Investing in Mpumalanga

By John Young

Rich in agricultural produce and minerals, Mpumalanga Province has two international borders – with Mozambique and Swaziland, and has four South African provinces as neighbours.

The province is home the Kruger National Park, South Africa’s most prized tourism asset. A strong manufacturing sector – that will be substantially boosted by expansion projects currently being undertaken by Sappi and Sasol – completes the picture of a province with great investment potential.

International partnerships are increasingly playing a role in the province’s affairs. A binational commission (the Komati Basin Water Authority) that oversees water issues with Swaziland and a recently signed tourism branding initiative known as Tri-lands (with Swaziland and Mozambique) are indicative of this trend.

It has signed memoranda of understanding with Oman, a gateway to the markets of the Middle East; and Portugal, a partner in the Mpumalanga Academy of Sport, which aims to be a worldclass centre for talented athletes, coaches and administrators.

The Maputo Development Corridor is a major bi-national regional route linking Johannesburg with Maputo, and there is still a lot of related development that could take place in this sphere.

Premier David Mabuza has made reference to the international dimension: “We will also exploit our memoranda of understanding with other countries abroad to promote trade and investment opportunities agreed upon.

“Among others, one refers to countries such as Oman – our gateway to the markets of the Middle East with regard to agricultural commodities; Portugal – our partner in the development of the Sports Academy and many others.”

A memorandum of understanding was due to be signed in 2013 by the provincial government, the Mpumalanga Economic Growth Agency (MEGA) and the China Development Bank Corporation.

There is an existing relationship between Mpumalanga and the German state of North Rhine-Westphalia. Acid mine drainage is a major issue for the province and the Germans have indicated that they might be able to offer expertise in this area.

Progress

In the course of the 2013 State of the Province address, Mabuza highlighted some statistics that had been revealed by the national census in 2011:

  • 87.4% of Mpumalanga households have access to water
  • 61.3% have access to sanitation
  • 88.3% have access to electricity
  • The population of four-million is a 20% increase since 2001
  • 130 000 fewer people were living in poverty in 2011 compared to 2010

National government has identified beneficiation as a key strategic part of the country’s growth path. The premier has made it clear that his province is keen to support the national imperative.

Mabuza said, “With regard to value adding, more attention will be given to agri processing and beneficiation. It is our conviction that taking our raw material to the level of finished products will assist in unlocking more opportunities for small businesses both on the upstream and downstream of the value chain.”

Plans for growth

The provincial government has developed a number of strategic plans to plot the path towards these economic objectives. These include the Mpumalanga Economic Growth and Development Path and the Mpumalanga Infrastructure Development Master Plan.

Among the key aspects for future growth identified by the province’s leaders at economic summits are:

  • The establishment of a university
  • The establishment of a tertiary hospital
  • The construction of an international convention centre
  • The repair and maintenance of the road system that supports the coal industry

A special conference dealing with infrastructure and tourism was held after the Soccer World Cup where a number of local and foreign investors were introduced to a variety of projects that, if successful, will boost the local economy and increase employment opportunities.

Geography

The geography of the province is defined by the Drakensberg escarpment which forms the dividing line between the Highveld (western grasslands at high altitude) and the subtropical areas at lower altitude to the east, the Lowveld.

The central region of the province is mountainous, with some dramatic landscapes presenting exciting vistas for visitors. The Lebombo Mountains rise in the east. The area south of the capital city of Mbombela (Nelspruit), near Barberton, has some of the world’s oldest rocks forming the Crocodile River Mountains.

Most of the province receives summer rainfall, often via thunderstorms. Frost is common on the Highveld, but is almost absent in the subtropical regions where fruit, nuts and citrus thrive. Differences in temperature and rainfall between the Highveld and Lowveld can be considerable. Large parts of the province are located in the so- called Middleveld comprising high-plateau grasslands. Forestry operations are found in central and south-eastern Mpumalanga, but the heart of this important industry is around Sabie.

Infrastructure

The province has excellent roads and railway connections and is well served by airports, airstrips and heliports. The privately owned Kruger Mpumalanga International Airport opened in 2002, but the old Nelspruit airport is still operational. SA Airlink flies direct from Cape Town, Durban and Johannesburg.

Maputo Corridor

The Maputo Development Corridor is a transportation corridor comprising road, rail, border posts, port and terminal facilities, running from Pretoria in Gauteng through Mpumalanga to the Port of Maputo in Mozambique.

