This would provide a key anchor project to make the industrial park and deep water port viable. The Industrial Development Corporation (IDC), whose board had approved taking up a 12.5 percent stake in the smelter, was also expected to play a leading role in the industrial development zone (IDZ).

October said his director-general, Alister Ruiters, had held several meetings with Alcan, which took over the original potential investor, Pechiney of France, which had already held in-depth discussions over Coega.

Although Alcan was considering a scaled-down version of the $2 billion (R13 billion) plan punted by Pechiney, it would use more appropriate technology than originally envisaged.

"So we are still confident about the smelter," he said, adding that he could not provide further details on the negotiations yet.

October said the government fully understood the recent decision by the Eastern Cape provincial government to pull back on its financial support for the Coega project because of pressing needs elsewhere.

"But Coega has always been a joint national and provincial government project and most of the original investment has actually come via the National Ports Authority for the building of the port and that commitment is still there," he said.

The R3 billion deep water harbour and industrial park was therefore still expected to open for business by the end of next year, with many key investors already indicating that once this was in place, they would be willing to move in.

A rail line would be built by a public-private partnership involving Kumba Resources and Spoornet from Sishen to Coega to ease the congestion on the Sishen-Saldanha route.

The aluminium smelter at Coega would take in bauxite carried on this rail link from Kumba Resources' Sishen mine and then ship the final product to key export markets.

Manganese dumps would be transferred from Port Elizabeth to Coega with Spoornet building a rail link between Coega and the main Port Elizabeth-Gauteng railway line.

October said the upgrading of roads around the area, including the N2 highway, was well in hand while Eskom had committed itself to supplying the IDZ and port areas with electricity.

On criticism that the project would not create many jobs, October said about 10 000 jobs had already been created in the labour-intensive first phase of the construction of the new port.

In time, this would lead to the development of supporting industries and more jobs, as had happened in Richards Bay.

"The multiplier effects are massive and Mozal in Mozambique is a success story [showing] what can happen."