OPPORTUNITIES
IN THE EASTERN CAPE SOUTH AFRICA
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SOUTH AFRICA - Alive with possibilities and opportunities
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EASTERN CAPE - Abounding with potential
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EASTERN CAPE DEVELOPMENT CORPORATION Facilitating your investment into the Eastern Cape
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COEGA IDZ AGRO-PROCESSING: Biodiesel production AGRO-PROCESSING: Coega dairy AQUACULTURE: Shrimp production
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ASGISA EASTERN CAPE AGRO-PROCESSING: Grain milling and processing and silos
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GROWTH SECTORS - Industry advancements BLUE CRANE DEVELOPMENT AGENCY
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TOURISM
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AGRO-PROCESSING
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COEGA INDUSTRIAL DEVELOPMENT ZONE
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RENEWABLE ENERGY
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NELSON MANDELA BAY
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AQUACULTURE
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AUTOMOTIVE AND COMPONENTS
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GENERAL MANUFACTURING
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INFRASTRUCTURE
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OTHER
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EAST LONDON INDUSTRIAL DEVELOPMENT ZONE
ASGISA EASTERN CAPE INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE EAST LONDON IDZ AGRO-PROCESSING: Chicken processing plant AGRO-PROCESSING: Tomato processing plant AGRO-PROCESSING: Pineapple processing plant AGRO-PROCESSING: Dairy processing plant
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AND OPPORTUNITIES Situated at the southernmost tip of Africa, South Africa is a vibrant country, alive with possibility and opportunities. The country, a popular tourist destination, received an estimated 9,9 million visitors in 2009. It is positioned for prime access to the 14 countries comprising the Southern African Development Community (SADC) which has a combined market of over 250 million people and the islands off Africa’s east coast and even the Gulf States and India. Having recently played host to the highly successful 2010 FIFA World Cup, South Africa excelled at being the first African country to host this event. Eager to take stock of what this opportunity has meant for the country in tourism and economic growth, South Africa has created a better life for many of its people. PAGE 01 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
AFRICA
SOUTH AFRICA
The Eastern Cape
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POTENTIAL Discover a land of opportunity, where a highly developed first world economy meets the potential of an emerging economy and which creates a dynamic investment environment. Home to approximately 6,9 million people, the province has the third largest population in South Africa. It has two major cities, Port Elizabeth and East London, and its natural resources offers a kaleidoscope of opportunities for investors such as grazing for livestock, forests, marine life, rich farming soils and wilderness. The Eastern Cape’s positioning affords it easy access to African and global markets by the sea, road, rail and air networks and has a world-class commercial and industrial infrastructure. Apart from these advantages, the Eastern Cape enjoys more than 300 days of sunshine a year and unsurpassed quality of life. PAGE 03 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
CAPITAL POPULATION AREA GDP ANNUAL GROWTH RATE BUSINESS LANGUAGE MAJOR CITIES
BHISHO 6.9 MILLION 168,666 KM² 14% OF TOTAL SOUTH AFRICAN AREA SECOND LARGEST LAND AREA OF SOUTH AFRICA’S NINE PROVINCES USD 26.5 million (7.6% contribution to the South African economy) 3.7% ENGLISH EAST LONDON AND PORT ELIZABETH
Aloe plants are a symbol of perseverance and strength to the people of the Eastern Cape
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(ECDC) ECDC provides a range of services aimed at achieving the socioeconomic goals of the Eastern Cape through innovative private sector interventions. As the economic development agency for the province, ECDC facilitates and supports sector development in the Eastern Cape by: • Supporting existing business • Creating opportunities for new business • Growing, sustaining and developing existing and new markets • Improving access to enterprise finance • Ensuring skills, infrastructure and policies support business development. INVESTMENT PROMOTION ECDC is the first point of call for local and foreign investment needs in the province, where at no cost, the corporation assists potential investors with: PAGE 05 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
• Identifying business opportunities in key sectors • Facilitating and financing joint ventures • Accessing investment incentive schemes and local business service networks • Creating access to a diverse portfolio of available land and buildings • Facilitating corporate relocations and aftercare services. PROPERTIES ECDC has a substantial property portfolio comprising of industrial and commercial premises at affordable rates throughout the province. These include large industrial areas ranging from 400m² and 3,000m² and which are suitable for production and manufacturing of goods such as textile, plastics and electronics. This property portfolio makes ECDC one of the biggest property owners in the province.
Ship at the East London river port
TRADE & EXPORT PROMOTION ECDC’s focus on trade and export promotion is geared towards creating maximum exposure for Eastern Cape companies while increasing export sales. The corporation also encourages partnerships through joint ventures, agents and distributors, as well as strengthening ties between exporters and importers.
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GENERAL MANUFACTURING The manufacturing sector is a key contributor towards the provincial economy. The dominant industries within manufacturing are automotive with three automotive manufacturing plants and automotive component manufacturers, and pharmaceuticals. Aspen is the largest producer of generic drugs in Africa and is located in Port Elizabeth. AUTOMOTIVE The Eastern Cape’s vehicle manufacturers are among the top companies in the automotive industry, with the focus mainly being on General Motors, Volkswagen, Mercedes-Benz and Ford. Optimal Energy’s Joule, SA’s first battery-operated electric car, is also likely to be built in the province at the East London IDZ. The province is also home to automotive component manufacturers which have established themselves globally, with the European Union as the largest export destination for local components. PAGE 07 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
AGRICULTURE & AGRO-PROCCESING The agricultural sector produces a wide variety of commodities ranging from fruit production such as pineapples, citrus and tomatoes, livestock, ostrich farming, forestry, wool and mohair production. AsgiSA Eastern Cape, the rural agency tasked by provincial government is developing the resource-rich Eastern part of the province. It’s high impact priority programme (HIPP) focuses on agriculture, agro-processing, forestry development, alternative energy, tourism and human settlement planning. In the case of agriculture, target crops include maize, beans, soya and fruit. The forestry HIPP aims to develop up to 100,000 hectares of new and existing lands for afforestation.
