MEGA Trade & Investment Profile 2023

MPUMALANGA TRADE & INVESTMENT PROFILE

WHY INVEST IN MPUMALANGA?

• 68% of land area in the province is used by agriculture

• Mpumalanga’s three biggest sectors are manufacturing, mining and agriculture

Mpumalanga’s diverse and resource-rich economy makes it one of the most attractive trade and investment destinations in South East Africa.

A large, growing domestic market and excellent access, supported by worldclass infrastructure, to the East African and Indian Ocean markets through Maputo Port makes Mpumalanga an ideal investment location for export-driven manufacturing and production.

Mpumalanga is one of South Africa’s most productive and important agricultural regions and through strategic investments in the Mpumalanga International Fresh Produce Market (MIFPM) and the Nkomazi Special Economic Zone (NSEZ) the province is set to become a major force in food production and distribution.

Mpumalanga’s sophisticated and well-segmented tourism and hospitality sector in a post-Covid world is ripe for investment and expansion.

Mpumalanga’s STRATEGIC LOCATION makes it a valuable transport and logistics hub

A province in eastern South Africa, bordering the nations of Swaziland and Mozambique

• Maputo Development Corridor enhances logistics

• Preferential access to lucrative EU market

• Proximity to South Africa’s economic heartland

• Access to regional SADC market: 360-million population

• Access to deepwater Port of Maputo

MPUMALANGA’S ECONOMY

UNIQUE SELLING PROPOSITION

•Abundant resources: minerals and agricultural produce

• Established manufacturing infrastructure: smelters, petrochemicals, food processing, paper, sugar

• Strategic location, access to regional and global markets

• Tourism hotspots: the iconic Kruger National Park, world-class reserves, adventure tourism and new UNESCO World Heritage Site

• Mpumalanga International Fresh Produce Market (MIFPM)

• Nkomazi Special Economic Zone (NSEZ)

• The new University of Mpumalanga

• Support for Green Economy research and investment

Capital City Mbombela (Nelspruit)

Population

4.5-million people

Main major towns Ermelo

eMalahleni

Middelburg Secunda

Airport Kruger Mpumalanga International Airport

The provincial economy of Mpumalanga is exceptionally diverse. Established industries in the province include Mining, Stainless Steel, Petrochemicals, Pulp and Paper, Ferro-Alloys, Energy Generation, Tourism, Agriculture and Agro-Processing.

Companies in these sectors include global giants in their industries such as Sasol (energy and chemicals), Sappi (paper, packaging, pulp and forests), Samancor Chrome (ferrochrome), Sibanye-Stillwater and Glencore (mining).

District GVA by district

38% 34% Nkangala

28%

The province’s commercial farmers are among the most efficient in the world, exporting huge quantities of everything from citrus to macadamia nuts. Columbus Stainless is the only stainless-steel manufacturer on the continent.

GOVERNANCE

The province has three district municipalities and 17 local municipalities. Several agencies which promote the regional economy report to the Mpumalanga Provincial Government. Large parts of the province comprises extensive rural villages that form part of areas run by traditional authorities.

TRANSPORT

Two airports at Hoedspruit and Mbombela (Kruger Mpumalanga International Airport, KMIA) plus many airfields. Extensive freight rail network, busiest in South Africa. N4 highway (Maputo Corridor) is an east-west spine of a highly-developed road system.

Mpumalanga

Gert Sibanda Ehlanzeni

ABOUT MEGA

The Mpumalanga Economic Growth Agency (MEGA) is the official Economic Development Agency for the Mpumalanga Provincial Government.

MEGA’s primary mandate is to foster the sustainable growth and development of Mpumalanga’s economy through its operational activities of Trade and Investment Promotion, Development Funding, Equity Investments, and Property and Infrastructure Development. The Agency remains accountable to the Mpumalanga Department of Economic Development and Tourism (DEDT). MEGA is the foreign investor’s or trader’s first point of contact for doing successful business in Mpumalanga Province. Through the Trade and Investment Promotion Division, the Agency provides a variety of services to potential investors and trading partners.