The corridor supports high volumes of cross-border freight services and aims to boost trade within and beyond the region. Industry and tourism benefit from the concentration of resources and ease of transportation. This international initiative emphasises Mpumalanga’s excellent location as a logistics and transport hub.

Economy

Mpumalanga’s 11 coal-fired power stations, mostly located near the extensive coalfields in the west, provide the bulk of South Africa’s electrical power.

South Africa needs more power to drive its economy and so several of these power stations are being returned to service after a period of inactivity or are having their capacity increased. This is creating a demand for coal and resource companies are responding quickly to this need, investing in new equipment and opening new mines.

Mining

More than 80% of South Africa’s coal is sourced in Mpumalanga, with the town of Witbank being the centre of the industry. Other minerals found in the province include gold, platinum, chromite, zinc, cobalt, copper, iron and manganese.

Columbus Stainless in Middelburg is a major producer of stainless steel, while Middelburg Ferrochrome, Samancor, Evraz Highveld Steel and Vanadium and the Manganese Metal Company are among other important heavy industrial companies. After mining and quarrying (29.8% of provincial GDP), manufacturing, power generation, tourism and agriculture are the province’s other major sectors.

Synthetic fuel is produced by Sasol at its liquid-fuel-from-coal plant at Secunda, in western Mpumalanga. This is now the only plant in the country using this process as the other plant, in the Free State, focuses on chemicals and other petroleum byproducts.

Mpumalanga has a strong manufacturing sector, with internationally renowned companies such as Sasol (synthetic fuels and chemicals), Evraz (steel) and Xstrata (ferrochrome) having large operations in the province.

Agriculture

The province’s rich agricultural produce is used by companies such as McCain, Nestle and PepsiCo and there are also pulp and paper plants (Sappi and Mondi), fertiliser facilities and textile-manufacturing concerns. The decision by Sappi to start producing chemical cellulose at its Ngodwana Mill will significantly increase the manufacturing capacity of the province.

The Nelspruit district in the Lowveld is South Africa’s second- biggest producer of citrus fruit, while vegetables of all sorts do well in this area too. Further east and south, sugar is the major crop.

The Mpumalanga forestry sector is one of the most important in the country: 11% of the total land area of Mpumalanga is covered either by plantations or natural forests.

Tourism

The Kruger National Park is a major national asset and is home to the Big Five. The park receives more than a million visitors annually. Some of the most luxurious private game lodges in the world are located along the park’s edge.

Mpumalanga boasts a range of natural attractions second to none: parks, reserves, botanical gardens, rivers and lakes, including the largest freshwater body in South Africa at Chrissiesmeer, near Ermelo.

Municipalities

Nkangala District Municipality
Towns: Middelburg, Delmas, Kriel, eMalahleni (Witbank), eMakhazeni (Belfast), Dullstroom, Emgwenya (Waterval Boven).

This area straddles the north-west. Rural and traditional in the north-west where the king of the Ndebele is still revered, a coal-mining and steel producing area in the industrial centre as well as a trout-fishing triangle in the north-east.

The district is at the centre of the fly-fishing sector that includes hatcheries and accommodation for tourists. Just over a million people live in the district.

Gert Sibande District Municipality
Towns: Bethal, Secunda, Standerton, Ermelo, Volksrust, Mkhondo (Piet Retief), Carolina.

Power stations abound in this region which stretches across the southern half of the province and is the home of the giant Sasol facilities at Secunda. The area is also on the top of South Africa’s maize triangle and agriculture and food processing are well- developed sectors.

Sheep, chickens, sunflower and sorghum are just some of the areas’s many agricultural products. Nestle has a processing plant at Standerton and Mondi has a pulp and paper facility in the south-east. About 900 000 people live in the Gert Sibande District Municipality.

Ehlanzeni District Municipality
Towns: Mbombela (Nelspruit), Malelane, Hazyview, White River, Sabie, Lydenburg, Barberton.

The urban centres are nodes of manufacturing in this region, which is also at the heart of Mpumalanga’s tourism offering. The Kruger National Park, the Blyde River Canyon, Bourke’s Luck Potholes, God’s Window and other attractions make this a highly desirable place to visit.

Citrus, sugar and forestry are the major agricultural products, all being major contributors to export earnings. The Sappi paper mill at Ngodwana is one of the biggest of its kind while TSB Sugar operates two large mills in the east. The population is about 1.5-million.

This is an edited version of an article published by Frontier Market Network. Republished here with kind permission.

Copyright © Frontier Market Intelligence Ltd. All rights reserved

Reviewed: September 2013