BUSINESS PROCESSING OUTSOURCING & OFFSHORING (BPO & O) With the main provincial economic hubs of Port Elizabeth and East London, this is a rapidly growing industry with the potential for development. At the centre of this anticipated growth are the Coega and East London Industrial Development Zones (IDZs). FINFISH MARICULTURE Mariculture is a new industry that has been developed in response to declining catches and increased fish prices. The Eastern Cape is the ideal setting for this industry because of warmer sea temperatures. Africa’s leading mariculture research institution is also situated at Rhodes University in Grahamstown. Renewable energy The Eastern Cape is favourably placed for the coming green energy revolution from increasingly expensive and damaging fossil-based electricity, to that generated by using renewable energy sources. The province is presented with more than 29 renewable energy opportunities that could generate 7700MW of power, and include the manufacturing of renewable technologies and components, the supply of raw materials, and the harvesting of solar, wind, hydro, biogas and biomass.
AGENCY The development agency was established by the Blue Crane Route Municipality in 2004 to undertake various mega development projects. Funded by development finance institution Industrial Development Corporation, the agency facilitates projects aimed to instigate and facilitate sustainable levels of local economic and social development for the benefit of the community, business and human resource development. The Boschberg development and aviation projects are the agency’s flagship projects which have the potential to generate employment and stimulate tourism and business development in the Somerset East area. Blue Crane Development Agency Tel: (+27) 42 243 0095 | Email: bcdac@lantic.net www.bluecranedevelopmnetagency.co.za INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
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(ELIDZ) The East London IDZ is a world-class industrial complex, especially built for clean, high value-adding industries. The East London IDZ promotes economic growth in the East London region by offering foreign and local investors a globally competitive combination of infrastructure, services and labour. Positioned only six kilometres from East London’s river port and two kilometres from the airport, the East London IDZ has generated investments worth USD 134 million through the 17 enterprises operational on the premises. With 400 hectares of strategically positioned land, which holds 150 fully serviced sites, the East London IDZ is ideally positioned to offer competitive solutions for streamlined business activity for all its manufacturers in various industries.
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The East London IDZ targets key sectors for investment: • Automotive • Information communication and technology (ICT) and electronics • Agro-processing • Pharmaceuticals • Renewable energy and advanced manufacturing • Marine aquaculture • Business process outsourcing and offshoring (BPO & O)
EAST LONDON INDUSTRIAL DEVELOPMENT ZONE Tembela Zweni, Executive manager: Business Development Tel: (+27) 43 702 8200, Fax: (+27) 43 702 8251 Mobile: (+27) 82 445 5012, Email: tembela@elidz.co.za www.elidz.co.za
East London Industrial Development Zone
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(COEGA IDZ) Built on the mouth of the Coega River, the Coega IDZ is positioned alongside the Port of Ngqura, which is Africa’s largest deepwater port, owned and operated by Transnet National Ports Authority. The 11,000 hectare industrial development complex has been custom built to meet the needs of manufacturers in various industries in a global marketplace. The Coega IDZ is operated by the Coega Development Corporation (CDC) which has been positioned as a catalyst for economic growth in the Eastern Cape province. As the flagship IDZ in South Africa, Coega IDZ aims to stimulate local and international manufacturing industries in the zone. New energy initiatives recently announced at the Coega IDZ include, a 2400MW combined cycle gas turbine (CCGT) to be developed by an independent power producer, an oil refinery owned by PetroSA (a publically owned Petro Chemicals Company), a 330MW Department of Minerals and Energy peaking power plant, as well as a 187 MW PAGE 11 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
Wind Energy Farm. Solar energy projects are also being considered. The first wind turbine arrived at the Port of Ngqura in May 2010 which provided renewable energy to the newly-built Nelson Mandela Bay Stadium during the 2010 FIFA World Cup and now provides energy to the municipality. The remainder of the 60 turbines wind farms are scheduled for completion in 2011 and will be part of the municipality and the IDZ energy mix. The Coega IDZ offers investment opportunities for both local and international investors in various sectors, such as: • • • • •
Automotive and logistics • Agro-processing Petrochemical • General manufacturing Renewable energy • Metals Pharmaceuticals Business process outsourcing & offshoring
COEGA INDUSTRIAL DEVELOPMENT ZONE - www.coega.co.za Nkuli Mxenge - Business Development Manager Nkuli.Mxenge-Mayende@coega.co.za, Mobile +27 83 655 1982, Tel +27 41 403 0416 Belu Mdlalo - Business Development Manager Belu.Mdlalo@coega.co.za, Mobile +27 83 397 8119, Tel +27 41 403 0489 Gustav Meyer - Business Development Manager Gustav.Meyer@coega.co.za, Mobile +27 82 373 5763, Tel +27 41 403 0485
Port of Ngqura INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
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Nelson Mandela Bay Municipality (NMBM) is one of six metropolitan municipalities in South Africa and has a population of 1,5 million people. Located on the shores of Algoa Bay in the Eastern Cape, Nelson Mandela Bay comprises of Port Elizabeth, which the largest city in the Eastern Cape, and nearby towns, Uitenhage and Despatch.
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The municipality, in partnership with key stakeholders, aims to build the competitive nature of the area and has prioritised key sectors for further growth and development:
Nelson Mandela Bay is a major exporter of a variety of commodities, the most well-known being automotive. Based in Uitenhage, Volkwagen SA is a large exporter of vehicles and components to domestic and world markets. Similarly, General Motors South Africa and Ford Motor Company are also highly competitive exporters in the automotive industry.
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Manufacturing Automotive Agro-processing Clothing and textiles Chemicals Metals and minerals Tourism
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Services - BPO & O - ICT Creative industries - Film
NELSON MANDELA BAY BUSINESS SUPPORT SERVICES Anele Qaba, NMBM Director: Trade & Investment Tel: (+27) 41 503 7500, Fax: (+27) 41 503 7520, Mobile: (+27) 82 780 6912 Email: aqaba@mandelametro.gov.za / investments@nelsonmandelabay.gov.za www.investnelsonmandelabay.co.za
Port Elizabeth coast, Nelson Mandela Bay
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(ASGISA-EC) AsgiSA Eastern Cape (Pty) Ltd is government agency, formed by the Eastern Cape provincial government and mandated to facilitate high impact priority programmes (HIPPs), particularly in rural Eastern Cape. Working with key public and private stakeholders, it addresses the broader developmental aspects such as uneven development and spatial imbalances, low growth mainly in the eastern part of the Eastern Cape, unequal terms of trade, high unemployment, complex regulatory bottlenecks, mediocre impact of existing agrarian and rural development initiatives, significant infrastructure backlogs, poor resources at provincial and local level for investment requirements, state capacity and absence of viable growth partnerships.