MEGA SERVICES

MEGA staff will go out of their way to make the process of investing in Mpumalanga or starting a business in the province easy. MEGA is focussed on customer needs and provides innovative solutions with a high level of service. Services include:

• Foreign Trade Promotion

• Investment Promotion

• Funding

• Property Management and Infrastructure Development

PLANNING THE WAY FORWARD

National government has articulated a Nine-Point Plan which seeks to prioritise projects that will tackle key economic issues. MEGA is aligned with the plan, which include issues relevant to growing the provincial economy:

• revitalise agriculture and the agro-processing chain

• advancing mineral beneficiation

• implementing the Industrial Policy Action Plan (IPAP) effectively

• unlocking the potential of SMMEs, cooperatives and township and rural enterprises

• resolving the energy challenge

• stabilising the labour market

• upscaling private investment

• investment in science and technology, water and sanitation, transport and broadband connectivity

MAPUTO DEVELOPMENT CORRIDOR

The Maputo Development Corridor is South Africa’s leading Spatial Development Initiative (SDI), linking Mpumalanga Province, Gauteng Province and the Nkomazi Special Economic Zone with the deepwater Port of Maputo in Mozambique. This efficient corridor provides investors and exporters with good access to the export markets of South East Africa, the Indian Ocean Rim and Far East Asia. The Maputo Development Corridor comprises road,

SOUTH AFRICA

rail, Special Economic Zone, border posts, port and terminal facilities. The corridor runs through the most highly industrialised and productive regions of Southern Africa. The Corridor has been extensively upgraded to international standards and links the industrial heartland of South Africa to its nearest port in Maputo, Mozambique, which is one of the fastest-growing countries in South East Africa.

KEY SECTORS AGRICULTURE

Agriculture in Mpumalanga is responsible for 3% of the province’s gross value added by region (GVA-R) and can be divided into the following categories (see map, right).

AGRICULTURE

SUMMER CEREALS & LEGUMES

MAIZE Maize meal

SOYA Meal, Edible oil

CANOLA Edible oil

SUNFLOWER Edible oil

TROPICAL & SUBTROPICAL FRUIT

CANE SUGAR Sugar / confectionery

CITRUS Juice & concentrate

MANGOES Dried, frozen, juice & concentrates

LITCHIS Dried, frozen, juice & concentrates

AVOCADOES Avocado oil

GUAVA Dried, frozen, juice & concentrates

MACADAMIA NUTS

Processed & confectionery

Mpumalanga Province is one of South Africa’s most productive and important agricultural regions and plays a key role in the export profile of South Africa, primarily in fruit and nuts. The province’s economic diversity extends into the agriculture sector where the natural topography of the province divides this sector between the Highveld and Lowveld Regions.

The Highveld Region in the west of the province is at an elevation of between 4 000 and 6 000 feet above sea level. This allows for the large-scale and commercial production of cereals and legumes like maize, soya, canola and sunflower.

The subtropical region of the Mpumalanga Lowveld plays a key role in the agricultural export profile of the province, primarily in fruit and nuts.

Mpumalanga Province is one of the world largest producers and exporters of citrus fruit. Duty-free exports of South African citrus to the USA under the African Growth and Opportunity Act (AGOA) reached a peak of 91 000 tons in 2020 ($94.9-million) and are expected to continue their strong annual growth as the USA is still considered a premium market.

KEY SECTORS FORESTRY

Lowveld Highveld

HIGHVELD: Summer cereals and legumes: maize, soya, canola, sunflower. Animal products: bovine meat, swine, sheep and poultry.

LOWVELD: Subtropical and citrus fruits, nuts and cane sugar.

Mpumalanga Province is the world’s largest producer and exporter of macadamia nuts. The province earned $207-million in exports in 2019, $76-million of this to the US. There have been major new investments in processing facilities in Mpumalanga.

Mpumalanga’s rich agricultural produce is utilised by companies such as McCain, Nestlé and PepsiCo.

9:1

Mpumalanga’s ratio of commercial farmers to small-scale farmers

Forestry is a key driver for the development of Mpumalanga’s rural economy and a major provider of job opportunities. About 40% of SA’s sustainable forests are located in Mpumalanga Province.

