Special Economic Zones (SEZs) are a critical mechanism to advance South Africa’s strategic objectives of industrialisation, regional development, export promotion and job creation. Industrialisation and growing this secondary sector is also key to South Africa’s economic growth and more particularly, employment. Key SEZ investments include Saldanha, as an oil and gas servicing hub, and Atlantis, as a renewable energy hub with the pending allocation as an SEZ. We discussed the progress and updates of both these SEZs as part of the West Coast Industrial Plan at our recent Thought Leaders Breakfast sponsored by Webber Wentzel.
We first heard from Herman Jonker, Portfolio Manager: Cape Catalyst at the Department of Economic Development and Tourism, who showcased the Western Cape Government’s analysis of all factors to ensure effective co-ordination and roll-out of proposed investment on the West Coast. With significant investment interest of R50 – 70 billion, important factors such as energy, water (including waste), freight requirements, and environmental impact, need to be carefully considered for the phased rollout of projects. Currently Saldanha Bay Municipality’s water and electricity usage is at maximum capacity, so investments would need to be made to support industrial growth. Another important consideration is the skills development to uplift the region with 54% of the population being between the ages of 18 – 35, and 30% unemployed and largely unskilled. Fortunately, the WC Government’s Apprenticeship Game Changer aims to address the skills required for sectors such as Oil and Gas and Renewable Energy.
Next we heard from Mike Mulcahy, CEO of GreenCape, who spoke about Atlantis as a focus for GreenTech investment with the pending Green SEZ allocation. GreenTech includes more than just the renewable energy sector, such as products that contribute to energy efficiency. Mike said that the City of Cape Town’s accelerated land disposal process and environmental authorisations have helped considerably to attract investors. For example, Gestamp, a wind turbine manufacturer, has invested R450 million and established an 8-hectare factory in less than a year. Atlantis has already attracted R680 million in investment and will further attract R1 billion in manufacturing, creating 1200 jobs in the next 5 years. While Saldanha has not been selected for Phase 1 of the Gas (LNG) to Power programme, Ankerlig is being converted to gas and an additional site for a 600MW plant next to Ankerlig has been proposed.
Laura Peinke, Executive: Business Development at the Saldanha Bay IDZ LiCo, then highlighted the progress at the Saldanha IDZ from designation in 2013. Laura highlighted the size of the port capacity at Saldanha which is the same size as all of the other seven ports in South Africa combined. The designated area is 330 hectares which also includes Transnet and IDC land with the types of businesses they will attract including rig and drill ships repair and maintenance, marine and subsea fabrication manufacturing, services for offshore activity, logistics i.e. the movement of equipment and crew, plus ancillary support services. Three companies are currently constructing their premises in the IDZ and another three will start in March 2017. Skills development is also a key focus of the IDZ and they are providing gap training for 640 students per year through training institutions.
Finally Nico Walters, Head of Strategy at Transnet National Ports Authority, highlighted the investments that Transnet have made at Saldanha. Nico said that South Africa is uniquely positioned in the global Oil and Gas market and fortunately the price per barrel has doubled since the start of 2016. Transnet has issued an Expression of Interest for a dedicated rig repair facility and will continue to engage with business to ensure that facilities are fit for purpose. When refering to the recent announcements of the Gas to Power Programme, where Saldanha was not included in Phase 1, Nico said that of the three ports considered, Richards Bay was more investor ready. This is due to the fact that their infrastructure is more progressed than both Coega and Saldanha, but Saldanha will be considered for Phase 2.