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Focusing initially on Mzimvubu Basin, AsgiSA-EC’s HIPPs are rooted in agrarian and land transformation and drive the area’s transformation: Agriculture and agro-processing • Targeting the management of one million livestock units, 40,000 ha and 500,000 ha of irrigated and dry-land cultivation respectively • Production focusing on food security followed by agro processing and bio-fuel production • Crops targeted are maize, soya beans, canola, sunflowers, sugar cane, flowers, sugar beet and fruit production • Other targeted produce includes dairy, meat and leather
Forestry development • Development through the facilitation of new forestation, rehabilitation and improved management of existing forests, and the development of downstream manufacturing opportunities in the timber industry • With a potential to develop 100,000 ha of new forestry plantations which should yield an additional 1,8 million m³ of timber per annum, creating 80% more wood for processing Water resources development • Optimising water resources in the Mzimvubu Catchment as a catalyst for agrarian transformation • Key areas of focus include sourcing 640 million m³ for forestry, agricultural, livestock watering, domestic and industrial use in the surrounding area
Tourism development • Linking eco-tourism on the Wild Coast with the adventure hotspots of the southern Drakensberg through a branded tourism corridor that includes Mandela’s birthplace and the Mandela Museum in Mthatha. Human settlement planning • Addressing sustainable human settlement patterns through the rural, urban and economic renewal of targeted areas. ASGISA EASTERN CAPE Chuma Sangqu, Executive manager: Stakeholder relations and investment promotion Arundel Park, Unit 2 & 3A, 12 & 14 Old Transkei Road, Stirling, East London, 5247 Tel: (+27) 43 735 1673, Mobile: (+27) 82 879 5483, Email: chuma@asgisa-ec.co.za www.asgisa-ec.co.za
Hydro-power and alternative energy • Generate 1 500 MW of clean, renewable energy.
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Chicken processing plant
The chicken processing plant will have an abattoir and include processing and packaging facilities. Investment opportunity • Capital required - USD 1,900 000 • Debt: Equity ratio - 70:30 • Financial viability - The Net Present Value in the Discounted Cash Flow (DCF) Model is positive which indicates that the project is financially viable. • The internal rate of return (IRR) for the project is 58%.
Tomato processing plant SOMERSET EAST
EAST LONDON IDZ Unati Spiers, Agro-Processing Sector Manager Tel: (+27) 43 702 8200, Fax: (+27) 43 702 8251 Mobile: (+27) 82 389 6607, Email: unati@elidz.co.za www.elidz.co.za
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Sourcing fresh tomatoes from selected and approved growers, the plant will produce tomato paste which can be sold and/or converted into different products. The project is financially viable and will be influenced by the price of fresh tomatoes. Investment opportunity • Capital required - USD 1,400 000 • Debt: Equity ratio - 50:50 • Financial viability - The Net Present Value in the DCF Model is positive which indicates that the project is financially viable. • The IRR is positive from inception of the project.
PINEAPPLE PROCESSING PLANT
Dairy processing plant
Investment opportunity • Capital required - USD 14.5 million • Financial viability - NPV of USD 400 449 and IRR of the business is 34%.
Investment opportunity • Capital required - USD 3,400 000 • Debt: Equity ratio - 60:40 • Financial viability - The Net Present Value in the DCF Model is positive which indicates that the project is financially viable. • The IRR for the project is 27%.
The proposed investment initiative is a pineapple canning factory that is planning to produce canned pineapples and pineapple juice.
Requirements The total financing requirement in the proposed investment as depicted is USD 1,459 718. The capital requirement is composed of the following: • Capital expenditure – USD 675 435 • Working capital – USD 184 486 • Raw material – USD 599 800
The plant will produce dairy products and include packaging and distribution facilities.
Status Investment requires additional investor; partial funding is available.
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Biodiesel production
The USD 291 million project is facilitated by Phyto Amandla and entails the production of biodiesel from canola oils for the export market. Canola will be planted in different areas in the Eastern Cape as the feedstock for this project.
Coega Dairy
The dairy processing plant, sourcing milk from selected and approved farmers throughout the Eastern Cape, will produce several products which will be distributed to the regional market. The project is facilitated by the Coega Dairy Pty Ltd. SOMERSET EAST
NELSON MANDELA BAY
COEGA INDUSTRIAL DEVELOPMENT ZONE Nkuli Mxenge - Business Development Manager Nkuli.Mxenge-Mayende@coega.co.za, Mobile +27 83 655 1982, Tel +27 41 403 0416 Gustav Meyer - Business Development Manager Gustav.Meyer@coega.co.za, Mobile +27 82 373 5763, Tel +27 41 403 0485
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Grain milling and processing and silos
In the past three years, AsgiSA-EC has helped develop the Eastern Cape’s cropping sector. This strategic intervention aims to improve food security and promote value chain development with the goal of creating jobs and generating income for those living in the former Transkei.
SOMERSET EAST
ASGISA EASTERN CAPE Thukela Mashologu, Project Manager: Agriculture and Agro-Processing Tel: +27 (0)43 735 1673, Mobile: +27 (0)82 414 7388, E-mail: thukela@asgisa-ec.co.za www.asgisa-ec.co.za PAGE 21 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
A focus of this agency is to build a value chain through the development of additional grain handling and milling capacity. A business plan was developed for building silos that handle a variety of grain crops that may be used for local and external consumption. These silos will be built at three strategic sites which are closer to grain producing areas. Attached to these silos is a plan is to build milling and processing plants that will ensure that a percentage of the locally-planted raw materials such as maize, soya beans, sorghum and sunflower, is processed locally to feed the local and export markets. Investment opportunity Approximately USD 17.5 million of the initial investment required for three sites will be used for the development of silos and milling plants. Current status of project The business plan is completed. The project will be implemented in a phased manner over a period of three years.