The industry comprises logging, saw-milling, wood products, wood board, pulp and paper as well as specialised cellulose. Specialised cellulose is a sought-after natural, renewable fibre with a wide range of uses in the textile, consumer goods, foodstuff and pharmaceutical industries and is produced in large quantities at Sappi Ngodwana.

R9.5 billion Amount invested in the foresty industry

39

Mpumalanga has processing plants out of 148 in South Africa

PG Bison has recently invested R560-million in a new front-end dryer for its particleboard plant in Mkhondo (Piet Retief). The company is also building a new medium-density fibreboard (MDF) plant at its Mpumalanga plant.

SAFCOL/Komatiland is the state forestry company with commercial and non-commercial operations covering a land area of 187 320ha.

Sonae Arauco is a Portuguese investment. A new entrant, local BEE company the FX Group, is commissioning a greenfield particle board plant in Lothair in the Gert Sibande District.

MAIN EXPORTS

PULP

PAPER

SPECIALISED CELLULOSE

SAWN LUMBER

WOOD CHIPS

WATTLE EXTRACT

MAJOR COMPANIES

SAPPI

SAFCOL

SONAE ARAUCO

PG BISON

KEY SECTORS MINING, MINERALS AND ENERGY

Mining is the province’s largest single sector, providing employment to 5.2% of the province’s workforce and making up 20% of gross value added by region (GVA-R).

Coal: 83% of South Africa’s coal production, 50% of national coal reserves, third-largest coal-exporting region in the world. Coal is the lifeblood of provincial economy, fuelling 11 Eskom power plants, which produce 80% of South Africa’s electricity. Coal is Mpumalanga’s single largest export product, shipping mainly to India and Pakistan.

of South Africa’s coal production

Other minerals: Gold mining takes place in Evander, Pilgrim’s Rest and Barberton. Gold is the second-largest export from the province. Platinum and chrome ore mining are located in the Steelpoort and Burgersfort areas in the north of the province and make up part of the Bushveld Igneous Complex. The mining services and technology industry is an important subsector in Mpumalanga. With over a century of commercial mining operations in the province, homegrown technologies are now exported around the globe.

National utility Eskom will spend R3.3-billion on the revival of the Matla coal mine. Exxaro Resources will manage the project and do the mining while major companies such as DRA, Worley, Sandvik and WBHO will also be involved.

Other companies engaged in expansion of life-of-mine projects are Pan African Resources and Evander (Elikhulu tailings), Exxaro Resources (Leeuwpan) and South32, which is spending about R4.3-billion at Klipspruit.

Platinum is an important mineral for the modern economy. Two Rivers is a joint venture between Implats (46%) and African Rainbow Minerals which is located on the southern part of the eastern limb of the Bushveld Igneous Complex, 35km south-west of Burgersfort in Mpumalanga.

Lydenburg is home to the Lion ferrochrome smelter that is a joint venture between Glencore and Merafe Resources.

KEY SECTORS GREEN ECONOMY AND JET

Mpumalanga has historically been at the heart of the South African energy and industrial complex and is still heavily reliant on the mining and burning of fossil fuels.

The Mpumalanga Provincial Government has been proactive in exploring opportunities in the Green Economy and pursuing a just transition to a low-carbon economy which secures the future and livelihoods of workers and their communities. Achieving such a just transition would require an integration of economic opportunities in sectors outside of energy and mining.

A Just Energy Transition (JET) to a Green Economy presents the following opportunities:

• Renewable energy: solar, biomass, natural products

• Gas and associated industries

• Sustainable smart agriculture: environmentally-friendly agriculture and agricultural processing

• Circular Green Economy: waste recycling, water reclamation, land rehabilitation

• Soft infrastructure: reskilling and institutional capacity-building for a carbon-neutral future

• Hard infrastructure: investment and expertise are needed in urban planning, water and waste management

• Building technologies: greener and more energy-efficient

• Transport and logistics: greener and more energy-efficient

MINERALS

COAL Waste briquettes

GOLD JEWELLERY

CHROME

PLATINUM

IRON ORE

VANADIUM

MANGANESE

GRANITE Building cladding & tombstone

CLAY Porcelain & ceramics

Electrical insulators

50% of South Africa’s national coal reserves

Mpumalanga has ESKOM POWER plants

Specific opportunities include:

•There are plans for the decommissioning of 11 000MW of Eskom’s coal-fired capacity by 2030. Opportunities are presented by repurposing land.

