Officials believe the establishment of the Richards Bay Industrial Development Zone (IDZ) will attract light industry to this port town, which has previously been dominated by heavy manufacturing.
Richards Bay IDZ marketing manager Cliff Bell says he expects the Department of Trade and Industry (DTI) to grant an operator’s licence for the IDZ before the middle of this year.
Bell says clients for the first light-medium industry section of the IDZ are likely to include a granite-beneficiation facility, a wood pellet plant, a chemical cleaning manufacturer, a motorised yacht manufacturer, a recycled tyre-product plant and general engineering services companies.
He says initial private sector investment in this section will be about R300-million and expects construction of the factories to begin in the next year.
The first harbour-side 30-ha zone will be a fenced customs-control area and include elec-tronic procedures for the rapid clearance of goods. The intention is to later include a further 65 ha in the customs-control area.
The most significant benefits for IDZ clients are a zero rating of value-added tax on all foreign and domestic supplies and services and the fact that they will not have to pay tariffs on imported production-related raw materials.
The benefits are limited to the production of goods for the export market.
Heavy industrial concerns expected to take advantage of the IDZ’s benefits include Tata Steel’s proposed R650-million ferrochrome smelter, a R2-billion Sodra–NCT Forestry Cooperative (NCT) joint-venture pulp mill, the R2,5-billion Rainbow Millennium gas-fired power station and a R20-million aluminium-powder plant.
These manufacturing concerns, requiring large sites, will be located outside the security-fenced customs-control area, and the intention is to provide ‘virtual’ customs control.
Bell says that the IDZ will also pioneer bene-ficiation of products, which has not been a strong aspect of manufacturing in Richards Bay.
An example of this is the aluminium-powder plant, which would buy molten aluminium from the nearby BHP Billiton aluminium smelters.
Bell says the only obstacle to Tata’s investment is environmental approval, adding that the company will submit its environmental-impact assessment (EIA) to the government ‘shortly’.
Mondi, whose pulp mill borders on Tata’s proposed site, has objected to the smelter on environmental grounds.
Bell says if approval is granted he expects construction to begin at the end of the year.
Sodra and NCT are still busy with their EIA, and Bell expects them to submit their EIA application before the end of the year. The Rainbow Millennium power plant intends to take advantage of the country’s looming electricity shortage and the government’s plans to encourage private companies to enter the energy sector.
The intention is to pipe gas in from Sasol’s Mozambican gasfields to fire a plant with a capacity of 200 MW to 500 MW.
Richards Bay is looking to become the third IDZ to receive a permit after Coega and East London, which acquired their licences in 2002.
The zone is owned by the Umhlathuze city council, which includes the twin towns of Richards Bay and Empangeni, and Ithala, the Kwazulu-Natal provincial government’s devel-opment body. Bell says the IDZ is finalising its business plan, company structure and procedures (specifically customs-related), after which he expects the DTI licence to be granted.
The government has already demarcated Richards Bay as an IDZ, and the operator’s licence is all that is needed before it can begin functioning.
Richards Bay is the country’s main bulk deepwater port and has previously focused on exporting bulk products such as coal, metals and timber and timber-related products.
The export of lighter containerised products is limited, but this could change, were a number of light-medium manufacturers to locate in the IDZ.
Despite the fact that the operator’s licence is yet to be granted, bulk service delivery has already begun for the first section of the light-medium industry site of the IDZ, with the installation of the main water pipeline.
This will be followed by the bulk earthworks and bulk electrical connection to the site.
The total capital expenditure on initial bulk infrastructure is R40-million, rising over five years to R120-million.
Other benefits for clients include the coverage of shipping costs for imported start-up machinery and negotiable rates for electricity and water for high users.
Serviced land in the customs-control area will go on the market at R140 to R150 a square metre, a discount to light-medium industry land available in the Durban area.
Bell says the area has the necessary technical skills to service potential new factories, but there will be a need to bring in upper management from other areas.