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TOURISM
NELSON MANDELA BAY, EASTERN CAPE SPRINGS
COLCHESTER
UITENHAGE
SWARTKOPS ALOE VAN STANDENS
VAND DER KEMPS KLOOF
PORT ELIZABETH
MAITLANDS
DODDS FARM SETTLERS PARK CAPE RECFE
NELSON MANDELA BAY MUNICIPALITY Joram Mkosana, Director: Environmental Management Tel: (+27) 41 506 5444, Mobile: (+27) 82 782 1014 Email: jmkosana@mandelametro.gov.za PAGE 23 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
Nelson Mandela Bay Municipality, in partnership with the Development Bank of Southern Africa, is set to publicise request for proposals for revamping existing infrastructure and developing new facilities at Settlers Park and in 9 nature reserves within the Nelson Mandela Bay area. Environmental impact assessments are complete for the developments which range from USD 145 000 to USD 3.6 million. INVESTMENT OPPORTUNITIES Maitland Nature Reserve Van Stadens Nature Reserve Dodd’s Farm Robert Searle Nature Reserve Van Der Kemp’s Kloof Colchester Slipway Aloe Nature Reserve Swartkops Nature Reserve Cape Recife Nature Reserve Springs Nature Reserve Settlers Park
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TOURISM Nestled on the slopes of the Boschberg Mountains which overlook the Karoo town of Somerset East, the multi-million rand Boschberg Coutry Estate is an anchor development for the region and will be the main feature of the 2,000 hectare Boschberg Nature Reserve.
Somerset East, Karoo
The Boschberg development node is unique, due to its serene tranquillity and ambiance, created by the surrounding terrain which resembles an amphitheatre. The densely-wooded reserve boasts 16 waterfalls and a natural forest, and serves as a popular destination with the hiking fraternity for its 15 km circular and overnight hike. The development, spearheaded by the Blue Crane Development Agency, will assist with establishing the area as a destination activity hub.
SOMERSET EAST
Blue Crane Development Agency Chris Wilken , Tourism Manager PO Box 197, Somerset East, Eastern Cape, South Africa 5860 Tel: (+27) 42 243 0095, Fax: (+27) 42 243 0097 Mobile: (+27) 82 329 4546, Email: bcdac@lantic.net www.bluecranedevelopmnetagency.co.za PAGE 25 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
Boschberg Country Estate includes: • Retirement village • Game reserve • Outdoor activities such as mountain biking fly fishing, game viewing, hiking, mountain climbing, golf, cycling and equestrian Investment opportunity* • USD 13 million residential development Development funding required for three complexes/400 sites. • USD 20 million tourism hub
The multifaceted tourism hub development seeks interested investors as concessionary holders or in partnership with government. The hub will entail: - USD 12 million hotel/wellness complex: 50 year government public private partnership - USD 2 million equestrian centre: 30 year concession - USD 2 million restaurant site: 30 year concession - USD 4 million wedding venue site: 30 year concession - Arts & Craft centre: 30 year concession Project's current status Planning is complete and authorisation has been received. *Environmental authorisation has made clear that the development will be a once-off occurrence and that no additional development will be allowed at a later stage.
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TOURISM
ACCOMMODATION DEVELOPMENT Baviaanskloof “Valley of the Baboons”, 120km west of Port Elizabeth
The Baviaanskloof Mega Reserve comprises 200 km² of unspoiled, rugged, mountainous terrain. The reserve, a World Heritage Site and one of the eight protected areas within the Cape Floral Region Protected Areas, is one of the largest wilderness conservation areas in the country. The area boasts seven out of eight of South Africa’s biomes. Several tourism development opportunities, ranging from accommodation facilities to ecotourism activities, have been identified. Investment opportunity* USD 4 million private sector funding required for development in partnership with the provincial biodiversity conservation authority Eastern Cape Parks.
SOMERSET EAST
Eastern Cape Development Corporation Thozama Jim, Investment Promotion Ocean Terrace Park, Moore Street, Quigney, East London, Eastern Cape, SA 5213 PO Box 11197, Southernwood, East London, Eastern Cape, South Africa, 5213 Fax: (+27) 43 743 6036 Email: tjim@ecdc.co.za www.ecdc.co.za PAGE 27 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
Planned projects include • Upmarket tourist lodge consisting of two complexes of six two bed units, each based on a single public lounge, dining, bar, library and reception area. • Mid-market tented camp comprising two complexes of seven tents each configured in two-bed and five-bed units. • Camp ground consisting of 17 campsites which include seven luxury campsites serviced with electricity and ten rustic “in the bush” campsites to be serviced by two central ablution facilities.
This facility is aimed at the recreational 4x4 camping market and the sedan/caravan/campervan market that can access Geelhoutbos along the good quality gravel road from nearby town, Willowmore. *Developments are classified in nodes from remote to high intensity development. Project's current status Feasibility study completed and implementation earmarked for 2011 to 2012.
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TOURISM The 772 hectare Hluleka Nature Reserve development kick-started with the development of an environmental education centre which, at a later stage, will serve as a conference facility with chalets, bulk infrastructure, and installation of water and electricity systems.
Wild Coast, South East of mtHatHa 180 km from East London
The reserve, which appeals to naturalists and bird lovers, is located on one of the most unspoiled beaches in southern Africa, the Wild Coast. The reserve offers diverse ecosystems from rocky seashores and lagoons to evergreen forests, and also has spectacular dolphin and whale viewing. USD 2.5 million has been allocated for the development by the Eastern Cape provincial government and construction has begun on seven of the nine four-bed chalets.
SOMERSET EAST
Eastern Cape Development Corporation Thozama Jim, Investment Promotion Ocean Terrace Park, Moore Street, Quigney, East London, Eastern Cape, SA 5213 PO Box 11197, Southernwood, East London, Eastern Cape, South Africa, 5213 Fax: (+27) 43 743 6036 Email: tjim@ecdc.co.za www.ecdc.co.za PAGE 29 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
The development is facilitated by the provincial biodiversity conservation authority Eastern Cape Parks and Tourism Agency and Eastern Cape Development Corporation, in partnership with a community business structure. Investment opportunity USD 4 million private sector funding required for the development of two four-bed chalets and nine two-bed chalets. Project’s current status Development commenced in 2009 and will be completed in 2012.
