production is expected to begin in the middle of 2022. A R2-billion hydrogen fuel cell project has begun in Mpumalanga under the leadership of Mashudu Ramano, a former chairman of several companies including Astron Energy. Seed funding has been provided by the Industrial Development Corporation (IDC) and the Development Bank of Southern Africa. Anglo American is investigating the feasibility of creating a “hydrogen valley” from its PGM mine in Limpopo to the coast of KwaZulu-Natal. One of the companies involved in the study, French firm Engie, estimates that the local market for green hydrogen could be R142-billion annually by 2040, with the export market worth 10 times that (Sunday Times). The 128MW Oya Energy Hybrid Facility being built near Matjiesfontein in the Western Cape is unusual. Falling within the Komsberg Renewable Energy Development Zone (REDZ), the project is owned by G7 renewable energies and will use a hybrid controller to dispatch power to the grid when it is needed from whichever of the technologies is producing power; wind turbines or solar PV arrays supported by lithium-ion batteries.
ONLINE RESOURCES IPP projects: www.ipp-projects.co.za National Energy Regulator of South Africa: www.nersa.org.za South African Independent Power Producers Association: www.saippa.org.za South African Wind Energy Association: www.sawea.org.za
Credit: BTE Renewables South Africa’s acclaimed Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) attracted about R200-billion in committed investments, mostly in solar and wind power, in just five years. Research has shown that there will be an electricity supply gap of approximately 2 000MW between 2019 and 2022. The Oya project is part of a more recent addition to the REIPPPP, the Risk Mitigation IPP Procurement Programme. A majority of wind projects have been allocated to the Eastern Cape, but approximately 60% of the solar projects so far allocated in the programme have been in the Northern Cape, the nation’s sunniest province. Projects such as Kathu Solar Park (100MW), a concentrating solar power (CSP) project, and the Roggeveld Wind Farm (147MW) are indicative of the large scale of most of the energy generation that is being rolled out. Gas is also in the mix. The Department of Energy is targeting the procurement of 3 126MW and intends spending R64-billion on port, pipeline, generation and transmission infrastructure at three key ports, Richards Bay, Coega and Saldanha Bay. ■ SOUTH AFRICAN BUSINESS 2022
COP 26 "Partnership aims to accelerate the decarbonisation of South Africa's economy" “South Africa welcomes the commitment made in the Political Declaration to supporting the implementation of our revised Nationally Determined Contribution, which represents our country's ambitious effort to support the global battle against climate change. “We look forward to a long term partnership that can serve as an appropriate model of support for climate action from developed to developing countries, recognising the importance of a just transition to a low carbon, climate resilient society that promotes employment and livelihoods.”
President Cyril Ramaphosa: COP26 must ensure a just transition that leaves no one behind
Subject to concurrence on the investment framework, and in line with budgetary procedures and consensus on the use of funds and terms on which finance may be provided, mobilize an initial amount of approximately $8.5 billion over the next three to five years through a combination of appropriate financial instruments, which may include but is not limited to multilateral and bilateral grants, concessional loans, guarantees, and private investments, and technical support to enable the just transition, with a view to longer-term engagement.
South Africa is developing plans to enable a just move to net zero. Our electricity sector, which contributes 41 percent of our greenhouse-gas emissions, will be the first phase. We will be decommissioning and repurposing coal-fired power stations and investing in new, low-carbon generation capacity. We will also pursue green industrialisation opportunities such as electric vehicles and fuel cell production that stimulate job creation and economic growth.
Source: UK News Today Nov 2021
"Net Zero emissions 2050"
Source: UK News Today Nov 2021
Source: Northern Cape GH2 Strategy 2021
"Launch this exciting development for the Northern Cape."
Minister Barbara Creecy: Launch of Northern Cape Green Hydrogen Strategy and Sasol as anchor investor
The new roadmap builds on what has been achieved in the past 10 years and moves us from research and development to manufacturing and commercialization. Local manufacturing of hydrogen products and components will contribute towards job creation and skills development and enhance economic transformation that will benefit the previously marginalized sectors of society, particularly women and youth, especially in a province, like the Northern Cape, which is one of the poorest in terms of demographics in South Africa. As we have heard this afternoon, the intention is to have a dedicated green grid, electrolyzer park, and green hydrogen-related Special Economic Zone to manufacture green hydrogen industry-related goods and services in the Northern Cape. We are particularly excited by this development which aligns with the DFFE’s declaration of the expanded western Strategic Energy Corridor in the Northern Cape. Over the past few years, our department undertook Strategic Environmental Assessments to identify among others renewable energy development zones (REDZ) and strategic energy corridors, in which large-scale grid infrastructure expansion could be incentivized. This was done to proactivity identify environmental sensitivities and assist in orientating infrastructure development away from areas of high environmental sensitivity, allowing for a streamlined environmental authorization process that speeds up development while maintaining the highest environmental protection. Through this process, we have heeded the call from the His Excellency President Ramaphosa to cut red tape and to halve the authorization timeframe for transmission scale electricity grid infrastructure and reduce the timeframe for electricity grid development from 7 to 3 years by allowing a pre-negotiated route to be submitted for authorization which significantly simplified the servitude negotiation process.
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Oil, gas and petrochemicals Offshore gas discoveries could boost South Africa’s economy. SECTOR INSIGHT A helium project in the Free State is set to join an elite club.
The Virginia Gas Project is ramping up. Credit: Renergen
outh Africa has set a target of 3 000MW of gas power in the national grid by 2030. This is laid out in the country’s most recent Integrated Resources Plan (IRP), which guides national targets in each of the various methods of power generation and which is tilted towards renewable energy. Although there have been encouraging finds off the southern coast of South Africa and prospects for shale gas appear to be good in the country’s interior, it has been pointed out by the commercial growth director of GE Gas Power for Sub-Saharan Africa, Michael Konadu, that these prospects are yet to be commercialised. When this fact is added to the logistical difficulties and security concerns surrounding the gas resource available from Mozambique, Konadu argues that liquified natural gas (LNG) should be the vehicle for meeting the objectives of the IRP and the national Gas Master Plan. His preferred method would be for a consortium to assume project risk, including terminal and plant infrastructure. The state could take a stake through Transnet or the Central Energy Fund. Whether it is via new imports of LNG or the development of the Brulpadda and Luiperd prospects off the southern coast, there is no doubt that new feedstock is needed for the PetroSA GTL refinery at Mossel Bay. Commissioned in 1992 as the world’s first gas-to-liquids (GTL) refinery, it plays an important role in the regional and national economy but it has effectively run out of feedstock.
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The entity is considering extracting geothermal energy from nine of its wells that are now depleted of gas as a way of fending off decommissioning. Total E&P South Africa BV, the operator and majority stakeholder in the joint venture which is drilling, has not yet taken a decision about what further steps it might take now that the first drilling operations have been shown to be successful. The drilling was successful enough to warrant the return of the semi-submersible rig Deepsea Stavanger from Norway to South Africa and in August 2020 the rig made more discoveries at the nearby Luiperd prospect. The JV partners are Qatar Petroleum International Upstream LLC, CNR International and Main Street 1549 Proprietary Ltd. Petroleum Agency South Africa (PASA), which encourages exploration and regulates the oil and gas industry, has noted the significance of international oil companies committing to exploration off South Africa’s coast. Another drilling project was launched in September 2020 in t he K aroo. The Council for Geoscience (CGS) announced phase two of the Karoo Deep Drilling and Geoenvironmental Baseline Project
Offshore gas finds could revitalise the gas-to-oil facility at Mossel Bay. Credit: PASA (KDD) in Beaufort West. The geoscientific research project in the Karoo Basin is aimed at developing a geo-environmental baseline model with a focus on assessing the potential environmental impacts of shale gas development. A Gas Utilisation Master Plan (GUMP) is being developed as a part of national energy policy. Private companies are responding to this changed environment. Tetra4, a subsidiary of Renergen, owns rights to a field of liquified natural gas (LNG) in the Free State and has started ramping up to the next (production) phase of the Virginia Gas Project. The pilot compressed natural gas (CNG) plant was constructed in 2016. The helium concentration tested by Renergen is at an excellent level and in line with early indicators. So good were the helium flow results announced in early November 2021 that the company’s share price shot up by 14.3% on a single day. The aim in phase one is to produce 350kg/d of helium via cryogenic liquification and to construct a commercial LNG plant. When the project comes on stream, it will become one of just 16 such facilities in eight countries globally. Production of helium is expected to grow to five tons in the second phase. The SpaceX rocket that launched in 2021 used 11 tons of helium to propel itself off the ground. Every computer microchip in the world is produced in the presence of helium and the world uses 85 tons of it every day. Although it’s a very useful element, it’s also a very difficult element. Renergen has had to import much of its equipment and many skilled personnel. First to respond to the potential of this gas find was the logistics sector. Bulk Hauliers International Transport (BHIT) and South African Breweries signed agreements to take LNG to fuel some of its trucks, which should lead to lower operating and maintenance costs.