• The vast new fields of natural gas found off the coast of Mozambique could have a big impact on the Mpumalanga economy.

• A Renewable Energy Development Zone (REDZ) is planned for eMalahleni / Witbank where coal jobs are at risk.

KEY SECTORS MANUFACTURING

Three primary pillars of the manufacturing sector in Mpumalanga account for more than 60% of the output of the manufacturing sector, which overall makes up 15% of gross value added, regional (GVA-R).

MAIN EXPORTS

STAINLESS STEEL

Cutlery

Catering equipment

Surgical instruments

Automotive components

STEEL White & grey goods

Pipes & tubes

Wire

PETROCHEMICALS

Plastic products

Recycling plastics

Artificial rubber products

Paint & vanish

Inks & dyes

FOOD PROCESSING

Maize meal

Machinery

Frozen & dehydrated

VEGETABLES Preserves, pickles & condiments

Nuts

PAPER Recycling

SUGAR Confectionery

MINING Machinery and services

RENEWABLE ENERGY

Solar and biofuel

Biomass

Fuel, petroleum and chemical products are manufactured at the Sasol Secunda plant in Secunda, Gert Sibande District. It is one of the world’s largest synthetic fuels facilities, producing 60-million litres of liquid fuel a day. Products produced include petroleum, paraffin, jet fuel, creosote, bitumen and waxes.

The ferro-alloy and stainless-steel industries are based in the Nkangala District. Columbus Stainless in Middelburg is Africa’s only producer of stainless-steel flat products. Samancor Chrome (Ferrometals), the world’s second-largest ferrochrome producer, has two plants in Mpumalanga.

Agro-processing is mainly based in the Lowveld Region and consists of manufacturing forestry products (pulp, paper and cellulose), sugar at the Selati RCL Foods plants in Nkomazi and processing subtropical fruit and nuts.

The province’s flourishing macadamia nut industry has a number of large processing facilities based around the provincial capital Mbombela. Subtropical fruits like mango, banana, papaya and citrus are processed into juice concentrate or dried for export.

There is a geographical divide in the manufacturing sector. Fuel, petroleum and chemical production occurs in the southern Highveld Region clustered around Sasol’s plants.

The northern Highveld area, including Middelburg and eMalahleni (Witbank), is home to ferro-alloy, steel and stainless-steel concerns. Creative thinking kicked in when Highveld Steel’s troubles reached a tipping point. The 1 000ha property in Emalahleni has been re-purposed as a multi-purpose site for industry and commerce. Called the Highveld Industrial Park, the project promotes a wide range of manufacturing enterprises.

In the Lowveld, agricultural and forestry products are processed while Sappi’s giant mill is close to the company’s forests south-west of the provincial capital, Mbombela.

KEY SECTORS TOURISM

The importance of tourism to the economy of Mpumalanga cannot be overstated. The effect of the Covid-19 pandemic has been strongly felt.

Mpumalanga received only 340 000 international visitors in 2020, down from 1.6-million international visitors in 2019. The key source countries were Mozambique, eSwatini, the USA, Germany, France and the UK. Domestic tourism has steadily increased. The total tourist foreign direct spend (TTFDS) in Mpumalanga for 2020 was R7.5-billion, down from over R21-billion in 2019. The sector accounts for 6% of gross value added by region (GVA-R).

The announcement in 2022 by Eurowings Discover, a new division of Lufthansa, that it would start flying three times a week to Mbombela from Frankfurt, via Windhoek, will give a certain boost to tourist numbers

1.6 MILLION

Number of visitors

ANNUALLY pre-COVID-19

billion

Rand value of tourist spend in Mpumalanga… before COVID-19

visiting Mpumalanga. The Kruger National Park is Mpumalanga’s most famous tourist asset and safaris and hunting are major tourist attractions. The Manyeleti Reserve, a 23 750-hectare game reserve sharing a fenceless border with the Kruger National Park, is operated and managed by the Mpumalanga Tourism and Parks Agency (MTPA). God’s Window and the Blyde River Canyon Reserve are other provincial treasures attracting investment.