TOURISM Port St Johns, known as the Jewel of the Wild Coast, is a small coastal town with 250 km stretches of coast. Like most areas along the Wild Coast, Port St Johns offers a unique blend of cultural richness, prime hiking country with forests and trails and more than 250 species of birds.
Port St Johns - Wild Coast
PORT ST JOHNS SOMERSET EAST
COFFEE BAY
The Cable Car, to be used to ferry tourists from town to Mzimvubu Mountain and back, is part of a project aimed at revamping the city. The project is believed to have great potential to resuscitate this former tourism destination with this prime opportunity. Investment opportunity • USD 7 million private sector funding towards infrastructure required for the development in partnership with the municipality. Project’s current status • Environmental impact assessment is underway. Project development will be implemented from 2011 to 2012.
Eastern Cape Development Corporation Thozama Jim, Investment Promotion Ocean Terrace Park, Moore Street, Quigney, East London, Eastern Cape, SA 5213 PO Box 11197, Southernwood, East London, Eastern Cape, South Africa, 5213 Fax: (+27) 43 743 6036 Email: tjim@ecdc.co.za www.ecdc.co.za INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
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TOURISM Existing infrastructure Inspection quarters for conservation staff has six rooms, a meeting/dining room, outdoor braai facility, with easy access to the beach.
CONCEPT 1
Proposal • Demolish existing buildings and build up-market self-catering accommodation facilities on a concession basis, with 50 bed exclusive, self-catering, double-story units • Create boardwalk access to the beach. Estimated cost USD 1,748 689
SOMERSET EAST
Rory Haschick ECDC Sector Specialist: Aquaculture, Tourism, Fisheries & Environmental Management Investment and Trade Promotion Tel: (+27) 43 704 5710, Fax: (+27) 43 743 6036 Email: rory@ecdc.co.za www.ecdc.co.za
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Activities Beach walks, hiking trail, boating, fishing Land status • No land claims • Eastern Cape Parks and Tourism Agency has full authority on the development of this nature reserve.
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TOURISM Proposal • A hiking trail (an up-market, portered trail) covering the whole of East Coast Nature Reserve from Hamburg to Cape Morgan • Hikers’ accommodation built on footprint of old conservator’s facilities no longer in use
CONCEPT 2
Estimated cost USD 1,165 793 Activities Beach walks, hiking trail, boating, fishing
SOMERSET EAST
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Land status • No land claims • Eastern Cape Parks and Tourism Agency has full authority on the development of this nature reserve.
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TOURISM Waters Meeting Nature Reserve has lush vegetation and rolling topography through which the Kowie River meanders on its way to the coast. The beautiful natural history of the Eastern Cape, as it was centuries ago, has been conserved.
SUNSHINE COAST
Proposal • Develop a bush camp at the horse shoe at Waters Meeting • Low impact, affordable, permanent tented (50 bed) and chalet type accommodation (60 bed) with self-catering facilities • Eco-friendly and low maintenance Develop a multi-purpose facility for weddings and conferences Estimated cost USD 3,205 931
SOMERSET EAST
Activities Walking, hiking, weddings, conferences Land status • No land claims • Eastern Cape Parks and Tourism Agency has full authority on the development of this nature reserve.
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TOURISM Proposal Up-market lodges with conference facilities based on the frontier history and heritage of the area. Conference capacity: 500 delegates. Estimated cost USD 5,100 345 Activities Walking, hiking, game viewing Land status • The nature reserve is co-managed with the local community • A concession agreement will be entered into with the Community Land Trust SOMERSET EAST
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TOURISM Dwesa Nature Reserve, in the heart of the Wild Coast, is a blend of lush coastal forests, rugged coastline, magnificent ocean views, white mangroves, rolling green hills, open grasslands, winding rivers, estuaries and vast sandy beaches. Proposal • Development of 36 bed, 3-4 star, self-catering units at site of current chalets • Development of bush camp facilities and up-market lodge. Estimated cost USD 2,623 034 and USD 5,537 518 respectively Activities Walking, hiking, camping, wildlife viewing SOMERSET EAST
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Land status • The nature reserve is co-managed with the local community • A concession agreement will be entered into with the Community Land Trust
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Somerset East, Karoo
The production of fruit in Somerset East is viable because of the area’s suitable good soil, climate and water conditions. Positive trials on citrus, deciduous fruit, pomegranates, figs and prickly pears show the area is well-suited for fruit production. Value addition activities which include canning, juicing and drying of fruit will further stimulate the local economy. Tests also show that biofuels and fodder can be obtained from prickly pears. The fruit will be exported from the Port Elizabeth harbour. Investment opportunity Ready for implementation, the fruit production project requires partnerships, joint ventures with local farmers or government, and equity investors. Land can be purchased or leased from land owners.
SOMERSET EAST
Blue Crane Development Agency Nico Lombard, Agricultural Manager PO Box 197 , Somerset East , Eastern Cape, SA 5860 Tel: (+27) 42 243 0095, Fax: (+27) 42 243 0097 Mobile: (+27) 82 329 4545, Email: bcdan@lantic.net www.bluecranedevelopmnetagency.co.za
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The project entails: • USD 7 million pomegranate development • USD 3 million deciduous fruit development • USD 2 million prickly pears development Return on investment ranges from USD 8 725 to USD 31 000 per hectare per year. Project’s current status quo Suitable land has been identified. Feasibility studies and business plans are complete.