ONLINE RESOURCES National Energy Regulator of South Africa: www.nersa.org.za South African National Energy Association: www.sanea.org.za South African Petroleum Industry Association: www.sapia.co.za
Renergen has signed an agreement with TotalEnergies for distribution and sale and the potential of another market was revealed in 2021 when Renergen agreed to sell LNG to glass manufacturer Consol. Bespoke depots will be developed. International chemicals and energy company Sasol has several large plants in Mpumalanga and the Free State. Sasol Gas is one of the four Sasol operations at Secunda, supplying natural gas to Sasol Synfuels and buying Sasol Synfuels’ methanerich pipeline gas. Air Liquide Large Industries SA, a subsidiary of French company Air Liquide, has purchased Sasol’s oxygen production site in Secunda for R8.5-billion. Sasol is selling a number of its assets in an effort to reduce debt. Most of the oil that feeds the country’s four crude-oil refineries is imported. The refineries are in Cape Town, Sasolburg and Durban (two). In addition to South Africa’s crude-oil refineries, natural-gas conversion plant, coal-to-fuel and gas-to-liquid crude -oil refineries, Sasol produces fuel from coal at its Secunda facility. ■ SOUTH AFRICAN BUSINESS 2022
Gas will help South Africa achieve net zero Gas can drive an economic recovery at the same time as building a bridge to a clean energy future, writes Petroleum Agency South Africa CEO, Dr Phindile Masangane.
he biggest threat to humanity is climate change and the biggest threat to South Africa’s social stability is the high unemployment rate, which has primarily been caused by economic stagnation. As the global economy recovers from the devastating effects of Covid-19, demand for oil and gas has gone up significantly. If there was ever a need for proof that oil and gas still drive the global economy, recent statistics demonstrate the trend. T h e w o r l d ’s d e v e l o p e d e c o n o m i e s industrialised on the back of oil and gas production and use. Now, just as Africa is on the cusp of being a significant gas producer and is making plans to use such gas for power generation, industrialisation and economic growth, the negative effect of greenhouse gas emissions on the environment has become undeniable. The urgency for action to mitigate the risk of climate change is no longer debatable. As a responsible global citizen South Africa must take steps to reduce its carbon footprint.
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The UN Framework Convention on Climate Change was established in 1992 to coordinate the global response to mitigate the threat of climate change, and specifically to get countries to commit to policies and plans that will ensure that the average global temperature rise is kept less than 1.5°C above pre-industrial levels. The International Energy Agency (IEA) proposes that to achieve this goal the world’s energy sector must reach net zero emissions by 2050. Country-specific pathways The IEA “Net Zero by 2050” report acknowledges that there will be a differentiated approach to a clean energy future, taking into consideration the cost of the new clean energy technologies and the economic consequences of transitioning for each country. The IEA emphasises that each country must develop its own pathway to a net zero emission future. South Africa’s economy has been predominantly powered by coal, which is also a significant contributor to the country’s economy in terms of GDP as well as employment. Of all primary energy resources coal is the most carbon-intensive, and South Africa therefore has a relatively high carbon-intensive economy, contributing about 1% of annual global greenhouse gas emissions. In addition to coal, South Africa imports oil, gas and petroleum products for its energy needs as the upstream petroleum industry is still at a nascent stage. The two recent world-class gas discoveries in the Outeniqua
basin off the south coast of the country are the biggest petroleum discoveries made in South Africa. The development of these discoveries has the potential to replace more than 2 300MW of diesel-fired electricity generation in Gourikwa, Dedisa and Ankerlig, thereby reducing the carbon emissions from these plants by more than 50% while eliminating sulphur oxide and nitrogen oxide emissions, which are also harmful to the environment. Gas is therefore an obvious bridge to a lower carbon future in South Africa. Importantly, these gas discoveries could restore the gas-to-liquid refinery in Mossel Bay to full production and profitability, saving about 1 200 direct jobs. A complete shutdown and abandonment of this refinery would not only lead to job losses at the refinery, but the effects would reverberate throughout the town of Mossel Bay and the Southern Cape region, since the refinery contributes about R2-billion a year, or 26% of the Mossel Bay economy, and 6% to the Southern Cape economy when producing at full capacity. The Petroleum Agency South Africa awaits the licensee of these gas discoveries submitting its production right and environmental authorisation applications when the exploration right expires, or earlier. The agency expects the licensee to use world-class technologies and standards to minimise the effects of the gas and gas condensate production on the environment, while maximising the in-country benefit or local content from this development to support South Africa’s economic recovery. These discoveries could indeed support both the country’s economic recovery and its transition to a clean energy future. ■
Credit: Anton Swanepoel Exciting discovery off Southern Cape coast In 2019 Total and its partners created a stir with the announcement that gas condensate had been found at a site called Brulpadda off the coast of Mossel Bay. In 2020, the nearby Luiperd prospect in Block 11B/12B delivered more exciting news. The block, in the Outeniqua Basin 175km off the southern coast, covers an area of about 19 000km² in water depths of 200m to 1 800m. The exploration was done by the semi-submersible rig Deepsea Stavanger (pictured), which journeyed twice from Norway to lead the exploration projects. The Luiperd prospect is the second of five prospects in the group. Light oil and gas condensate were discovered in significant quantities. The exploration drilling is in deep waters similar to where the gigantic Mozambique Rovuma Basin gas discoveries were made in 2011 and 2012. These discoveries have exciting repercussions for the development and growth of South Africa’s oil and gas sector. If the local gas market is to take off and thrive, significant drilling has to take place. PASA, which encourages exploration and regulates the oil and gas industry, has noted the significance of international oil companies committing to exploration off South Africa’s coast. Increased confidence by such companies can only lead to growth in the industry and with the gas finds off Mozambique there are sure to be more companies interested in South Africa’s potential. In addition to adjudicating on coastal fields, the agency has awarded coalbed-methane-gas exploration rights in KwaZulu-Natal and natural gas exploration permits in the Free State.
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Water Three-year programme will tackle dam storage problems.
Darlington Dam in the Sundays River valley, Eastern Cape. Credit: Addo Elephant National Park
ater loss in a water-scarce country is a serious business. The National Department of Water and Sanitation (DWS) has appointed the Water Research Commission ( WRC) to develop and manage the National Siltation Management Strategy for Large Dams. More than 90% of the country’s total storage capacity is carried by 321 large state dams, most of which are subject to serious sedimentation, which greatly reduces their carrying capacity. Expectations are that South Africa will have a 17% water deficit by 2030 and so the matter is urgent. Three government water schemes are the target of the pilot plan: Hazelmere Dam in KwaZulu-Natal; Darlington Dam in the Eastern Cape; and Welbedacht Dam in the Free State. Key deliverables include creating models for sustainable dredging and decision-making. The programme is intended to be complete by 2023. Leaking pipes account for a large portion of the water lost to South African municipalities in trying to serve their households and businesses. The simple expedient of reducing water pressure, which the City of Cape Town introduced during the period of severe water shortage that raised the spectre of “Day Zero”, reduced water use by 40%. Supplying water to households and businesses has often been a task beyond the capabilities of some of South Africa’s municipalities. The Municipal Infrastructure Support Agency (MISA) falls under
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SECTOR INSIGHT Managing water pressure can drastically reduce consumption. the National Department for Cooperative Governance and Traditional Affairs and will assist municipalities to plan for, provide and maintain infrastructure. The first action of MISA was to commission 81 engineers and town planners to get to work in areas that need the most help. In the North West, the revitalisation of the VaalhartsTaung Water Irrigation Scheme will double the land available to emerging farmers, create more than 10 000 jobs during its implementation, resolve water shortages in local municipalities and provide certainty for producers of fresh produce.
