The South African Energy and Metallurgical Special Economic Zone, Musina Summary of Application for Designation
Presentation outline
• • • • • • •
Introduction; Pre-Feasibility; Feasibility; Business Plan; Key Risk areas; Current/ Next activities; Recommendations.
Introduction
Overview • • • • • •
Development Context; Mission Statement; Value Proposition; Background; Support; Key comparative advantages.
Development Context • The Musina SEZ falls within the originally conceptualised Trans – Limpopo Spatial Development Initiative; • The Trans-Limpopo SDI contributes to the Regional Economic Integration – it covers development initiatives within the Province (South Africa), Matebeleland South (Zimbabwe) and Mozambique; • The Musina SEZ is a key driver for development, based on the secured investment for the metallurgical cluster.
Victoria Valls Bulawayo
20 Km 50 Km # S
Messinas
Limpopo Basin
Trans Limpopo SDI (N1)
Makhado
# S
# S
East West SDI To Botswana
Bandelierkop
# S
# S
Setateng Ellisras
Marken
# S
Matoks
# S
Polokwane
Leeudraai Kgapane # S
Duivelskloof # S Tzaneen
# S
Phalaborwa SDI
Letsitele Gravelotte # S
Phalaborwa
Chuene # Potgietersrus S
# S
Offlaco # S
The Oaks
Atok # S
# S # S
# S
Acornkoek
Driekop
Dilokong SDI Burgersfort To Orighstad & The Oaks Hazeyview
# S
To Lydenburg MPUMALANGA
8
Mission Statement
To be a node attracting agricultural and metallurgy, agroprocessing, logistics and petro-chemicals industries into a shared services environment that makes business sense and serves to stimulate economic growth and employment opportunities.
Draft Value Proposition
The Musina SEZ will be at the pivotal trading point along the North‐ South Corridor, the gateway to SADC and Southern Africa with access to large-scale logistics and agricultural activities based in and around the town and the border post. The SEZ provides opportunities for the metallurgy, logistics, agriculture and petrochemicals sectors, which include the upstream value chain as well as several downstream opportunities
Background • SEZ addresses logistics, agro-processing, mineral beneficiation/metallurgical clusters (future: petrochemical); • Mineral beneficiation and industrialization are key priorities; • Logistics fundamental to economic growth; • 2 Sites: Antonvilla (375 ha 1st phase); Bokmakierie (6000 ha 1st phase); future expansion to Limpopo Eco-Industrial Park (LEIP); • Provides a One Stop Shop Service when established.
Support
• National government (Dept. of Trade and Industry, Water & Sanitation, Transport, National Treasury, Public Works, Environmental Affairs and others); • Limpopo provincial government (premier’s office, Dept of Economic Development, Environment and Tourism); • Limpopo Economic Development Agency (LEDA); • Mulambwane Community; • Musina municipality; • Vhembe and Makhado district municipality; • SEZ license will be held by LEDA on behalf of the province.
Comparative Advantages • • • • • • • • • • • •
Strategically located combination of mineral resources Unique close proximity to mineral resources Investor plans include electricity generation Close proximity to SA-Zimbabwe border / good access to SADC market and cross-border trade Ideal location on main North-South N1 Corridor (strong logistics) Strong future potential of a cross-border zone Possible dry port for expanded flow of products, vehicles Future potential in the agro-processing (supply Gauteng, SADC) Polokwane International Airport (international cargo handling) Vehicle distribution centre (close to export cross-border route) High possibility for intermodal facilities Catalyst for economic diversification (Limpopo, South Africa).
Pre-Feasibility
Overview • • • • •
Main focus of Pre-Feasibility; Clusters; Key Requirements; Impact; Conclusion.
Pre-Feasibility • Opportunities identified: – – – –
Metallurgical; Petrochemical; Agro-processing; Logistics.
• Impact assessment; • Investor interest established; • Key requirements.