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Size of investment: USD 79 million Market: US, EU and Asia food and health markets Requirements: An investor to establish a plant State of readiness: Ready Infrastructure availability: Infrastructure completion within 18 months Scope for expansion: The potential exists for 100% growth within 3 years Up and Downstream Opportunities/Value Chain: 400 Direct jobs (standard factory); 3 indirect jobs per hectare (30,000 hectares) Skills availability: Available labour
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Size of investment: USD 11.6 million Market: US & EU health and food markets Requirements: An investor to establish a plant State of readiness: Ready Infrastructure availability: Infrastructure completed within 12 months Scope for expansion: Identified growth potential Up and Downstream Opportunities/Value Chain: 1 Million: 1 Job ratio Skills availability: Sufficient
Size of investment: USD 17.5 million Market: US & EU health and food markets Requirements: An investor to establish a plant State of readiness: Ready Infrastructure availability: Infrastructure completed within 12 months Scope for expansion: Identified growth potential Up and Downstream Opportunities/Value Chain: 1 Million: 1 Job ratio Skills availability: Sufficient
Eastern Cape Development Corporation Mlamli Nodada, Agro-processing Sector Specialist Ocean Terrace Park, Moore Street, Quigney, East London, Eastern Cape, SA 5213 PO Box 11197, Southernwood, East London, Eastern Cape, South Africa, 5213 Tel: (+27) 43 704 5606, Fax: (+27) 43 743 6036, Cell: (+27) 83 451 2187 Email: mnodada@ecdc.co.za www.ecdc.co.za
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Market opportunity >800 000 houses with no access to flushing or chemical toilets or water management Manufacturing potential Manufacturing of digesters Regional fit Very good as this technology can assist in waste from livestock and organic material.
Market opportunity Municipal waste water treatment plants are under threat Manufacturing potential Remote monitoring and flaring on small scale Regional fit Excellent solution to treat environmental and health matter; Carbon credits can generate additional revenue for municipal areas Eastern Cape Development Corporation Willie van Heerden, Renewable Energy/General Manufacturing Sector Specialist Ocean Terrace Park, Moore Street, Quigney, East London, Eastern Cape, SA 5213 PO Box 11197, Southernwood, East London, Eastern Cape, South Africa, 5213 Tel: (+27) 43 704 5606, Fax: (+27) 43 743 6036, Cell: (+27) 83 451 2193 Email: willie@ecdc.co.za www.ecdc.co.za
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Size of investment: USD 137.2 million Market: Local blending into fuel supplies Requirements: Funding and technical partners State of readiness: Pre-packaged project exists Infrastructure availability: Immediate availability of biofuel plant with upgrade potential Scope for expansion: Identified growth potential Up and Downstream Opportunities/Value Chain: Agricultural and rural expansion potential Skills availability: Agriculture: limited, Engineering: negligible
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Size of investment: USD 218 586 for feasibility study and business plan development Market: Local and international Requirements: Funding and partnership State of readiness: Concept document available; Master plan under development Infrastructure availability: Pilot project underway Incentives: Industrial Development Zone (IDZ) incentives Scope for expansion: Identified growth potential Up and Downstream Opportunities/Value Chain: Manufacturing, R&D, testing and accreditation of imported equipment, skills development and carbon trading Skills availability: Limited
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Market: Local REFIT or export of pellets Requirements: Project developers with funding State of readiness: Early stages of development: 3 Million tons of invasive species available for processing Infrastructure availability: Availability of two small biomass plants exist (small scale) Incentives: Feed-in tariff Scope for expansion: Identified growth potential Up and Downstream Opportunities/Value Chain: Substantial employment opportunities in rural areas Skills availability: Available
Market opportunity >600 000 formal houses in the Province need hot water
Market opportunity >800 000 formal and informal houses in the Province with no access to electricity
Manufacturing potential Insulated storage tanks, evacuated tubes, solar collectors, and mounting systems; Skills training
Manufacturing potential Solar OV modules and skills training
Regional fit Excellent: Province has high solar radiation with levels between 6000-8000MJ/m2/annum
Regional fit Excellent: the Province has high solar radiation with levels between 6000-8000MJ/m2/annum
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Market opportunity >5000 wind turbines planned for the Province Manufacturing potential Tower and blade manufacturing and tooling as well as skills training Regional fit Very good: The Eastern Cape has available wind resource (sufficient wind speeds inland and on the coastline) A well-established automotive industry means relevant manufacturing skills for alternative energy (wind) sector.
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Market opportunity >800 000 formal and informal houses in the Province with no access to electricity and agricultural applications that need electricity Manufacturing potential Potential to increase production, export or even diversify into larger turbine manufacturing. Regional fit Very good: The Eastern Cape has available wind resource (sufficient wind speeds inland and on the coastline) A well-established automotive industry means relevant manufacturing skills for alternative energy (wind) sector.
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Size of investment: USD 14 million Market: Local (REFIT) Requirements: Funding State of readiness: Pending site testing Infrastructure availability: Requires upgrade of substation Scope for expansion: Limited Up and Downstream Opportunities/Value Chain: Manufacturing of blades and towers Skills availability: Negligible
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Market opportunity High number of rural areas with little or no access to electricity Manufacturing potential Refurbishment and maintenance of wind farms Regional fit Excellent: Some rural areas have no access to electricity; off-grid solution is most cost effective
Market opportunity Cogeneration from invasive alien plants; 2.7 Million tons of material readily available Manufacturing potential Manufacturing of gassifiers Regional fit The project will support the work of “Working for Water” as well as “Working for Energy”; also addresses notable environmental problems associated with invasive species
Market opportunity 25.8MW of potential hydro power available Manufacturing potential Micro turbines (10-500KW) Regional fit Province has great potential for standalone/off-grid as well as grid connected facilities
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Fishing & Aquaculture
NELSON MANDELA BAY, EASTERN CAPE
The project, facilitated by the Eastern Cape Development Corporation and the National Department of Agriculture, Forestry and Fisheries, involves the designation of offshore mariculture zones for the farming of indigenous marine fish species in Algoa Bay in Nelson Mandela Bay. A minimum of one and a maximum of three zones are targeted. The final number of zones will be determined on completing of the environmental impact assessment. Nelson Mandela Bay’s harbour, existing processing plants and other land-based support services and infrastructure are suitable for this investment Current status of project Feasibility and environmental impact assessment studies are currently underway and will be completed by the end of 2011. The designation of zones will follow thereafter.
SOMERSET EAST
NELSON MANDELA BAY
Rory Haschick ECDC Sector Specialist: Aquaculture, Tourism, Fisheries & Environmental Management Investment and Trade Promotion Tel: (+27) 43 704 5710, Fax: (+27) 43 743 6036 Email: rory@ecdc.co.za www.ecdc.co.za
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Upon designation of the zones, calls for investment proposals will be made. Investment opportunity Sites will be available for lease to investors based on their proposals and business plans. Minimum investment value and job creation numbers may apply.