The project was gazetted as one of the Strategic Integrated Projects (SIPs) in 2020 and falls under the Presidential Infrastructure Coordinating Commission (PICC). The existing Vaalharts Irrigation Scheme is one of the largest irrigation schemes in the world, covering 39 000ha under irrigation, and extending it to Taung in the North West will give it even greater reach. The scheme currently has 1 000km of concrete-lined canals and more than 300km of concrete drainage. The Vaalharts Water User Association is headquartered in Jan Kempdorp, a town in the Northern Cape right on the border of the North West and at the centre of the scheme’s area of operations. The DWS has released a master plan in response to the severe droughts that have affected the country in recent years. It calls for annual investment for a decade of R3.3-billion in infrastructure to achieve water security. This is a figure that can only be achieved with the help of the private sector. The National Cleaner Production Centre South Africa (NCPC) is the technical partner for the water use part of Phase 2 of the Strategic Water Sector Cooperation between the governments of Denmark and South Africa. The NCPC, which runs the Industrial Water Efficiency project, has found that more efficient use of energy (a key focus area of its work) has also led to less water being used in production processes.
Technology and innovation A new kind of water filtration system has been pioneered by a water entrepreneur from Limpopo, a system which puts macadamia nut shells to use. The brainchild of Murendeni Mafumo, the idea was first put into action in 2018 and has been used in schools and rural communities by Kusini Water. Powered by solar power, the purification system uses a carbon filter that is made from macadamia nut shells. Simpler technology is giving the pupils at a school in the same province access to drinking water. Students from the University of Pretoria’s Department of Geography, Geoinformatics and Meteorology have helped to build a net in the mountains where Tshiavha Primary School is located. Fog is captured by a big net
ONLINE RESOURCES National Cleaner Production Centre South Africa: www.ncpc.co.za National Department of Water and Sanitation: www.dwa.gov.za South African Water Research Commission: www.wrc.org.za Water Institute of South Africa: www.wisa.org.za
and channelled into tanks by a gutter running along the bottom of the net. About 2 500 litres of water is captured per day which means that there is enough to share villagers. The province of KwaZulu-Natal is taking a lead in desalination technology. Richards Bay has installed a desalination plant next to the municipal water treatment plant at Alkanstrand. The first mobile sea water purification unit in South Africa, it comprises 10 containers and is located adjacent to the water treatment plant at Alkantstrand. It can deliver 10 megalitres of drinking water. A plant that makes water from air has been launched. Aqua Air Africa has established an atmospheric watergeneration plant at Ga-Rankuwa near Pretoria and is producing about 10 000 litres per day through a process that involves the condensation of water vapour into liquid. In an attempt to reduce the amount of water sucked up by alien plants, Coca-Cola aims to recover nearly three-billion litres of water through the removal of invasive plants. Another response to the municipal problem is a new national strategy which gives a bigger role to well-resourced water boards such as Umgeni Water and Sedibeng Water. In terms of the National Water Resource Strategy, catchment area management agencies have been established to oversee water resource management on a regional basis. ■ SOUTH AFRICAN BUSINESS 2022
Coca-Cola Beverages South Africa – taking transport initiatives to another level Hamish Narsey, Regional Logistics Manager for CCBSA’s Coastal region, outlines his company’s comprehensive approach to transport.
Please tell us the scope of your activities? In CCBSA’s Coastal region, we deliver within the KwaZuluNatal and Eastern Cape Provinces as well as parts of the Western Cape, up to and including Beaufort West. We operate a number of vehicles which includes a combination of truck and trailer sizes. How many trips are undertaken in an ordinary month? And how was that affected by Covid-19? We take on approximately 4 000 trips per month. Our number of trips remained the same during lockdown, with volumes fluctuating as we transitioned through the different lockdown alert levels and restrictions.
BIOGRAPHY Hamish Narsey started his career at CCBSA in 2000. He has progressed through the ranks within the operations environment and has gained vast experience in warehouse and inventory management. He has fulfilled various operational and strategic management roles and is well-travelled through benchmarking among the best Coca-Cola manufacturers and distributors in the United States. He is currently responsible for four sites, two of which are in Durban, one in Gqeberha and one in East London. SOUTH AFRICAN BUSINESS 2022
How important is road safety to CCBSA? Road safety is essential in maintaining our social licence to trade, and the business therefore embarks on various road safety initiatives. These initiatives include a strong focus on vehicle safety, driver safety, system improvement, compliance as well as monitoring and auditing. We also have the Respect the Road Campaign, which is a road safety campaign that runs twice a year with our heavy motor vehicle and light motor vehicle company users and extends to Owner Drivers and Local Distribution Partners. This is generally run prior to the Easter and December holiday periods, with ongoing awareness throughout the year. In what ways does CCBSA partner with government to promote road safety? Aligned to our focus on system improvement, CCBSA built two driver simulators. The simulator incorporates everyday, real-life challenges faced by drivers on South African roads, such as protest action, changing weather conditions, third-party driver behaviour and adapting driving behaviour to changing road conditions. CCBSA often partners with government on road safety campaigns where the simulator is used.
As part of our focus on compliance, CCBSA has retained our Road Transport Management System (RTMS) certification and was recertified in July 2021. The benefits of accreditation include improved road infrastructure and road safety, better maintenance management control, improved load accuracy, improved transport productivity and improved social responsibility. The RTMS certification is also a prerequisite for applying to run Performance Based Standards (PBS) trailers in South Africa.
What are PBS trailers? PBS trailers are 27.9 metres long and can transport 44 pallets, as compared with the conventional 30-pallet trailer. How does the introduction of a bigger 44-pallet PBS contribute to sustainability? By having more pallets at a time, it means that we have fewer trucks on the road, fewer shipments are transported per annum and fewer kilometres are travelled every year, all of which contributes to a reduction in CO2 emissions. ■
Engineering Renewable energy projects are coming on stream. SECTOR INSIGHT Bosch Holdings celebrated an anniversary in 2021.
Bosch Ulwazi has been certified by the Engineering Council of South Africa (ECSA) as a certified training academy. Credit: Bosch Holdings
osch Holdings celebrated its 60th anniversary in 2021. Having started with the design of the sugar terminal in the Port of Durban, the group now has eight companies and offices in Kenya, Brazil and the UK. Head office is in Durban. Bosch Projects does consulting engineering and project management in a range of sectors but has retained the company’s historic ties with the sugar industry, designing and supplying specialist production equipment. Other companies cover training, technology services and financial advisory. Aveng reported its first profit in seven years in 2021. One of South Africa’s biggest engineering companies, Aveng managed to turn the corner through the activities of its mining division in South Africa and its Australasian company, McConnell Dowell. Several of the country’s other big companies went into business rescue, including Group Five, Basil Read and Esor. These companies delisted from the JSE but although Covid-19 upset the plans for business rescue, that option continued to be preferred into 2021, rather than liquidation. Like Aveng, Murray & Roberts and WBHO rely heavily on offshore contracts for revenue. Murray & Roberts has completed its transition from being a South African company focussing on contracting to a multinational engineering and construction group with a focus on natural resources markets. The CEO of Consulting Engineers South Africa (CESA) has called for a united front to help the sector fight its corner. Chris Campbell noted in a Mail & Guardian article in 2021 that the country has “countless industry bodies” including, but not limited to, ECSA, SAICE, SABTACO, NSBE and SAIEE. Campbell referenced an earlier overarching body, the South African Forum
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for Engineering (SAFE) as a model. Such a body would be able to take an industry-wide position on issues such as Cuban engineers working on South Africa’s water system, a contentious issue that was in the spotlight in 2021. The Engineering Council of South Africa (ECSA) regulates the industry through professional registration and the standardisation of tertiary qualifications. South Africa is the only African member of the International Engineering Alliance (IEA). An Investment and Infrastructure Office has been created in the Presidency. It is headed by the former Gauteng MEC for Economic Development, Dr Kgosientso Ramokgopa. In 2020, 51 infrastructure projects with a total investment value of more than R340-billion were gazetted and hopes are high that this initiative will provide a boost for engineering firms. A study carried out by KMPG found that spending on infrastructure resulted in additional economic activity worth R26-billion and created 92 000 direct jobs. The Renewable Energy Independent Power Producer Pro c u re m e n t Pro gr a m m e (REIPPPP) has created an entirely
OVERVIEW new industry in less than seven years, with investment of about R200-billion in solar parks and wind farms. This has created many opportunities for engineers. Marine repair and engineering form a significant sector in the Western Cape and KwaZulu-Natal, with established companies such as EBH South Africa offering comprehensive services. Both KwaZuluNatal ports are expanding and will continue to attract engineers. Dormac, which is headquartered in the Bayhead area of the Port of Durban, is best known for its marine engineering but it offers specialised services to the sugar industry and provides machinery for industrial giants like Toyota and Defy.