Business travel, including conferencing, adventure, heritage and cultural tourism, all hold huge growth potential in Mpumalanga, but require investment in infrastructure and product development.

A hotel and conference centre project in Middelburg is making progress and should be completed in 2023.

INVESTMENT OPPORTUNITIES TOURISM

Selected Strategic High Impact Projects:

BOURKE’S LUCK POTHOLES HOTEL

This natural water wonder is a major tourism attraction in the Mpumalanga Lowveld. This project presents an investment opportunity for a five-star hotel and a top-quality restaurant.

Feasibility study: completed

Environmental Impact Assessment (EIA): commenced

Model: Joint Venture (JV), Build-Operate-Transfer (BOT)

Value: R100-million

GOD’S WINDOW SKY WALK

The project to build a “Sky Walk” – an income-generating tourism attraction off the edge of the 700m God’s Window cliffs – giving 360-degree panoramic views out and down through a glass floor.

Feasibility study: completed

EIA: commenced

Investors: secured

Model: JV, BOT

Value: R100-million

3.7km

Length of one of Eastgate Airport’s runways at Hoedspruit, which doubles as an airforce base. The other runway is 2.1km

500+

BLYDE RIVER CANYON CABLE CAR PROJECT

The Blyde River Canyon is the largest and deepest green canyon in the world and offers a spectacular opportunity to build a cable car transporting tourists from the top of the canyon to the peninsula below.

Feasibility study: completed

EIA: commenced

Model: JV, BOT

Value: R500-million

Bird species recorded in the Kruger National Park, including the Kori Bustard, Martial Eagle, Southern Ground Hornbill and Lappetfaced Vulture

Nature reserves are run by the Mpumalanga Tourism and Parks Agency and Kruger National Park is run by SANParks

INVESTMENT OPPORTUNITIES PRODUCE MARKET

Selected Strategic High Impact Projects: Mpumalanga International Fresh Produce Market

MEGA is establishing a R1.2-billion fresh produce market facility located in Mbombela, the Mpumalanga International Fresh Produce Market (MIFPM). To date the province has invested an estimated R540-million in the project.

Mpumalanga is one of South Africa’s most productive and important agriculture regions. It is home to predominantly tropical and subtropical crops and vegetables owing to its conducive climate. The tropical and subtropical crops consist of avocado, banana, citrus, ginger, granadilla, guava, litchi, macadamia nut, mango, papaya and pineapple.

The vegetables produced include potatoes, tomatoes, pumpkins, sweet corn, onions, sweet potatoes, beetroot, carrots, green peas, cauliflower, cabbages and green beans.

Site: The site is in Mbombela on a 248ha plot less than 10km from the Central Business District. It is situated within the Maputo Development Corridor (MDC), linking Mpumalanga, Gauteng Province and the Nkomazi Special Economic Zone with the deepwater Port of Maputo in Mozambique.

The market: The market will give local farmers access to local, regional and international fresh produce markets and will aid in ensuring food security for the region.

The infrastructure of the MIFPM will attract international as well as the large domestic food retailers as a key processing and distribution

point. It will also secure Mpumalanga’s position in the regional export market in fresh produce.

The market will offer:

• Open trading halls for fruit and vegetables

• A meat, fish and flower market

• Complementary cold storage, ripening facilities and pallet handling

• Processing facilities

• An export hall

• Bulk-breaking facilities for retail outlets

• Links with statutory organisations such as customs, PPEBC and EuroGap

• Transport and logistics enterprises

• Shared collation and pack house facilities for SMMEs

• Commercial services including banks and restaurants

• A food bank for NGOs

Feasibility study: completed

EIA: completed

Bulk infrastructure: completed

Top structures: underway

Model: JV, BOT

Value: R1-billion

INVESTMENT OPPORTUNITIES NKOMAZI SEZ

Selected Strategic High Impact Projects: Nkomazi Special Economic Zone

The Nkomazi Special Economic Zone has been officially designated and MEGA has been appointed to establish the entity.