Metallurgical Cluster • Key opportunities: – 1320 MW thermal power plant (phased); – Coking plant (1.1million tons pa); – Ferrochrome plant (600,000 tons pa); – Ferromanganese plant (600,000 tons pa); – Ferrosilicon plant (300,000 tons pa); – Iron plant (3 million tons pa); – Pig Iron plant (1 million tons pa); – Steel plant (2 million tons pa); – Stainless Steel plant (1 million tons pa); – Lime plant (5 million tons pa); and – coal washing plant (10 million tons pa).
Logistics Cluster • Key opportunities: – – – – – – – –
Warehousing; Central hub; Fresh produce area; Container Yard; Offices; Parking bays; Food Processing; Vehicle Distribution Centre (VDC).
Petrochemical Cluster • Future Expansion: Limpopo Eco-Industrial Park (LEIP) • Key Opportunities: – Coke Plant + power generation; – Plasma waste gasification; – Coal-to-Liquids (CTL) Plant (Carbon (Coal) to Hydrocarbon (CTHC) plant (methanol, diesel); – Coke to Methanol Plant; – Waste Water Treatment; – Gas to Methanol to gasoline processing; – Di-methyl ether (DME) from methanol processing; – Methanol to Propylene and polypropylene (PP); – By-products: (Waxes, black tars, ammonia, urea(agriculture fertilisers), LPG (Liquid Petroleum Gas), various solvents, linear Alpha-olefins and ethylene; – Synthetic Bitumen Plant; – Small Solar Plant.
Key Requirements • Key requirements (Business Case): – – – – – – – – –
Policy and strategy alignment; Investors and investors readiness; Skills development; Technology; Environmental matters; Availability of land; Stakeholder readiness; Bulk infrastructure; Market access.
Impact Benefit
Total Impact
1)Direct capital investment
R 39.754 billion for establishment
2)GDP contribution
R 58.9 billion over 20 years*
3)Limpopo GGP contribution
R 45.5 billion over 20 years*
4)Employment
21 000 jobs plus
5)Tax contribution
R 30.6 billion over 20 years+
6)Household income contribution
R 99.9 billion over 20 years*
7)Export earnings
To be confirmed in Jan 2016 from Tax study
* Figures subject to updated financial model . +Figures subject to allocation of 15% Tax rate
.
Conclusion • Viable SEZ (Business Case); • Key requirements: – – – – – –
Skills development; Incentives and optimum financing arrangements; Provision of appropriate infrastructure; Timing – first mover advantage; Investment pipeline; Market access.
Technical Feasibility
Overview • • • • • • •
Infrastructure; Land; Skills Development; Environment; Financial Model; Risk assessment (covered in separate section); Conclusion.
Transport • Main port of entry by road from Sub-Saharan Africa (through Botswana and Zimbabwe) into the Republic of South Africa; • Linked to the major centres in South Africa via the N1 route to Pretoria and Johannesburg; • Approximately 18.5 km from the Beit Bridge Border Post; • Approximately 200 km from the capital city of the Limpopo Province and Polokwane International Airport; • 460 km from Pretoria and 520 km from Johannesburg; • Excellent local, regional and international road connectivity; • Musina rail station within 6km of the proposed Antonvilla site.
Energy Eskom study completed for area re. volume of energy supply; Proposals received for substations in the SEZ; 10 MVA for each of 2 sites in SEZ proposed; Estimated 6 - 9 months to completion to supply construction needs; • Thermal power plant planned as part of metallurgical cluster; • Excess power available once full scale reached. • • • •
Water & Sanitation • Estimated peak water demand at Site 1 is 17.2 l/s (avg of 4.3 l/s|) and 38 000 l/s at Site 2; • Water supplied via borehole; • There is existing water supply pipework serving the disused Antonvilla mine but repairs and upgrading needed; • Access to water from Limpopo river managed through international agreements; • Long-term piping from Zimbabwe dams in the area addressed through agreement led by DWS; • Water Study with Dept. of Water & Sanitation to commence early 2016; • Waste water treatment, sewage works capacity to be added.
Other Infrastructure • High bandwidth Information and Communication Technology network; • Solid waste removal services planned; • Recreation and sports facilities planned; • Landscaping and security planned; • Bulk infrastructure estimated at R 1.4 billion.