Training The Engineering Council of South Africa has a programme where trainees can earn certificates in specific disciplines from a range of institutions. The qualifications are in line with the council’s Exit
ONLINE RESOURCES Consulting Engineers South Africa: www.cesa.co.za Engineering Council of South Africa: www.ecsa.co.za South African Consulting Engineering Firms: www.consultsa.co.za Southern African Institution of Civil Engineering: www.civils.org.za
Level outcomes. Six of South Africa’s biggest construction companies have established a R1.25-billion skills fund. Several partnerships between the public and private sectors are trying to address the skills deficit. One example is the partnership that Wits’ National Aerospace Centre has with Boeing and Airbus. The Skills Development Amendment Act is intended to improve the situation. Universities, universities of technology and companies are increasing their focus on the training of engineers. ■
Construction and property Covid-19 has shaken up sector priorities.
ovid-19 provided a sharp shock for many business sectors, but with the move towards working from home accelerated by the pandemic, none is going to have to look harder at its models for sustainability than the office rental sector. Logistics, often taken for granted in normal times, became an even more important component of the supply chain during the global lockdown and in the months that followed, with the second half of 2021 characterised by blockages and delays. In that context, the news that Fortress REIT had successfully let more than 100 000m² of logistics space in KwaZulu-Natal, was significant. The company also announced its intention to develop more than a million square metres of logistics assets over three years, transforming the weighting of its portfolio to two-thirds logistics. Fortress’s Clairwood Logistics Park, which has port access, signed up two big clients in 2021, Kings Rest Container Group and African Sugar Logistics. Fortress’s new Cornubia Logistics Park (pictured) has the advantage of being near the King Shaka International Airport. The same locational logic applies to Eastport Logistics Park, which is close to OR Tambo International Airport in Gauteng, where Fortress has signed its biggest logistics development to date, a joint venture with Pick n Pay which is establishing another inland distribution centre. The clients of Equites, a company which focusses on logistics property, include Amazon, Super Group, HDL and DSV. Equites is the only specialist logistics property company listed on the JSE. In six years, its portfolio has grown from R1-billion to R15-billion. There are more than 30 real estate investment trusts (REITs) on the JSE and they generally deliver good value. FNB, which publishes a regular property barometer, has done an in-depth analysis of previous crises to help understand what may
ONLINE RESOURCES Construction Industry Development Board: www.cidb.org.za SA Reit Association: www.sareit.co.za South African Property Owners Association: www.sapoa.org.za
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SECTOR INSIGHT Logistics property is on a growth path. occur in the post-Covid property market. According to John Loos, a property strategist at FNB Commercial Property Finance, the most vulnerable sector is likely to be Retail Property. Smaller neighbourhood centres, with more essential items and greater convenience, will be less vulnerable. Statistics SA has found that the percentage of South Africans living in flats has risen markedly. Whereas 26 out of 100 approved plans in 2013 were for flats, this figure reached 59 in 2016. Although the total number of people living in flats is still relatively small (5.4%), this figure will rise as urbanisation increases. An innovative scheme to build a new township in Gauteng is backed by a retirement fund. The Transport Sector Retirement Fund is building an integrated settlement in the Sedibeng District Municipality south of Johannesburg. The R2.7-billion development includes a shopping centre and will include a mix of housing types. ■
Vaccine manufacturing is accelerating.
he Aspen Pharmacare facility in Gqeberha will make hundreds of millions of doses of the Johnson & Johnson Covid-19 vaccine for South Africa and Africa. A consortium of development finance organisations, including the World Bank’s International Finance Corporation, made €600-million in financing available to the South African company in the course of 2021 to assist it in ramping up production of the vaccines. By 2022, the facility should be making about 500-million doses annually. In Johannesburg, global pharmaceutical company Mylan has purchased a manufacturing site, previously used by Ascendis Health, to make antiretrovirals to cater to the seven-million South Africans living with HIV. The Isando factory will produce effervescent tablets, semi-solid and hard capsules and pills. A new tender for a national supplementary HIV/Aids drug tender, which was previously awarded to foreign companies, is to be issued, opening up opportunities for local manufacturers such as Cipla Medpro. The three-year tender is worth R18.3-billion. Pirates off the west coast of Africa are driving an increase in boatbuilding in South Africa. Companies like Paramount Marine which specialise in security boats are receiving many orders. In August 2021, the company announced that its Cape Town facility was making 26 boats for a contract price of more than R850-million. PG Bison, a subsidiary of KAP Industrial Holdings, is investing more than R2-billion at its plant in Mkhondo in Mpumalanga (pictured). With operations in four provinces ranging from forestry to the manufacture of medium-density fibreboard (MDP), particleboard and value-added products, PG Bison is also building a new MDP plant in Mpumalanga to complement its existing Gauteng facility. TFG, whose South African brands include TotalSports, Markhams and Foschini, has a five-year plan to double its manufacturing capacity. Having purchased Prestige Clothing Maitland and Prestige Clothing Caledon and spent R75million on expanding the factory in Caledon, TFG now plans to significantly increase the percentage of locally-made clothing items from the current level of 35% to 55%.
ONLINE RESOURCES Chemical and Allied Industries’ Association: www.caia.co.za Manufacturing Circle: www.manufacturingcircle.co.za South African Textile Federation: www.texfed.co.za
PG Bison is spending on expanded capacity.
Credit: PG Bison The Manufacturing and Competitiveness Enhancement Programme (MCEP) of the Department of Trade, Industry and Competition (the dtic) has disbursed grants which have resulted in 230 000 jobs being “sustained”. Because of the Clothing and Textile Competitiveness Programme, that sector currently now employs around 95 000 workers, contributing 8% to manufacturing GDP and 2.9% to overall GDP. In the leather sector 22 new factories have been opened, supporting 2 200 jobs. In the Western Cape, this revival is reflected in member companies of the Cape Clothing and Textile Cluster hiring 35% more staff in four years. About 23 600 people are employed in the province and exports from the Cape amounted in 2017 to R4.4billion with sales up by 34% above inflation. ■ SOUTH AFRICAN BUSINESS 2022
Transport and logistics The private sector is set to play a bigger role in transport. SECTOR INSIGHT Budgets for spending on public transport are increasing.
One of the two new helicopters purchased for the transfer of pilots at Richards Bay and Durban. South Africa was the first country to use helicopters to transfer pilots. Half of the team of 26 pilots are women. Credit: TNPA
hen the state tried to revive branch rail lines a decade ago, the sticking point was who was to pay for the infrastructure upgrade. An announcement in 2021 by the Minister of Public Enterprises Pravin Gordhan that concessions were back on the table was accompanied by the news that only fully-repaired lines were under discussion, greatly reducing the risk for potential private partners. Bids are to be made on four lines initially, with state utility Transnet to be responsible for maintenance. The private operators will pay a fee every time they use the line. Minerals and agricultural produce in remote areas are likely to be the first target for private companies looking to assist the state in moving a greater proportion of the country’s freight from road to rail. Another area of proposed private sector participation with the Transnet group is in the running of the nation’s ports. Congestion and under-investment have meant that South Africa’s ports are not as competitive as they should be. A start has been made in that South Africa’s largest agricultural company has signed an agreement with Transnet to partner in upgrading grain facilities at two ports. However, there are much more ambitious plans in the offing. Transnet is calling for bids from global container terminal operators for the ports of Durban and Ngqura. The creation of Transnet National Ports Authority ( TNPA) as an independent subsidiary, which took place in June 2021, is designed to assist in the process. Large amounts of money are to be spent on various forms of public transport in the short term. Investments in rapid transit systems in the big metropolitan areas of Johannesburg and Cape Town are now being followed by other South African cities such as Polokwane and Rustenburg, the Gautrain is looking to expand its routes, a taxi
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infrastructure programme is in place in some cities and the Passenger Rail Agency of South Africa has a plan to increase and upgrade its rolling stock. In Limpopo’s provincial capital of Polokwane, operations of the Leeto La Polokwane public transport system were launched in Transport Month, October 2021. In the North West, the Rustenburg Rapid Transport Project (Yarona) aims to integrate busses, taxis and improved pedestrian access throughout the city. The South African Department of Transport has several agencies and businesses reporting to it: Air Traffic and Navigation Services Company, ACSA, National Transport Information System, Road Accident Fund, South African Civil Aviation Authority, South African Maritime Safety Authority (SAMSA), South African National Roads Agency Limited (Sanral) and Passenger Rail Agency of SA (PRASA).