SEZs are geographically designated areas set aside for specifically targeted economic activities that are supported through special tax incentives. An SEZ aims to be an economic development tool to promote rapid economic growth by using various support measures to attract targeted foreign and domestic investments and technology. The main goal is to support the implementation of South Africa’s industrial development programme.

Strategically positioned in the border town of Komatipoort, the SEZ offers a multi-sector base of operations along the Maputo Development Corridor which provides exporters with good access through Maputo Port to the export markets of South East Africa, the Indian Ocean Rim and Far East Asia.

The Nkomazi SEZ will target investment from the agriculture, agro-processing, nutraceuticals and fertiliser production sectors, as having a strong focus on logistics and trade services.

The NSEZ offers the investor a unique and incentivised base of operations on the Maputo Development Corridor running through the most highly industrialised and productive regions of Southern Africa.

The Maputo Corridor is bound to develop even more as the Maputo harbour improves its handling and scheduling

capacity. In the event that a second rail line to Maputo to complement the current rail link is developed, the shipment of mining products

MPUMALANGA –NKOMAZI

Manufacturing

Centralised Facilities

Convenience Retail Accommodation

Logistics

Recreation

FOREIGN TRADE

Mpumalanga is proving to be a key player in the local economy as well as internationally.

TOP 10 EXPORTS 2022

TOP 10 EXPORT MARKETS 2022

THE PERFECT LAUNCH PAD FOR AFRICA

The African Continental Free Trade Area could revolutionise African trade: Mpumalanga is the perfect launch pad for manufacturers and exporters.

start of trading under the AfCFTA Agreement from the beginning of 2021. Further meetings have been held to take the process forward in terms of details and practical measures.

The nations covered by AfCFTA have an estimated combined GDP of $2.5-trillion and a population of over 1.2-billion.

In terms of population, it will be the largest free trade area in the world. The AfCFTA envisages the

The African Continental Free Trade Area (AfCFTA) has been agreed on by almost all African nations and holds the potential to change the nature and size of trading on the continent in profound ways.

Mpumalanga Province, as a strategically-positioned region with a dynamic manufacturing sector and excellent logistics and infrastructure, provides the perfect launch pad for investors looking to take advantage opportunities that will be created by the AfCFTA Agreement.

The burgeoning African middle-class is a global trend that economists are carefully watching. As more sophisticated infrastructure is rolled out across Africa, having a base with good connections to ports and with good air, road and rail connectivity will be vital. Mpumalanga has all of that, and more.

An Extraordinary Summit of the AU Assembly on the AfCFTA was held in December 2020. The Assembly approved the

gradual elimination of tariff and non-tariff barriers to trade on the continent. In terms of export-driven manufacturing and production Mpumalanga is well positioned to take full advantage of the economic promise of the AfCFTA and attract investment, thereby helping to increase income levels and reduce poverty. Mpumalanga is served by the Maputo Development Corridor (MDC), which is South Africa’s leading Spatial Development Initiative (SDI), linking Mpumalanga, Gauteng Province and the Nkomazi Special Economic Zone with the deepwater Port of Maputo in Mozambique. This strategic location gives Mpumalanga a particular advantage with respect to logistics and market access. Improving and increasing intra-African trade will change the way countries do business and include a much broader range of countries and products into the global market. Foreign direct investment is expected to grow rapidly, as investment opportunities such as those on offer in Mpumalanga attract the attention of international companies and institutions. New sectors, such as the Green Economy which Mpumalanga is actively preparing for, will grow exponentially on the back of a continental system of trade with fewer barriers and more connections than ever before.

Af CFTA FAST FACTS

Africa’s exports could increase by $560-billion and some experts predict that continental business and consumer spending could reach $6.7-trillion by 2030.

$450 BILLION

AfCFTA could boost regional income by 7% or $450-billion

(Source: the World Bank)

30

AfCFTA could lift -million people

out of poverty, according to the World Bank

10% AfCFTA could boost wages by up to

* World Bank estimate

ABOUT SADC

South Africa is a member of one of Africa’s oldest regional organisations, the 16-member Southern African Development Community, (SADC). This enables duty-free trade within a growing market of more than 360-million people. All goods shipped under SADC Certificate of Origin receive duty-free status.

Duty-free trade

within a GROWING MARKET of more than360 million people