23 February 2005
The Coega Project – a multi-billion rand industrial development complex and deepwater port 20 kilometres east of the city of Port Elizabeth in the Eastern Cape – could soon become the logistics hub for Southern African trade.
Located on the south-eastern coast of the country, the project is the first, and one of the largest, industrial development zones (IDZs) to be established in South Africa.
The IDZ is already well-serviced by transportation networks, a skilled labour force and utility services. It boasts world-class industrial infrastructure, including inter-modal transportation linkages and cost-effective bulk services.
Coega is located in the Nelson Mandela Metropolitan Municipality and is being developed by the Coega Development Corporation (CDC) on 12 000 hectares of industrial land. Although the CDC is a private company, national and provincial government are the only shareholders.
During the construction period, the project will generate additional income of between R1.6-billion and R2.4-billion nationally. Between 36 500 and 57 500 direct, indirect and induced jobs will be affected, either in the form of existing jobs that are sustained or as new jobs that have been created.
By February 2005, the total number of people employed during the construction phase of the project clocked in at over 11 300, with a total wage bill of over R90-million.
Coega is also complementing the region’s already proliferating automotive industry – Africa’s largest and most successful vehicle assembly and component manufacturing hub.
Automotive manufacturers Volkswagen of South Africa and General Motors South Africa, the bulk of the country’s catalytic converters, leather seating and component manufacturers, as well as a Ford Motor Corporation engine plant, are expected to benefit immeasurably from access to the new deepwater port.
Businesses in the southern African region rely on projects like Coega to reduce logistics costs and improve efficiencies.
With its central position and customs-secure zones, Coega will be an ideal site for warehousing, assembly and other logistics-related operations, while its deepwater port will offer competitive advantages to businesses in surrounding areas.
The area has excellent transport networks, while world-class industrial infrastructure – including roads, rail, bulk electricity and water, sewage and hazardous waste processing facilities – is being provided.
Industrial development zones
South Africa’s industrial development zones (IDZs) are purpose-built industrial sites linked to an international port or airport and specifically designed to attract new investment in export-driven industries.
All companies investing in IDZs will receive tax incentives and duty-free benefits from the government. Each IDZ established in the country will have:
- A customs-secured area with its own SA Revenue Services personnel, allowing investing companies to import raw materials on a duty-free basis from foreign countries and vat-free from inside South Africa.
- An industrial and services area for service and supply industries supporting large manufacturers in the custom-secured area, with top-notch industrial and office park environments as well as other services.
- A one-stop centre to facilitate regulatory procedures and requirements.
The Port of Ngqura, a multi-user deepwater port on the Coega River, is being developed by the National Ports Authority of SA.
Construction on the port is already far advanced, with the facility expected to be operational by the end of 2005. It will have a capacity for accommodating bigger container vessels than any of South Africa’s seven other commercial ports.
With the depth of the channel and the protected position in Algoa Bay, the port is in one of the best spots for a harbour along the South African coast.
A channel carved by an ancient glacier allowed the development of the port to up to 23 metres. Protected from south-westerly winds by a finger of land, the port’s bay has 330 anchor days per year.
The port cater to the needs of existing and future investors in the Coega IDZ, provide a conduit to international markets – and could make South Africa the hub of all north-south and south-south sea traffic.
New generation smelters
The government has been in talks with Brazilian mining company CVRD regarding its possible involvement in the Coega new generation aluminium smelter. Some R3-billion was last reported to be needed to develop the smelter.
Canadian aluminium producer Alcan remains the lead promoter of the project. Both CVRD and Alcan have aluminium smelting interests in other parts of the world.
Meanwhile, a memorandum of understanding with all the major participants involved in the construction of a ferro-nickel smelter could be in place by early next year.
The CDC’s Peter Inman says negotiations are under way for the supply of nickel. “Excellent progress has been made – we have been speaking to everyone who is anyone in nickels”, Inman says. “We are looking at a number of ore suppliers ensuring a good geographical spread, and reducing the risk associated with long-term supply.”
Inman says the deal to supply the 3-million tons of nickel annually is of very long duration to match the project life – some 25 to 30 years.