Coega, SA’s most heavily supported industrial development zone (IDZ), will soon announce its latest investor: a German company that plans to construct a R270m solar power plant.
Government’s investment in Coega to date, in the underdeveloped Eastern Cape, is estimated at US$4,8bn, according to Coega Development Corp (CDC) acting executive business development manager Christopher Mashigo.
Thus far it has attracted investments worth R13bn. The impact of the recession and SA’s power crisis in 2008 led to the cancellation or delay of a number of large investments in Coega, just as it seemed to be gaining momentum.
Mashigo says the downturn forced the CDC to rethink its strategy. It led to a drive to lure renewable energy investors.
The motivation, he says, was that this sector was one of the few that still benefited from investment, despite the recession.
Coega has signed agreements with three European wind energy companies. The solar project will now seek environmental permits and power purchase agreements. This could be a stumbling block (see page 48). Meanwhile , Mashigo says, the CDC will begin to attract suppliers for its renewable energy investors.
There are already a number of other wind projects in the province, making Coega the ideal location for a manufacturing facility that could supply parts. “There is a strong case for the localisation of many components. The market extends far beyond Coega , but within a radius that allows Coega to become a manufacturing hub,” Mashigo says.
Details of the construction of a power plant to supply electricity at peak times at Coega are expected to be announced soon. Currently, government’s planned power supply mix undertakes to use gas only in 2019. The CDC, however, is lobbying government to bring this date forward, which would be motivation for the construction of a combined-cycle gas turbine within the IDZ.
Aside from energy, the CDC’s other major focus areas include the automotive and agroprocessing sectors. German parts manufacturer Benteler Automotive opened its plant in 2010, which supplies the neighbouring Volkswagen plant. This has increased VW’s local content from 40% to 70%, Mashigo says.
CDC built the main structure of Benteler’s plant in the Nelson Mandela Bay Logistics Park, which it manages on behalf of the local municipality. It spent R140m and Benteler added R180m. The company is also considering expanding its capacity.
Dynamic Commodities, a local food- processing company, relocated from an industrial area in Port Elizabeth to Coega in 2007. MD Manie Maritz says there have been numerous benefits.
Coega’s infrastructure, he says, is new and therefore in excellent condition. Good roads, water piping and secure electricity supply at Coega are in sharp contrast to the old industrial areas with dilapidated services, Maritz says.
Its location, near Ngqura port and close to Motherwell township from where it draws the majority of its workforce, are other advantages.
Though the company still exports its value-added agricultural products from the Port Elizabeth port, it expects to begin to use Ngqura in the near future. Ngqura already handles more freight volumes than the Port Elizabeth port.
CDC funded the construction of the Dynamic Commodities plant, which was built to the company’s specifications.
Agroprocessing will be a critical focus area. Mashigo says the CDC wants to look beyond food processing, to extract further value from agricultural products and says this could overlap into the pharmaceutical sector. Its potential to create jobs is also a consideration.
Aside from the investment already procured, Coega has a pipeline of potential investment. Projects worth R117,3bn are at feasibility stage.