Logistics Transnet Freight Rail (TFR) has had a new CEO since April 2020. Siza Mzimela, with a background in airlines and logistics, wants to divert road freight to rail, which currently attracts just 20% of South Africa’s general freight.
Durban is South Africa’s port, with increasing volumes of containers putting pressure on logistics operations. Credit:TNPA
One of her goals is to find a South African manufacturer who can produce railway lines. Transnet Freight Rail’s operations represent about 80% of Africa’s rail infrastructure. With 25 000 employees TFR has specialist divisions for hauling coal and iron ore together with a general freight division which transports everything from grain to chemicals. While there is concern about the performance of South Africa’s ports in getting goods in and out in the best possible time, a record was set in 2020 by Transnet Freight Rail in transporting 66 train lots and 3 662 FEU reefer containers from Limpopo and Gauteng to the Port of Durban. The Citrus Growers Association was very happy about this, which represented a 20% on the previous year’s volumes and was some way towards the target of 15 000 reefer containers. A mandatory automated truck booking system has been introduced at Durban Container Terminal Pier 1 and Pier 2, while the Grindrod, FPT and Bulk Terminal depots have also piloted their own booking systems. Although Transnet Port Terminals and Transnet Freight Rail are vital to the smooth running of the loading systems, private operators
ONLINE RESOURCES African Rail Infrastructure Association (ARIA): www.aria.org.za Airlines Association of Southern Africa: www.aasa.za.net South African Heavy Haul Association: www.saheavyhaul.co.za
of storage facilities and trucking companies also need to synchronise their operations. In Cape Town, efforts to work on decongestion include the City of Cape Town, the Cape Chamber of Commerce and Industry and the provincial government. The building of the MusinaMakhado Special Economic Zone (SEZ) will boost Limpopo’s role as a transport and logistics hub. The Musina Intermodal Terminal is 15km from the busy Beit Bridge border crossing. It will boost efforts to move cargo from road to rail. The Maputo Development Corridor is Africa’s most advanced spatial development initiative. Run by the Maputo Development Corridor Logistics Initiative (MCLI), the corridor runs from near Pretoria in Gauteng to Maputo in Mozambique. The Harrismith Logistics Hub at the Maluti-A-Phofung SEZ on the N3 is an inland port that can handle cargo containers and shift cargo from road to rail, reducing congestion and costs. Several airports are possible future regional freight nodes: Wonderboom Airport in Pretoria, Polokwane International Airport in Limpopo and Mafikeng Airport in North West Province. South Africa has 22 000km of railway lines and 747 000km of roads, 325 019 heavy-load vehicles and the road freight industry employs 65 000 drivers. The logistics and courier market is worth R10-billion. There are 135 licensed airports in the country, 10 of which have international status. ■ SOUTH AFRICAN BUSINESS 2022
Building a safe and integrated transport system Limpopo MEC of Transport and Community Safety, Mavhungu Lerule-Ramakhanya, reflects on the role that aviation can play in creating an integrated system and promoting economic growth. What are the primary objectives of the Department of Transport and Community Safety and how does aviation fit in with them? Our mandate is to provide safe, sustainable and affordable integrated transport services for the citizens of our province. To intensify the fight against crime and to root out corruption. This must be done in a way that promotes socio-economic development. We have to provide for the safe transportation of goods, services and people. Road safety, mobility and vehicle safety and law enforcement on our roads are key. Aviation, and the Polokwane International Airport in particular, plays a vital role in positioning the province as a logistics hub.
MEC Mavhungu Maureen Lerule-Ramakhanya, Department of Transport and Community Safety
BIOGRAPHY Born in Makhado (formerly Louis Trichardt), Mavhungu was a community activist from a young age, heading various structures including the ANC Youth League before taking on leadership roles within the African National Congress at a provincial level. She is also a member of the South African Communist Party. She was appointed as Executive Mayor of Vhembe District Municipality before serving as Speaker of the Limpopo Provincial Legislature. In March 2020 she became the Member of Executive Council (MEC) for Transport and Community Safety.
Are you promoting freight transport? In January we will be meeting with existing freight companies who have shown an interest in leasing space. How will the activities at the airport assist in road safety? Aviation fits in with the pillars of our strategy in terms of safety. When PIA is fully operational it will significantly reduce the load on our roads, especially at peak times like Easter and Christmas and make for a safer travel experience. Polokwane International Airport was downgraded because of safety concerns. How far have you gone in addressing the challenges? We have recently received our licence for operating for the year to come, so we passed the annual assessment. How are things looking for the coming months? Our department, together with the Limpopo Tourism Agency and the Limpopo Department of Economic Development, Environment and Tourism (LEDET), has agreed on a marketing strategy where we are targeting the holiday months to drive up numbers. Are there any plans for another airline to operate out of PIA? We are open to anyone. We are not in a position to offer monetary incentives, but we encourage any airline with a licence to come to Limpopo. The economic cluster at provincial level is working on a strategy on how best to introduce more cargo and freight businesses. Would the introduction of additional routes to Cape Town and Durban assist the province’s development? We have a lot of people who go to Durban and Cape Town for holidays and business. If those routes were available, it would help a lot.
Commercial services resume at Polokwane International Airport Hard work pays off and growth plans are in the works.
he resumption of ser vices at the Polokwane International Airport (PIA) on 18th October 2021 came as relief to people who had been deprived of access to one of the most reliable modes of transport due to a downgrade. Commercial activities were suspended pending the finalisation of severe safety findings by the South African Civil Aviation Authority (SACAA). It took the Gateway Airports Authority Limited (GAAL) about five months to fix the identified risks. Among the dignitaries who came to witness the resumption of commercial activities were Limpopo Department of Transport and Community Safety MEC Mavhungu Lerule-Ramakhanya, Economic Development and Tourism MEC Thabo Mokone, Polokwane Municipality Executive Mayor John Mpe, Limpopo Tourism Agency CEO Moses Ngobeni, Airport Acting CEO Paul Moloto and the GAAL board led by the Chairperson, Victor Xaba. It was a colourful welcome and the mood was jovial as the first flight from OR Tambo International touched down. The strength and readiness of emergency personnel was displayed. Passengers were warmly welcomed by a group of young people bearing huge banners. The first flight was a symbol of many more to follow after a commitment from Airlink.
MEC Lerule-Ramakhanya thanked everyone who contributed to the reopening of the facility. The MEC had earlier assembled a team to assist GAAL. She assured the people of Limpopo that the facility will never be downgraded again. The MEC also thanked the SACAA for their intervention in ensuring the safety of passengers. “I want to take this time and thank everyone for the effort made to make sure that this airport is back to its glory days. We have a responsibility as a collective to ensure that we remain a shining example to South Africa and the world. I am grateful that we have a board led by people with aviation experience and I have no doubt that they will take this airport to greater heights and also to ensure that it remains economically viable,” said Lerule-Ramakhanya. Airport management is currently canvassing for new tenants and old businesses to return to cater for hundreds of passengers. There is currently one airline operating between Polokwane and OR Tambo, with two flights in the morning and two in the late afternoon, which is likely to increase in the course of 2022. The PIA management is working around the clock to attract other airline services and cargo carriers. The airport is strategically placed to transit cargo to the SADC region and for the development of the Musina-Makhado Special Economic Zone (MMSEZ). ■ ABOUT GAAL Gateway Airports Authority Limited is the entity responsible for the management of all public airports in the Limpopo province. GAAL is exploring opportunities to expand and make PIA competitive. PIA has a variety of business opportunities, including leasing of vacant office space, hangars and a fuel farm.
ONLINE RESOURCES Tel: 087 291 1050 | Email: email@example.com | Website: www.gaal.co.za
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Building a logistics hub at Polokwane International Airport Victor Xaba, the chairperson of the board of Gateway Airports Authority Limited (GAAL), reports on growing investor and airline interest as the entity rebuilds. What are the key responsibilities of the GAAL board? As the accounting authority, the board is responsible for: • Providing strategic direction, taking GAAL from its current position towards being financially and operationally sustainable. • Entrenching the principles of corporate governance as well as compliance to industry regulations and legislative requirements. • Leadership stability through the appointment of a senior management team that is adequately skilled, ethical, performancedriven and accountable. • Ensuring business continuity. • Drving the consolidation and growth of the aviation industry within Limpopo, furthering the interests of service delivery as well as economic growth in South Africa and the SADC region. • Promoting the Provincial Integrated Transport Strategy, inclusive of the establishment of Polokwane as the Provincial Logistics Hub.