Land Site 1: • 375 ha secured; • Additional 3150 ha from Dept. of Public Works in process. Site 2: • Land secured but negotiations with CPA underway on terms of use; • Subject to timing of designation.
Skills Development • Development of a high-level Skills Plan completed end January 2016; • Comprehensive Skills Plan to address skills of SEZ and surrounding development based on plan proposed in High-level Plan: – – – – –
Field study re. skills in the area; Skills database; Training programmes; Implementation; Engagement with tertiary/ TVET institutions.
Environment • Desktop EIA concluded; • Full EIA to be concluded during 2016, including geotechnical study; • Service Provider to be appointed by LEDA in February 2016; • EIA’s to be conducted by investors in parallel, subject to designation.
Financial Model Total infrastructure requirement of R1.408 billion; Buildings planned at R 849 million; Profitability achieved by year 18; Investor direct capital investment of USD 4 billion; Tax Contribution of R 30.6 billion over 20 years (subject to proportion at 15% tax rate); • Export earnings of R 99.9 billion over 20 years (subject to update of financial model); • • • • •
Conclusion • Opportunities: – Logistics and metallurgical cluster immediate; – Petrochemical and Agro-processing medium/ long-term.
• • • •
Desktop EIA conducted; Infrastructure assessment (water, electricity key risk); Environmental concerns re. metallurgical cluster; SEZ is viable (medium/ low road scenarios).
Business Plan
Overview • • • • • • • • •
SEZ Strategy (Introduction); Impact (Pre-Feasibility); Infrastructure (Technical Feasibility); Financial Plan (Technical Feasibility); Marketing Plan; Operation and Governance; Risk Management Plan(separate section); Energy Plan; Conclusion.
Marketing Plan • Market analysis covered in Pre-Feasibility and Feasibility; • Investment Promotion strategy and plan currently under development; • Includes final Value Proposition and other aspects.
Operation and Governance • Governance framework; • New Company registration; • .
Energy Plan • Governance framework; • New Company registration; • .
Conclusion • • • • • • •
SWOT analysis; Socioeconomic analysis; Impact assessment (GDP, Jobs, Tax, Exports, investment); Infrastructure/Environmental assessment; Financial plan; Marketing plan; Governance/ Operations;
Key risk areas
Key areas /1 • Key Risk areas: Land: secured; Energy: sufficient and planned for; Water: adequate and Water Study in process; Investment: pipeline/ funding secured and plan underway; Environment: Desktop EIA concluded, EIA’s and geotechnicals planned/ underway; – Skills Development: draft high level plan to guide skills planning and development activities; – – – – –
Key areas /2 • Key Risk areas continued: – Limited community participation: development of integrated plan for whole area during 2016; – Environmental pollution: environmental management plan to be developed during 2016; – SME Development: to be addressed as part of integrated plan.
Current/ Next Activities
Current Activities The following actions are under way: • Application for designation; • Compile project schedule for implementation; • Development of investment promotion strategy and plan; • Plan and address bulk service infrastructure supply; • Explore alternative energy sources with DoE and Eskom.
Key Next steps • Secure additional land/ Sign final agreement with CPA; • Address key bulk infrastructure needs (electricity, water, sanitation, roads); • High bandwidth Information and Communication Technology network to be implemented; • Solid waste removal services capacity to be developed; • Development of integrated plan for area; • Post-designation agreements to be concluded; • Additional planning and studies, e.g. SME Plan, Logistics Plan, Communication Plan, Stakeholder Management, etc.; • Address support capacity for SEZ.
Recommendations
Requested Recommendations The following actions are requested from the Board: • Recommendation to the minister to designate the SEZ according to the SEZ Act No.16 of 2014; • Critical support for the project: – Environmental standards; – Long-term support for water provision; – Skills Development infrastructure in the area;
• Economic areas to be included on the license: – – – – –
Energy; Metallurgy/ mineral beneficiation; Agroprocessing; Logistics; Petrochemical.
Thank you