Marine fish operation in Port Elizabeth, Nelson Mandela Bay
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Fishing & Aquaculture
Breeding, nursing and rearing of fin fish species Size of investment: USD 14.5 million over 5 years Requirements: Equity partner State of readiness: Pre-packaged project exists Infrastructure availability: Construction of a pilot plant overdue/ delayed by cashflow problems Scope for expansion: • Target: 200 tons per annum in 3 years and 1800 tons in 5 years • Scope for a fish processing plant • Net cashflow by year 6 = 72 million ZAR or USD 11 million • Debt obligations would have been settled by year 4 Up and Downstream Opportunities/Value Chain: Agricultural and rural expansion potential Skills availability: Agriculture: limited, Engineering: negligible
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automotive & components
Size of investment: USD 107 million Market: ASIA, EU and India Requirements: An investor to manage and operate the facility State of readiness: Ready Infrastructure availability: The site is serviced and available for construction Incentives: The Department of Trade and Industry Scope for expansion: The facility has capacity to produce up to 100,000 units p.a. Up and Downstream Opportunities/Value Chain: 1,600 Direct jobs Skills availability: Available skilled labour
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Albasera Aircraft is a Johannesburg-based ultra-light aircraft manufacturer which is relocating to Somerset East. AlbaSera Aircraft imports light sport aircraft kits to be manufactured and sold in southern Africa.
Somerset East, Karoo
Investment opportunity USD 1,5 million funding required for a partnership in investment equity or commercial production. Project’s current status The business plan is complete. Relocation of the manufacturing plant is underway.
SOMERSET EAST
Blue Crane Development Agency Rob Beach, Business Manager PO Box 197, Somerset East, South Africa 5850 Telefax: (+27) 42 243 0095, Mobile: +27 82 329 4547 Email: bcdar@lantic.net www.bluecranedevelopmnetagency.co.za
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Market opportunity 6 Million private cars in South Africa, electric motor bikes; >50 000 households in the Province with solar systems that require storage capacity Manufacturing potential Deep cycle batteries for storage Regional fit Three primary electrical storage manufacturers already present in the Eastern Cape
Market opportunity White goods market for 11 Million households in SA and the SADC region Manufacturing potential Refrigerators: domestic, commercial and medical; Water heating Regional fit Excellent manufacturing base with two companies already operational in the Province
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INSTRASTRUCTURE
between Nanara outside Port Elizabeth (intersection of N10, N2 and R72) and East London
SOMERSET EAST
The R72/N2 Toll Road project will extend between Nanara outside Port Elizabeth (intersection of N10, N2 and R72) and East London. The R72 is the primary mobility route also used for heavy freight as well as being a tourism route between the two cities. The parallel N2 runs further inland. Status of feasibility studies The technical, financial and environmental impact assessment studies are complete. The basic assessments and socio-economic impact study is still required. Expected contractual/commercial structure USD 200 million is expected to be initially funded by the Eastern Cape Department of Roads and Public Works for the R72. SANRAL will provide an estimated USD 450 million for the parallel N2 toll road through capital markets. The long-term plan involves the transfer of the R72 to SANRAL and both roads being tolled.
South African National Roads Agency Limited Ron Harmse, Project Management 48 Tambotie Avenue, Val de Grace, Pretoria, PO Box 415 Pretoria Tel: (+27) 12 844 8022, Fax: +27 12 844 8200 Email: xxx www.nra.co.za
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Expected capital cost requirements The expected capital cost requirements are estimated at USD 650 million towards operations and maintenance, construction, expansion and rehabilitation.
Driving factors • More efficient supply chains • Job creation • Stimulate economic activity • Improve safety • Boost tourism between Port Elizabeth and East London
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INSTRASTRUCTURE
BETWEEN N2 GONUBIE INTERCHANGE (EAST LONDON, EASTERN CAPE) AND N2 ISIPINGO INTERCHANGE (KWAZULE NATAL)
SOMERSET EAST
South African National Roads Agency Limited Ron Harmse, Project Management 48 Tambotie Avenue, Val de Grace, Pretoria, PO Box 415 Pretoria Tel: (+27) 12 844 8022, Fax: +27 12 844 8200 Email: xxx www.nra.co.za
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The project extends over a total distance of approximately 560km between the N2 Gonubie Interchange (East London, Eastern Cape) and the N2 Isipingo Interchange (KwaZulu Natal). The Wild Coast region has been identified as an area for strategic economic development in accordance with government’s spatial development initiative. The existing N2 south of Mthatha requires major upgrades to fulfill its function as a primary national road between economic centres and to cater for rapidly growing traffic volumes. Status of feasibility studies The Record of Decision (RoD) has been received and appeals have been lodged accordingly. The environmental impact assessment reports and all other studies are available on the SANRAL website, www.nra.co.za. Expected contractual/commercial structure The expected contractual structure is in line with successful practice of Build-Operate-and-Transfer (BOT) concessions of the South African National Roads Agency Limited (SANRAL). This means the road will be handed over to the control of SANRAL.
The costs of developing and running the roads will be covered by tolling or charging a fee to the users of the road. Expected capital cost requirements The expected capital expenditure costs for the project is USD 972 million to USD 1,2 billion. Driving Factors • Alleviate traffic along the route • Facilitate economic growth of the area
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INSTRASTRUCTURE The Wild Coast Meander project is a 240km surfaced road that will run from Kei Mouth in the South to Port St Johns in the North. The project is aimed at unlocking the tourism potential of the southern Wild Coast, and act as a catalyst for revitalising three provincial reserves in that area.
FROM KEI MOUTH TO PORT ST JOHNS
SOMERSET EAST
Eastern Cape Department of Roads and Public Works Craig McLachlan, General Manager: Roads Planning & Project Management Office Private Bag X0022, Bhisho, 5605 Tel: (+27)43 711 0100, Fax: (+27)86 588 7897, Cell (+27)82 574 2935 Email: craig.mclachlan@dpw.ecape.gov.za
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Status of feasibility studies A basic planning study for the entire route and linking roads, as well as an environmental screening are complete. The Eastern Cape Department of Roads and Public Works is planning to undertake further financial feasibility studies, however, this depends on potential investor’s appetite. Expected contractual/commercial structure The expected contractual structure for the project is a Build-Operateand-Transfer (BOT) public private partnership. The construction period is expected to stretch over eight years, from 2012 to 2020, and the maintenance programme is expected to last for a 20-year period, from 2020 to 2040. Expected capital cost requirements The expected capital cost requirements are estimated at USD 522 million. The road and related infrastructure are expected to account for approximately 60% of the total cost of the project. Driving Factors • Unlock the tourism potential of the southern Wild Coast • Act as a catalyst for revitalising three provincial reserves in the area.