Dithoriso Victor Xaba, Chairperson of the Board
BIOGRAPHY Born in Temba, Tshwane, Xaba is a business executive with over 21 years’ work experience within the defence and aviation sectors. Qualified as a chemical engineer, Xaba joined Denel in 2000 and progressed through various technical and managerial positions eventually serving as Acting CEO, Chief Commercial Officer and Deputy CEO in Denel and SA Express. In October 2020, Xaba was appointed CEO of Forpress Technologies. In April 2021, Xaba was appointed Chairperson of the Board of GAAL.
How important is safety in aviation? The safety of passengers and goods in transit lies at the centre of the aviation industry. The aviation industry is governed by the South African Civil Aviation Authority Act. Has PIA been attracting new investors or airlines? Yes indeed. Within the current financial year there has been expressions of interest by companies wishing to take tenancy at the aerodrome as well as considering the expansion of their existing operations into PIA. This is a positive development which will fuel the activities of management to expand their engagement with airlines and infrastructure investors to consider PIA as a critical part of their growth plans. What are the attractions of PIA as a transport hub? The geographical location of PIA in proximity to SADC countries, the world-class facilities as well as the available usable land are some of the key attractions that make the airport “fertile ground” for the establishment of the provincial transport and logistics hub. Is GAAL running campaigns to sell PIA to investors? The resumption of scheduled flights into PIA, the renewal of the airport’s operating licence by the SACAA and the relaxation of Covid-19 restrictions have allowed GAAL to prepare and launch campaigns targeted at air travellers, airlines and infrastructure investors. Beyond running GAAL-specific campaigns, the entity is engaging with the provincial administration stakeholders to embark on joint campaigns. ■
Finding the right talent The Acting CEO of Gateway Airports Authority Limited (GAAL), Paul Moloto, looks forward to building a strong team to drive growth. Please tell us about your background in aviation. My introduction to the aviation industry was by sheer luck. I was part of a group of volunteers helping the airport regain its commercial operations after the licence downgrade. My experience of being an extensive traveller assisted me in appreciating working in this intriguing environment. What are your short-term goals for GAAL? In the words of our Board Chairperson, “Arresting the decline”. For anything we do to be successful, we need to get the human resources right. Our task is finding the talent with the right ethics and commitment to ensure that we never regress.
Paul Moloto, Acting CEO, GAAL
BIOGRAPHY Born in Moletsi, Polokwane, Moloto became SRC President in 1991. A graduate of Damelin, University of Limpopo, Wits Business School and the National School of Government, he led various structures such as SAYCO, ANCYL, ANC, the SACP and NEHAWU. A former head of protocol in the Limpopo Office of the Premier, he became Director Special Programmes in the Department of Safety Security and Liaison until it was amalgamated into the Department of Transport and Community Safety.
Where do you see GAAL in 10 years’ time? With the current limited utilisation of our asset, we remain a welllocated logistics hub for the province, the largest and northern-most international airport with two long runways ready for cargo and passengers alike. Giving true meaning to the concept of the heartland of Southern Africa, safely providing a mode of transport still to be tapped into by the growing African continent. Polokwane International Airport could assist as a refuelling station and cargo hub as well as serving to decongest passenger and cargo volumes for OR Tambo International Airport. Given the proximity to Gauteng, size and availability of space in Polokwane, the airport could also serve as a source for carbon-free hydrogen fuel. Polokwane International Airport will facilitate connecting flights for SAA, particularly to SADC countries. What impact did Covid-19 have on operations? We lost talent due to the death of some staff members. The lockdown has also led to the loss of business and revenue for the company. Have flight figures improved after the lockdown? There was an improvement after the lockdown, hence the resuscitation of full operations to Category Seven. We are optimistic that the business will flourish given that many of our potential passengers have been vaccinated and the economy of the country has stabilised. What airlines fly in and out of GAAL? Currently Airlink is our only commercial airline operator. There is an abundance of new opportunity available, based on the investment in infrastructure that has taken place. ■
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Automotive Total manufacture and exports rebounded well in 2021.
olkswagen Polos have been made in the Eastern Cape town of Kariega (formerly Uitenhage) since 2017. In June 2021, as the company’s production of Polos in the year ticked past 61 000 (and Polo Vivos exceeded 10 000) the total production of the popular car reached the milestone of 400 000 units. More than 300 000 of those were exported, materially improving South Africa’s balance of payments. The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced a name change to accommodate the fact that its mandate has expanded to represent the interests not only of original equipment manufacturers (OEMs) but retail OEMs and heavy commercial OEMs. It is now known as Naamsa | The Automotive Business Council. The organisation published figures in 2021 to show that automotive manufacturing and exports recovered well from the dip caused by Covid-19. Exported vehicles in the year to October 2021 amounted to 245 820, an increase of 12% over the previous period and total manufacture reached a figure of 371 180 by September 2021, an increase of 22%. Vehicle sales had declined sharply in the Covid-19 lockdown period. For the year to September 2020, sales of passenger vehicles went down by 34.4% and by a similar amount in light commercial vehicles. The manufacturing part of the automotive and components sector is a vital part of South Africa’s manufacturing landscape. It is responsible for more than 112 000 jobs which translates to more than 450 000 jobs through the multiplier effect. Long-term state support of the industry through the Automotive Production and Development Programme (APDP) is a major reason for the continuing health of this vital sector. The industry itself is looking to Africa for new markets. By increasing total production numbers to one-million vehicles, the sector will become more viable. South Africa has three centres of automotive production: the Eastern Cape, Gauteng and KwaZulu-Natal. In the Eastern Cape, the OEMs are Volkswagen, Mercedes-Benz, Isuzu and Beijing Automobile
ONLINE RESOURCES Automotive Industry Development Centre: www.aidc.co.za National Association of Automotive Component and Allied Manufacturers: www.naacam.co.za Naamsa | The Automotive Business Council: www.naamsa.co.za
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SECTOR INSIGHT The Kariega plant of Volkswagen has produced its 400 000th Polo. Investment Corporation (BAIC). Ford has an engine plant in Port Elizabeth. In KwaZulu-Natal Toyota has a large plant just south of Durban. Although the manufacturers of loaders, dump trucks and haulers are not counted in the tally of South African OEMs, Bell Equipment, a global leader in its field, runs a large manufacturing site in Richards Bay. Pretoria is home to BMW, Nissan and Ford. The Tshwane Automotive Special Economic Zone ( TASEZ) is a project of the Gauteng Province, the Department of Trade, Industry and Competition (dtic) and the City of Tshwane. The implementing agent is the Coega Development Corporation (CDC), the developer and operator of the Coega SEZ. Both the Nissan and BMW plants are expanding and Ford is investing in Silverton. There is an Incubation Centre for SMMEs at Nissan’s assembly plant in Rosslyn which is run by the Automotive Industry Development Centre (AIDC), a subsidiary of the Gauteng Growth and Development Agency (GGDA). ■
ICT Covid-19 has increased demand for faster data speeds. SECTOR INSIGHT Johannesburg will host Oracle’s first African data centre.
