TRANSNET has invested more than R2bn in extending and deepening the Ngqura container terminal at the Coega industrial development zone (IDZ) near Port Elizabeth by adding two more berths and equipment including ship-to-shore cranes, gantries, and trailers.
This comes as the Coega Development Corporation (CDC) says it plans to issue notice for an environmental impact assessment to assess the feasibility of establishing a cargo airport and aerospace industrial cluster in the zone.
The Ngqura terminal is one of the most successful aspects of the IDZ’s history and development, which first began in about 2000. The new investment has taken the terminal’s annual operating capacity to 1.5-million standard-sized containers from 800,000 containers, and has increased the terminal’s capacity to 2.2-million containers overall.
But overall, mega-projects elsewhere in the IDZ have been hobbled by bureaucracy, financing and electricity shortages. To this end, the CDC has changed its strategy of wanting large anchor tenants such as aluminium and manganese smelters, to welcoming less energy-intensive downstream industries, including the Agni Steels SA mini-mill and the DCD Wind Towers manufacturing facility.
Total investment by Transnet in developing the Ngqura container terminal is now R14bn, with port operations having been rated an international success.
Transnet says it will spend another R30bn in the Eastern Cape over the next seven years, but business in the Nelson Mandela Bay metropolitan area is unhappy that it has delayed the relocation of Port Elizabeth’s manganese terminal from the city’s main port to Ngqura — to grow capacity.
Meanwhile, at least R140bn of anticipated investment in the Coega IDZ’s development has not come to fruition, leaving a material shortfall of more than R125bn since about 2000. And while the government acknowledges the failure of its IDZ programme — and is now pinning its hopes of enticing private investment on Special Economic Zones — the latter have been criticised for not widely including the private sector in their planning and development.
Kevin Hustler, CEO of the Nelson Mandela Bay Business Chamber, says business is “crying out for honesty, transparency and accountability at local, provincial and national levels of government”, in relation to electricity and water supply for Port Elizabeth and its surrounds.
The city struggled through a severe drought cycle five years ago, leading some water-intensive manufacturers to move elsewhere. But despite presidential and ministerial assurances, Mr Hustler says the national government has not funded urgent water infrastructure.
The nearby towns of Despatch and Uitenhage are home to a large portion of SA’s strategically important automotive industry. They have also been affected by electricity and water outages.
Ayanda Vilakazi, CDC head of marketing and communications, says Eskom electricity price increases have forced big smelter projects to review their business cases in the Coega IDZ.
“Coega then revised its strategy, as well, from primary smelting with downstream focus to secondary and downstream focus,” he says.
He says the corporation has aligned itself with Minister of Economic Development Ebrahim Patel’s policy directive for scrap metal exports, which came into effect in late 2013. This compels SA’s scrap metal exporters to first offer their products to domestic foundries, small mills and secondary smelters at a 20% discount to international prices, before they can qualify for export permits.
He says the IDZ’s “new metals cluster strategy and land utilisation framework” ensure that the government’s Industrial Policy Action Plan, the New Growth Path and the National Development Plan, together with the state’s strategic integrated infrastructure projects in the Eastern Cape, are “fully aligned”. This creates a business case for metals sector investors to locate to the IDZ, he says.
This dovetails with the CDC’s announcement that it wants to establish a cargo airport and an aerospace industrial cluster in the zone.
“Feasibility work has been done by industry experts which has yielded great potential for the project,” Mogamad Sadick Davids, the corporation’s metallurgy business development manager, says.
He envisages the possible manufacturing of helicopters, aerospace engines, auxiliary equipment and parts, and also possible aircraft overhaul and rebuilding facilities.
“Industrial clustering for mobility industries is an accepted form of economic organisation across the world,” Mr Vilakazi says. He also says existing expertise, skilled labour and logistics services within the Eastern Cape’s automotive and manufacturing industries support development of aerospace manufacturing in the region.
Such thoughts are positive and constructive, but need to be weighed against the IDZ’s past failures. These include the non-development of multi-billion-rand projects — such as an aluminium smelter, a 2,400MW gas-fired turbine and PetroSA’s long delayed Project Mthombo refinery.
Electricity supply has been an overarching problem, along with financing amid the global recession. But such thinking can also be “pie in the sky” when local, provincial and national government is not honest, transparent or accountable.