The oil and gas sector is the fastest growing in South Africa, and a slew of recent announcements show that the vision for the Saldanha Bay is already bearing fruit for the relatively undeveloped West Coast
It was recently announced that Royal Bafokeng Holdings is involved in two oil and gas projects in Saldanha Bay that could total an outlay of more than R4 billion.
Phase 1 of the Sunrise Energy liquid petroleum gas import facility terminal, costing R1 billion, was officially launched in August this year. According to CEO Pieter Coetzee the next two phases would cost R200 million each, while a road-to-rail facility would be around R50 million. Royal Bafokeng CEO Albertinah Kekana said Sunrise Energy’s LPG import and storage terminal was the largest in Africa.
Royal Bafokeng’s second Saldanha project is a R2.6 billion oil tanking venture, already under construction and due for completion by 2019. Kekana said: “When completed, it will be the only dedicated oil blending and storage facility in Africa.”
Wesgro recently announced that the oil and gas sector of the Western Cape economy had sustained 7 120 direct jobs, and 6 120 indirect jobs in the province as of 2015 and added R1.5 billion to the provincial economy in 2015.
MEC for Economic Opportunities Alan Winde noted that Saldanha Bay was at the heart of this success and is currently servicing 82% of the market in South Africa, its proximity to the Angolan and other oil fields being a factor in its favour.
Mozambique’s oil fields provide further potential. Laura Peinke, Executive: Business Development and Saldanha Bay Special Development Zone noted that “A recent report by Wood Mackenzie reported that more than 15 major upstream projects have reached final investment decision stage in 2017 to date, one of which is the Coral FLNG project by ENI in Mozambique.”
Niall Kramer, Chief Executive Director of the South African Oil and Gas Alliance (SAOGA) said, they were meeting with at least two international investors on a monthly basis while Winde confirmed that SAOGA and the Saldanha Bay Industrial Development Zone (IDZ) were hosting more than four interested delegations a quarter. “Most recently, a French delegation of maritime companies met with local companies to explore partnership opportunities and areas of growth in projects such as port infrastructure and specialist fabrication,” he said.
Saldanha has of course long attracted a variety of businesses, with the oil and gas players the latest to take advantage of being located in a port larger than those of Durban, Cape Town, Richard’s Bay and Port Elizabeth combined.
Leading compressor and generator hire company, Rand-Air recently opened a branch in the IDZ, and with Saldanha Bay the only dedicated iron ore export facility in South Africa, the Sishen/Kolomela-Saldanha iron ore export channel sees trains pulling 342 wagons of iron ore arriving every nine hours. The ore is loaded onto ships waiting at the ore quay or stockpiled at ArcelorMittal.
Wesgro estimates that the Saldanha Bay IDZ has the potential to contribute 86% to the gross geographic product (GGP) of the Western Cape, creating around 12 000 new jobs.
Last year, Standing Committee Chairperson on Econ Development, Tourism & Agriculture Beverley Schäfer said, “The development of the SB IDZ forecasts R53.4bn cumulative contribution to the WC GGP by the end of 2020, with an approx. R8.2bn in cumulative taxes back to the national fiscus.”
The impact on the area is already being felt, with property prices and rental demand in the area soaring. According to Lew Geffen Sotheby’s International Realty, house sales between 2013 and 2016 “showed an increase of nearly 300% (291.92%) in Saldanha alone”. And positive effects are expected to be experienced in neighbouring towns too, for example the popular holiday town of Langebaan, 30km from Saldanha.
Says Dries Venter, Langebaan Ward Councilor: “The development of the IDZ in Saldanha will have a direct impact on Langebaan by inter alia stimulating housing demand and positively impacting on the tourism and leisure sectors. Increases in possibly higher guesthouse occupancies and support for restaurants and retail will result in balancing out economic activity all year round. Businesses will no longer be reliant on the festive season, Easter and school holidays. This will all have a positive multiplier effect on job creation and the growth of Langebaan, which will hopefully attract further services to support the growing population.”
Langebaan is well equipped to serve the expected boom, with facilities such as the 18-Hole Gary Player Design’s Black Knight golf course and a host of other facilities offered at the Langebaan Country Estate.
“The IDZ in Saldanha has already impacted businesses in Langebaan – we’ve seen a definite increase in accommodation, conferencing and leisure interest from businesses there, and are enjoying introducing our new neighbours to our beautiful corner of the West Coast,” says Kate Richardson, Langebaan Country Estate Marketing Manager. “It’s not surprising really, we have a great offering here and we’re just half an hour from Saldanha. Once the IDZ is at full capacity, the spin offs for Langebaan will provide even more business and thus job opportunities for the whole area. It’s a very exciting time.”