nvicta Holdings, an investment holdings and management company, has expanded into the fibre field at a time when working from home has massively increased the demand for data. In 2021 Invicta acquired Dartcom Group for R500-million, giving it a presence in the distribution of communication and renewable technologies and the manufacture of fibre optic cables (under licence from Japan). As South Africa joins the global trend towards online shopping and with the first networks rolling out 5G in 2020, data centres are going up all over the country. The latest to join the trend is software company Oracle which announced in 2021 that Johannesburg would be the headquarters of its African cloud region. All of the company’s cloud regions worldwide will be 100% powered by renewable energy by 2025. Teraco stores data in Johannesburg, Durban and Cape Town. A second 30MW site is under construction in Brackenfell to complement the existing facility in Rondebosch. Microsoft Azure has facilities in Cape Town and Johannesburg and Amazon has two sites in Cape Town. Huawei Cloud services will use a partner company in Johannesburg to store its data. Africa Data Centre (ADC), part of the Liquid Telecom Group, has purchased a Tier IV data centre in Johannesburg, previously used by Standard Bank. A 2019 study by Microsoft found that the cloud ecosystem will create around 112 000 new jobs in South Africa by 2022 (IT Web). The number of permanent employees of Amazon Web Services reached 7 000 in October 2020. A new entrant to the South African market relies entirely on the cloud. Uniconta, an enterprise resource planning (ERP) system for small and medium-sized businesses, opened its first
ONLINE RESOURCES Business Process Enabling SA: www.bpesa.org.za Independent Communications Authority: www.icasa.org.za Technology Innovation Agency: www.tia.org.za
offices in Cape Town in 2019, a precursor to plans to expand elsewhere in Africa. Cell C became S outh Africa’s third mobile operator in 2001, following MTN and Vodacom. Cell C was in the news early in 2020 when i t d e f a u l te d o n i n te re s t payments on a loan and this had an effect on the shares of Blue Label Telecoms, which owns 45% of the operator. When Cell C’s results were announced in October 2020, reference was made to a turnaround strategy. The Council for Scientific and Industrial Research (CSIR) in Pretoria will host a new body aimed at preparing South Africa for the Fourth Industrial Revolution (4IR), the South African Affiliate Centre of the World Economic Forum. The Information Technology Association (ITA) is the trade and employer body of the I n f o r m a t i o n Te c h n o l o g y industry in South Africa. The ITA represents more than 200 companies which supply information technology equipment, systems, software and services. Members include IBM, Microsoft SA, Siemens, SAP and Axiz. ■ SOUTH AFRICAN BUSINESS 2022
Tourism The summer of 2021/22 will be vital for the sector. SECTOR INSIGHT The Hospitality Property Fund is now a subsidiary of Tsogo Sun Hotels.
Credit: Sun International
otel groups such as Sun International survived the Covid-19 lockdown, but only by closing some of its facilities and retrenching more than 2 000 staff. The group’s South African operations improved overall income by 52% for the six months to June 2021, compared to the previous six months, but the total effect of the Covid-19 lockdown over 18 months was estimated by Sun International CEO Anthony Lemming to be a loss of R3.5-billion in ebitda, earnings before interest, taxes, depreciation, and amortisation (Sunday Times). With uncertainty about exactly who could travel to South Africa, occupation rates for the 2021/22 season could not be accurately predicted but everyone agreed that having a good season would be vital for the health of the sector. City Lodge Hotels told the Sunday Times that 60% occupancy rates had been achieved over the Heritage Day long weekend, a signal that domestic tourism was picking up. December bookings at Sun City (pictured) were expected to be better than before the pandemic hit. Tsogo Sun’s Beverly Hills Hotel in KwaZulu-Natal was anticipating no vacancies for December. Hospitality Property Fund Limited delisted from the JSE in 2021 and became a wholly-owned subsidiary of Tsogo Sun Hotels Limited, giving Hospitality shareholders shares in a more liquid stock and the hotel group an expanded property portfolio. Most of Hospitality’s 54 properties (with about 9 000 rooms) were operated by Tsogo Sun. According to John Loos, a property strategist at FNB Commercial Property Finance, an overlooked factor in many analyses of the Covid-19
ONLINE RESOURCES African Business Travel Association: www.abta.co.za South African National Parks: www.sanparks.co.za South African Tourism: www.southafrica.net
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lockdown has been how technology has shown that some business travel can be avoided altogether. Corporate travel budgets will be cut, and fewer physical conferences will be held, he predicts, which will put the meetings, incentives, conferences and events (MICE) sector under even more pressure. When the Marriott International hotel group closed three of its South African hotels during the Covid-19 lockdown, Tsogo Sun Hotels, which owns a controlling stake in all three hotels, stepped up its commitment by agreeing to bring them into its portfolio, keep them open and run them. A three-billion-year-old microfossil found in the Makhonjwa Mountains in Mpumalanga is thought to be the oldest sign of life on the planet. The Makhonjwa Mountains is now a UNESCO World Heritage Site. Culture and heritage accounts for 40% of world tourism and is one of the fastest-growing subsectors. There are 711 745 people employed in the tourism industry nationally, with road transport (29%), food and beverages (20%) and accommodation (19%) absorbing the largest numbers. The sector contributes 9% to South Africa’s gross domestic product (GDP). ■
Banking and financial services 120 years on, Cape Town has a stock exchange again.
everal alternative stock exchanges have opened in South Africa recently, and one of them has moved to Cape Town. Previously known as 4AX, the rebranded bourse has fittingly chosen The Woodstock Exchange (pictured) for its offices. A short-lived exchange opened in 1901 in Cape Town because the Anglo-Boer War made Johannesburg uncomfortable for traders. The Cape Town Stock Exchange, which aims to attract African listings and to take advantage of the Cape’s specialisation in technology, is the only other South African exchange (apart from the JSE) with both equity and debt listing licences. The company announced that it planned to double its market capitalisation by early 2022. At the time of the announcement, the exchange had eight listings and a market capitalisation of just over R7-billion. Of the other new exchanges, Equity Express Securities Exchange (EESE) trades in Black Economic Empowerment (BEE) while ZARX targets companies that are not listed elsewhere. A2X had 56 listings and a market cap of close to R4-trillion in October 2021, when Tiger Brands announced that they would do a secondary listing on the exchange. The JSE is the world’s 19th biggest exchange and nearly 400 companies are listed on the JSE or AltX, the JSE-owned exchange for smaller companies. The launch by Sanlam Investments of a Sustainable Infrastructure Fund is a sign of the times. The South African state has promised a huge infrastructure drive but in the context of climate change caused by the use of fossil fuels, the investment community is increasingly putting emphasis on sustainability. Sanlam Group will invest R6-billion in the fund and aims to attract a further R5-billion from institutional investors. Investments will be made in housing, transport, health, water, waste, communication, conventional energy and renewable energy, a fast-growing sector with enormous potential. Naspers Foundry is one of several investment funds looking for opportunities in the financial sector. Insurance technology is of particular interest, together with credit services and payment systems.
ONLINE RESOURCES Financial Sector Conduct Authority: www.fsca.co.za Insurance Institute of South Africa: www.iisa.co.za South African Institute for Chartered Accountants: www.saica.co.za
SECTOR INSIGHT Renewable energy funding is a fast-growing sector.
Credit: Kristof Basson Architects Capital Appreciation, which is part-owned by the Public Investment Corporation, is already invested in a software developer, a credit card payment terminal provider and has R500million available for further investments. African Rainbow Capital has a stake in the investment company and is the owner of TymeBank, which received a banking licence in 2017 and is expanding rapidly. Discovery Bank officially launched in March 2019 and is experiencing rapid growth with deposits of R3.7-billion. Discovery Bank is applying the behavioural model it uses in its health business to reward good financial behaviour. Another relatively new bank is Capitec. Investment holding company PSG has reduced its holding in Capitec Bank from 32% to 4%, earning about R4-billion by selling those shares. ■ SOUTH AFRICAN BUSINESS 2022
Development finance and SMME support The IDC has assets of R144-billion at its disposal.
