Coega nets multimillion-rand deal

19 May 2005

Hot on the heels of Barclays Bank’s R33-billion offer for Absa and General Motors’ R18-billion contract for South Africa to manufacture its new Hummer, the Coega industrial development zone (IDZ) has secured a R200-million investment from Belgian-owned Sander International Textiles.

The Coega Development Corporation (CDC) announced the 20-year lease in its Port Elizabeth-based harbour project on Wednesday.

A high-end niche textile producer, Sander International Textiles will invest the R200-million in building a sophisticated weaving mill.

The company will occupy 10ha of the 40ha allocated for the textile cluster of the Coega IDZ.

The deal is expected to create over 500 permanent jobs. An empowerment company, Ican Foundation, will own 51% of the project, which should make a profit after two to three years.

“Four years after ditching the strategy of seeking to attract an ‘anchor tenant’ for Coega, the CDC has been vindicated in opting to secure a basket of investments in various sectors of industries with different financial values,” said Vuyelwa Qinga-Vika, spokesperson for the CDC.

She added that there had recently been “unprecedented interest from foreign investors in specific sectors of industry, including those in the metallurgical, high-end niche textiles, automotive and energy sector”.

Tax incentive
Alex Liessens, the chief executive of Sander, told Business Report that because of the size of the investment, the government had given the project a tax break under the Strategic Investment Programme. This offers incentives to capital investments worth over R50-million.

The new deep-water Port of Ngqura is expected be commissioned by the end of 2005.

Work on the new plant is well under way, Qinga-Vika said, with an access road already in place. Construction in the textile zone will include a weaving mill and a dyeing and yarn facility.

“Sander will produce a specialised high-end niche product – fire retardant fabrics – for the automotive and transport industries, including ocean liners and aircraft, and for the hospitality industries,” Qinga-Vika said.

The products are to be exported to North American markets, taking advantage of lower US import tariffs through the United States’ African Growth and Opportunity Act (Agoa), which favours African countries.

The CDC has indicated for some time that negotiations with a number of investors were in their final stages.

CEO Pepi Silinga said he expected announcements over the next few months “to fully justify government’s faith in the project”.

Coega

A huge investment
The multibillion-rand Coega project, comprising an industrial development complex and deepwater port 20 kilometres east of Port Elizabeth, is the single largest infrastructure development project in the country since 1994.

Located on the coast of the Eastern Cape, one of South Africa’s poorest provinces, the project is the first and largest of the four IDZs established in the country.

It falls in line with South Africa’s vision of becoming a manufacturing centre for the world. President Thabo Mbeki has officially declared Coega a lead project in SA.

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 transport linkages and cost-effective bulk services.

Coega is located in the Nelson Mandela Metropolitan Municipality and is being developed by the CDC on 12 000 hectares of industrial land. Although the CDC is a private company, national and provincial government are the only shareholders.

The various governments have ploughed about R8-billion into the project, including R3.1-billion for the new port, R2-billion for infrastructure in the IDZ, and R2.1-billion by Eskom for to upgrade the power supply. Spoornet has invested R500-million in upgrading rail facilities.

SouthAfrica.info reporter