Coega reflects rise in African FDI
Investment in the Coega Industrial Development Zone (IDZ) reflects the positive trends identified in the recently unveiled Africa Attractiveness Index (AAI) & Foreign Direct Investment (FDI) 2017, according to Dr Ayanda Vilakazi, at CDC.
The research by FDI Markets shows a 31.9% growth in foreign capital investment in Africa between 2015 and 2016, owing to capital intensive projects in the real estate, hospitality and transport/logistics sectors. This supports the Africa Attractiveness Index report, which identified 676 new foreign direct investment (FDI) projects in Africa in 2016. In 2017, South Africa was ranked the second most attractive country in Africa for FDI, down from its top ranking position in 2016, now occupied by Morocco.
South Africa was ranked first in Africa for Investment in infrastructure and logistics, second for Economic diversification and 33 for Macro-economic resilience.
During this period the Coega IDZ attracted 16 of these investors against a target of 7, with a combined investment value of R11.69 billion against a target of R1, 1billion.
Dr Ayanda Vilakazi attributes this success to the attractiveness of South Africa as a top FDI destination in Africa for the past years, as well as the Coega SEZ value proposition.
South Africa retains its top ranking in Africa as a destination for projects, with 139 projects in 2016 compared to 130 in 2015; followed by Morocco (81) and Egypt (79). South Africa with 28 projects originating from the US, continued to be the main target of US-based firms, followed by Morocco with 14 projects and Egypt with 13 projects. France invested in 81 projects in Africa to become the second largest investor in the continent after the US (91 projects). China was the third with 66 projects and South Africa was sixth (29 projects). Although the share of African intra-regional investors FDI projects continue to decline, South Africa outperformed Kenya to resume the role of being Africa’s leading intra-regional investor owing to a decrease in Kenya’s outbound FDI projects in 2016.
“The purpose-built Coega IDZ which is integrated into the deep water port of Ngqura is part of the country’s leading edge in logistics and infrastructure. Furthermore, one of the major strengths of the Coega IDZ is that all the necessary infrastructure and zoning is in place, which reduces the time to market by months or years,” says Vilakazi.
Coega is attracting investors in all the main growth sectors identified namely technology, media and telecommunications, consumer products and retail, business services, transport and logistics and automotive. Currently, the Coega IDZ has 40 operational investors, which have contributed a cumulative investment of R7.0 billion.
“A positive for the Nelson Mandela Metro and Eastern Cape is that we are seeing less reliance on the automotive sector to create jobs and economic growth. Our new investors include a lighting plant, logistics operators, green energy companies, business process outsourcing, pharmaceutical firms and agro-processors,” says Dr Vilakazi.
Although ranked third in terms of number of projects in Africa, China’s contribution to economic growth in Africa (66 projects) represents a 106% growth from 2015 (32 projects).
A major Chinese investment in the Coega IDZ in 2016 was the R11 billion BAIC vehicle assembly plant. In addition, First Automotive Works (FAW) is assembling commercial vehicles at its R600 million facility in the IDZ. However, “we are in negotiation with a number of other Chinese investors,” says Vilakazi.
The other major sources of investment in Coega are India, Germany, France and the United States.
“This is also a confirmation of the EY Africa Attractiveness Index, which puts the United States as the top FDI investor in Africa measured by the number of projects, followed by France and China.
“South Africa is ranked sixth, which makes it the leading African country investing in the continent. Companies are able to use the Coega IDZ as the gateway from which to expand into Africa due to its logistics connections to the rest of the continent,” concludes Vilakazi.
Coega certified as a Top Employer for 2018
Coega was recently certified as the Top Employer 2018 - Certified Excellence in Employer Conditions, for the third year. The certification was based on a comprehensive analysis of the human resources environment.
Top Employers South Africa is a research project that looks at international HR Benchmarking, with rigorous processes. The CDC achieved international standard of people management excellence across key areas of the HR best practice. The CDC earned the employer brand certification as a Top Employer in South Africa (Public Sector).
“The CDC’s human resources management and employee conditions within the organization was critically assessed based on talent strategy, workforce planning, learning and development, performance management, leadership management, career and succession management and the organizational culture,” says Bronwen Addison CDC Remuneration and Benefits Manager.
Zola Ngoma, CDC’s unit head of Performance and Talent Management further highlights that, “as the CDC, we seek to provide exceptional employee conditions, with an outlook to nurture and develop talent throughout all levels of the organization, and this we managed to has demonstrate to the judges of the awards.”
Following validation and external audit, the CDC’s performance score was rated against an international standard. The CDC achieved the required level in the research and thus qualified for certification. The research comprised of the HR best practices survey, international validation and audit.
Monde Tshabalala and Paul Reynell