A Seda client adds the finishing touches. The Automotive Aftermarket Support Programme covers panel-beaters, motor mechanics, auto spares and auto fitment. Credit: Seda
he Industrial Development Corporation (IDC) disbursed R6.3-billion in the year to 31 March 2021. The group has assets of R144-billion and is a major funder and funding partner in the South African business landscape. The group’s annual financial results claimed that a total of 13 354 jobs were expected to be “created, saved and sustained”. The IDC created a R2.5-billion Covid Distress Fund to assist partners and businesses which were hit by the pandemic. In addition, deferments were implemented, which allowed 75 of the corporation’s partners relief to the value of R778-million in a range of sectors from agro-processing to mining. In terms of the IDC’s transformation agenda, the following amounts were committed: • Black Industrialists, R3-billion • black-empowered companies, R3.2-billion • women ownership above 25%, R2-billion • youth ownership above 25%, R1-billion. The Covid-19 lockdown had a severe impact on small businesses. A survey conducted by risk finance company Business Partners Limited found that 95% of SMME respondents thought they would not survive without help. During lockdown, Business Partners regional general manager Jeremy Lang issued a statement regarding financing options for SOUTH AFRICAN BUSINESS 2022
SECTOR INSIGHT The North West Provincial Government is investing in digital infrastructure. small businesses. “We implore SMEs who might be tempted to throw in the towel to reconsider their financing options,” he said in February 2021. Lang made the point that a wider range of financing options is available than many people might know about. He listed “grants, riskfree and risk-based finance where either grants, debt or equity investments are made available”. Lang also noted the relief programmes specifically designed to help SMMEs weather the Covid-19 storm. The company’s own packages
included a Repayment Relief Programme and a Financial Assistance Programme capitalised at R100-million. The National Department of Small Business Development (DSBD) has several programmes to assist SMMEs and co-operatives. The Small Enterprise Development Agency (Seda), a subsidiary of the DSBD, has 42 incubation centres in South Africa under its Seda Technology Programme (STP). In Mpumalanga, Seda supports several incubators: Furntech, furniture manufacturing, White River; Mobile Agro-Skills Development & Training (MASDT), agricultural training, Nelspruit; Mpumalanga Stainless Initiative (MSI), stainless-steel processing, Middelburg (with Columbus Stainless); Timbali floriculture, Nelspruit; Ehlanzeni TVET College Rapid Incubator Renewable Technologies, Nelspruit. In the North West, the Provincial Government is investing in digital infrastructure. SMMEs will be able to use the newlyestablished Mafikeng Digital Innovation Hub as a co-working environment and to get support in using digital tools. The South African National Roads Agency Limited (SANRAL) actively supports small businesses wherever it works in South Africa. Subcontracts are routinely awarded for maintenance such as the patching of potholes, fencing and the cutting of grass verges. Part of the rationale behind a national programme to revive industrial parks is to benefit SMMEs. The National Department of Trade, Industry and Competition has invested R40-million in the Nkowankowa Industrial Park in Limpopo, an initiative which has helped to create 174 direct jobs. In the northern reaches of the province, more than 300 jobs have been created with the revitalisation of the Thohoyandou Industrial Park, which has achieved a 91% occupancy rate. A new fund for SMMEs was launched in 2020 with the aim of providing capital at a fair price. Former SA Post Office CEO Mark Barnes, who previously worked in investment banking and private equity, is heading the Kisby Investment Fund. Partners in the fund are Arena Holdings (media), 4AX Africa Exchange, 4AX Debt Services and Rainfin (online credit). Barnes told Business Day that the fund would be compensated for the risk in supporting companies that have to “hunt around in the overpriced debt market” by taking equity in the firm. Kisby is aiming for a R5-billion fund to support companies in the R10-million to R1-billion revenue bracket.
ONLINE RESOURCES National Department of Small Business Development: www.dsbd.gov.za Small Business Institute: www.smallbusinessinstitute.co.za Small Enterprise Development Agency: www.seda.co.za South African SME Finance Association: www.sasfa.net
Funding is available for technology start-ups in many forms but getting funding early in the process can be difficult because the concept is not proven. For asset management company Futuregrowth, r ing-fencing some funding for allocation to early-stage development is a way of ensuring that potential is not overlooked. The company has put 10% of its development equity fund (or R280-million) into businesses such as payment devices ( Yoco), infrastructure platfor m (Rubicon), fintech (LifeCheq) and an app for domestic workers (SweepSouth). Data company 5M2T (5Minutes2Town) has started offering sophisticated information about the township market. From how many spazas in Soweto have refrigeration units (4 700) to brand loyalty, 5M2T covers 60 000 spazas, salons, barbers and other informal trade outlets an “in-market audit”. This allows for better ordering and planning for suppliers and logistics operators. Most big companies in South Africa have two main programmes to support SMMES: enterprise development (ED) and local supplier development (or procurement). Venetia Mine in northern Limpopo, a De Beers Group mine, has more than 50 SMMEs enrolled in incubation programmes and 34 locally-owned companies are doing business with the mine. The National Department of Trade, Industry and Competition (the dtic) is trying to stimulate township and rural economies. Programmes include the Enterprise Investment Programme (EIP). ■ SOUTH AFRICAN BUSINESS 2022
South Africa requires an economy that can meet the needs of all its economic citizens, its people and their enterprises in a sustainable manner. Government’s objective is to achieve this vision of an adaptive economy characterised by growth, employment and equity. Achieving authentic BEE has required a reassessment of traditional business models and corporate cultures. The Bill, code and strategy document rely upon core policy instruments that have been designed to bring about BEE. These instruments are essentially measurement tools that will permit the public and private sectors to evaluate the BEE status of a particular enterprise. Failure to adapt to the new paradigm will have significant consequences. A real commitment to BEE is now a business imperative.
Description of services • • •
assess and certify BBBEE rating; provide insight into BBBEE challenges facing various organisations; provide insight and guidance on the actions required to elevate BBBEE status; and verification of supplier BBBEE status.
With BBBEE recognised as an imperative by companies committed to building an equitable South Africa, verification is an essential requirement that confirms a company’s participation and contribution. Verification is performed in a manner similar to that of a financial audit: it provides an independent SOUTH AFRICAN BUSINESS 2019 SOUTH AFRICAN BUSINESS 2022
assessment of investment, performance and initiatives in a control system. Criteria against which companies are measured are provided by government and like an audit, verification must be performed annually.
Small, medium and large enterprises achieving an annual turnover of below R10-million and over R50-million respectively (including all charter sectors).
Pricing Pricing for BEE consultancy services is based on the client’s requirements and can be structured on an hourly or monthly basis. For BEE verification and issue of a BEE Compliance Certificate, please contact the office for the current rates.
Credit: Christina Morillo from Pexels
VeriFi is the leader in the business of verification and certification for BBBEE recognition.
The value of verification With BBBEE recognised as an imperative by companies committed to building an equitable South Africa, verification is an essential requirement that confirms a company’s participation and contribution. Verification is performed in a manner similar to that of a financial audit: it provides an independent assessment of investment, performance and initiatives as a control system. Criteria against which companies are measured are provided by government, and like an audit, verification must be performed annually.
Advantages of BEE certificate from VeriFi • •
BBBEE explained Government BBBEE legislation consists of: • The Strategy for Broad-Based Black Economic Empowerment • T he Broad - Base d Black Economic Empowerment Act, No 53 of 2003 • The Codes of Good Practice for Black Economic Empowerment • Various sectoral BEE Charters or Codes In terms of these Codes of Good Practice, businesses are divided into three categories: • Where turnover is less than R10-million a year, or when in the first year of incorporation, a business is categorised as an Exempt Micro Enterprise (EME). However, it is necessary to confirm this status by providing proof of annual income. • Businesses with a turnover of between R10-million and R50-million a year are categorised as Qualifying Small Enterprises (QSEs). The criteria for each of these elements are less onerous for QSEs than for companies with turnovers exceeding R50-million per annum.
proposals for new business with government; the licensing of regulated activities which include mining, liquor sales and the granting of credit; leasing of premises from government or private businesses; and the creation or continuance of business relations with clients seeking assurance of a company’s BEE compliance.
Once a verification and certified rating through VeriFi is accomplished, a company can perform business in confidence, as its commitment to equality, nationbuilding and unique South African business processes will be recognised.
Key facts and figures Year established: 2005 No of staff: 15 Major clients: BP, Public Investment Corporation Limited, IBM South Africa, Saab Grintek Defence, Independent Newspapers, Premier Fishing & Brands Limited, African Equity Empowerment Investment Limited, South African Express Airways SOC Ltd.
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INDEX Air Products............................................................................................................................................................................... 63 Atlantis Special Economic Zone..........................................................................................................................27-31 Brand South Africa..............................................................................................................................................................4-5 Coca-Cola Beverages South Africa.....................................................................................................................60-61 Council for Geoscience (CGS)................................................................................................................................34-37 Department of Mineral Resources and Energy.........................................................................................46-47 Fetakgomo-Tubatse Special Economic Zone............................................................................................20-25 Gateway Airports Authority Limited (GAAL)...............................................................................................68-71 Invest Durban.........................................................................................................................................................................2-3 Kemtek............................................................................................................................................................................................ 7 Northern Cape Economic Development, Trade and Investment Promotion Agency (NCEDA)..................................................................................................................................50-53 OUTvest....................................................................................................................................................................................OBC Petroleum Agency South Africa .........................................................................................................................56-57 Polokwane International Airport........................................................................................................................ 69, 71 South African Mohair Industries Limited (SAMIL) ..................................................................................42-43 Verifi.........................................................................................................................................................................................78-79 Vodacom....................................................................................................................................................................................IFC
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Your own dedicated OUTsurance broker At OUTsurance, we base your insurance premium on your business’s unique risk profile which means that if you’re a low-risk client, you could pay significantly less than if you were insured somewhere else. Depending on the complexity of your business, you could also get access to your very own, dedicated Business OUTsurance broker. Think continued policy administration, claims support, and proactive input on product developments and innovation.
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