Coega eyes 10 projects worth R287bn

2019-02-28 01:18

The Coega Development Corporation (CDC) has 10 projects in the pipeline that could lead to investments worth R287 billion and free the Eastern Cape from its dependence on the automotive industry.

The CDC is the operator of the Coega special economic zone (SEZ) in Nelson Mandela Bay.

The 10 projects comprise two abalone farms; a maize-processing and grain-milling plant; an animal feed facility; a renewable energy components factory; a gas-to-power plant; a solar rooftop project; a stainless steel strip mill; a stainless steel smelter; and Project Mthombo, an oil refinery.

“This is just a basket of some of our bankable projects that we are looking at over the next five to 10 years. Some will be implemented within a year from now,” said CDC spokesperson Ayanda Vilakazi.

The stainless steel smelter, boasting an investment worth R174 billion, would be the biggest ever investment in the Eastern Cape. Phase one is expected to start in January 2021 and be completed in 2024.

The smelter is forecast to create 30 000 jobs during construction and 4 500 when operational. It will be built by Lamergyre Stainless Steel, a local company with consortium partners.


The business plan and financial forecast have been completed. About 80% of the smelter’s production will be reserved for export. At full capacity, 9 000 tons of stainless steel will be produced a year, and annual sales revenue is projected to be in excess of R500 million.

According to Vilakazi, during phase one, the smelter is set to produce massive volumes of thin, strip-coiled materials in various shapes and sizes, to customer specifications.

Given Eskom’s power supply problems, plans are under way for the smelter to install its own combined cycle gas turbines, a seawater desalination plant and its own liquefied natural gas tank farm.

“Even at the project’s early stage, the proof-of-concept investigation, we were aware that electrical power, water and the supply of natural gas had to be given proper consideration to ensure that these resources were sufficiently available at the lowest cost possible, and under the smelter and steel plants’ control,” said Vilakazi.

The stainless steel strip mill will create 600 jobs during construction, 130 permanent jobs and 5 000 downstream jobs. The market study, bankable business plan and due diligence have all been completed.

While part of the funding will be sourced from the Automotive Incentive Scheme and the Public Investment Corporation, 50% of funds have been secured from the Industrial Development Corporation.

The CDC lists Project Mthombo – Petro SA’s greenfield initiative to build a crude oil refinery with a generating capacity of 300 000 barrels a day (see insert) – among its initiatives, despite the project’s implementors declaring that plans had been shelved because of a lack of funds. The CDC still projects operations starting in 2025, with feasibility studies to be completed in 2020.

Project Mthombo is estimated to create 7 000 direct jobs during construction and 14 000 indirect ones. When fully operational, about 1 000 jobs are envisaged and 4 000 indirect jobs.

The department of trade and industry is expected to fund Project Mthombo, the two abalone farms and the animal feed production plant.

The first abalone farm will be developed by Mamjoli Marine Enterprise and Abalone. It is expected to create 100 jobs during construction and 420 permanent jobs.

The second farm will be developed by Taconic Abalone. Output is projected to start in October 2020. It is set to create 100 jobs during construction and 280 permanent jobs.

The grain-milling project will create 100 jobs during construction and 160 jobs when operational. It will be implemented by NewCo Milling. Production starts next year.

The animal feed production plant will be built by Chinese company New Hope. Construction starts next year, with full production realised in 2021.

A total of 100 jobs will be created during construction, and another 100 when fully operational.

The Coega gas-to-power project will supply power from 2026, according to the draft Integrated Resource Plan of 2018. All preliminary processes – an environmental impact assessment, site readiness, and technical and engineering studies – have been completed.

The Coega solar rooftop project’s development plan will be completed by the end of the CDC’s 2020 financial year.

It will be implemented by a private developer and funding will come from both carbon footprint reduction incentives and SEZ incentives.

Sod-turning ceremony for liquid bulk facility

In another development at Coega, a sod-turning ceremony was held last week to mark the long-awaited relocation of the old tank farm from the Port of Port Elizabeth to the Port of Ngqura, where a new liquid bulk tank facility will be built.

The relocation is set to begin in two weeks.

The new facility will pave the way for a new petroleum trading hub for southern Africa as it will also be used as a stopover for refilling by international vessels.

Transnet has allocated 20 hectares of land for the development of the facility by Oiltanking Grindrod Calulo. Operations are expected to start by the end of 2020.

About 500 jobs will be created during construction and 50 permanent ones when operations begin.

Speaking at the sod-turning function, Ngqura port manager Thandi Lebakeng said: “The new facility will develop the Port of Ngqura’s liquid bulk capacity for commodities such as petroleum, diesel, jet fuel, illuminating paraffin and liquid petroleum gas. Once operational, the terminal will facilitate substantially increased throughputs over current volumes handled at the Port of Port Elizabeth due to its deeper draught, which allows it to handle much larger vessels.”

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May 31 2020