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INSTRASTRUCTURE The Mthatha Airport development project involves upgrading the current facilities into a fully fledged regional airport with links to Cape Town, Durban and Port Elizabeth and daily flights to Johannesburg. The airport is expected to be the main gateway to the northern eastern parts of the Eastern Cape, which include the tourism destination of the Wild Coast.
MTHATHA
SOMERSET EAST
Eastern Cape Socio-Economic Consultative Council Baphelele Mhlaba, Programme Manager: Development Planning and Infrastructure 12 Gloucester Road, Vincent, East London Postal Address: Postnet Vincent, P/Bag X9063, Suite No 3025246, Vincent, 5247 Mobile: +27 (0) 83 477 3372, Tel: +27 (0) 43 701 3445, Fax: +27 (0) 43 701 3415 Email: baphelele@ecsecc.org www.ecsecc.org PAGE 67 | INVESTMENT OPPORTUNITIES IN THE EASTERN CAPE, SOUTH AFRICA
Status of feasibility studies A financial feasibility study completed in 2008 is currently being updated. Scoping done for the project included fencing, upgrading the terminal building and constructing a new parking lot. Under the new scope, a phased development approach is planned in order to reposition the airport as a logistical multi-facility precinct: • Phase 1: Refurbishment of the terminal building, extension of apron, construction of new runway, de-gassing of the existing fuel farm • Phase 2: Commercial property investment in both retail and hospitality • Phase 3: Cargo targeted upgrades optimising the airport for passenger and freight transportation Expected contractual/commercial structure The expected contractual structure for the project is a public private partnership (PPP).
Expected capital cost requirements The estimated cost is currently estimated at USD 73 million for Phase 1 and USD 486 million for Phase 2 and Phase 3. The Eastern Cape provincial government is spending USD 9,7 million in 2011/12 as part of refurbishment and related works in Phase 1. Driving factors • Construct of a new runway to accommodate 737 Boeings and other larger aircrafts • Establish a new above ground facility and construct extension of the terminal building to accommodate retail facilities • Construct a commercial and hospitality complex incorporating office and conferencing facilities incorporating a hotel • Relocate car rental facilities to a separate controlled parking area
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INSTRASTRUCTURE The Keil Rail Improvement Project is aimed at improving efficiencies of the existing service between Mthatha and East London. The estimated requirements are four locomotives, 14 passenger cars and six wagons.
BETWEEN MTHATHA AND EAST LONDON
Status of feasibility studies The upgrade is in the feasibility stage. A study for comprehensive purchasing, maintenance and upgrade of the rolling stock and infrastructure assets on the 282km Amabhele – Mthatha railway line is underway. A study for the 70km line between Amabhele – East London has been commissioned. Expected contractual/commercial structure The expected contractual structure for the Kei Rail Project is a public private partnership (PPP).
SOMERSET EAST
Expected capital cost requirements The capital cost requirement for new coaches and locomotives is currently estimated at USD 48,6 million. Eastern Cape Department of Transport (Head Office) Rail and Maritime Gabula Bavuyise Tshangana, Engineering Project Manager Cell: (+27) 71 8654210, Tel: (+27) 43 604 7598/7603, Fax: (+27) 86 675 6868 Email: bavuyise.tshangana@dot.ecprov.gov.za
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The capital expenditure estimate includes possible minor modifications to the train sets in order to operate on the 1,067mm track gauge. This should be achieved within a two-year period.
Driving factors • The need to drastically reduce the 10hr transit time to at least 4.5hrs on the 352km rail line from East London to Mthatha • Implement the National Transport Agenda of moving freight from road to rail which will involved transporting goods to and from the central East London Port to the north Eastern Cape region using Mthatha as gateway • Upgrading the passenger service
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INSTRASTRUCTURE
PORT OF NGQURA
The Kalahari Basin is a large lowland area covering most of Botswana and parts of Namibia, South Africa, Angola, Zambia, and Zimbabwe and holds 80% of the world’s high-grade manganese ore reserves. The development of the manganese fields in South Africa’s Northern Cape province took off in the early 1960’s when the manganese export facility was opened in Port Elizabeth. 50 years later, there remains a strategic need to expand the line given the growing demand for manganese worldwide. Status of feasibility studies The financial feasibility study is complete and the environmental impact assessment is planned during the different stages of the project. The scoping development stage is ongoing.
SOMERSET EAST
Eastern Cape Department of Transport (Head Office) Rail and Maritime Gabula Bavuyise Tshangana, Engineering Project Manager Cell: (+27) 71 8654210, Tel: (+27) 43 604 7598/7603, Fax: (+27) 86 675 6868 Email: bavuyise.tshangana@dot.ecprov.gov.za
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Expected contractual/commercial structure Different funding models are being explored while the scoping studies are being undertaken. The agreed contractual/commercial structure will be determined in due course. Expected capital cost requirements The expected capital cost requirements for the project are estimated at USD 1,2 billion - USD 2,4 billion, depending on the selected technical solution. Driving factors The project will mainly consist of 12 Metric Tons Per Annum (mtpa) capacity for manganese to the Port of Ngqura.
For more information contact:
ECDC TRADE AND EXPORT PROMOTION Tel: +27 (0) 43 704 5606, Email: exports@ecdc.co.za ECDC INVESTMENT PROMOTION Tel: +27 (0) 43 704 5606, Email: invest@ecdc.co.za HEAD OFFICE ECDC House, Ocean Terrace Park Moore Street, Quigney, East London PO Box 11197, Southernwood 5213 Tel:+27 (0) 43 704 5600 • Fax:+27 (0) 43 704 5700
Cover: Hole-in-the-Wall in Port St John’s located on the Wild Coast of the Eastern Cape. Picture by John Castello.
SMGAFRICA_7368
www.ecdc.co.za