Mining and SEZ development to the rescue for Limpopo economy

Mining companies have committed to investing a total of R36.3 billion into the Limpopo provincial economy over the next five years.

This announcement by Premier Chupu Mathabatha during his recent state of the province address (Sopa) brings a sparkle to a rather dark period in which the mining sector shed at least 11 000 jobs in the province, largely due to a fall in platinum prices and companies placing some mines in the Sekhukhune district under care and maintenance.

Limpopo’s central eastern area forms part of the Bushveld Complex, which is rich in platinum group metals and is the hub of the province’s platinum mining endeavours.

Last year, the World Platinum Investment Council (WPIC) reported that a forecast that the global demand for platinum was set to increase by 5% due to the expected significant rise in investment demand.

However, it also cited that possible ongoing disruption of mining output in South Africa could reduce supply, and that the recovering diesel market share in western Europe may increase demand for automotive components.

The WPIC also said the significant increase in the palladium price made future demand growth for platinum as a replacement for palladium in petrol-propelled cars more likely.

“Mining and ancillary services dominate our provincial economy at 25% contribution to the GDP. During the period under review, Limpopo accounted for 24% of national mining output,” noted Mathabatha in his Sopa, underlining the significance of the sector.

“It is our firm belief that these mining expansions will not only contribute to the growth of our economy, but will also help create much-needed jobs for our people,” Mathabatha said.

He added that, despite being a dominant sector in the provincial economy, mining employment decreased from 106 000 to 86 000 jobs between the fourth quarter of 2018 and the fourth quarter of last year.

However, he said the outlook was not that bleak because there was a slight recovery in the mining sector. He cited the fact that palladium had seen an exponential price increase, which resulted in increased mining activities for platinum group metals.

Mathabatha’s announcement on progress in the Musina-Makhado special economic zone (SEZ) and the injection of billions of rands into the mining industry provided a ray of light in what has been a rather gloomy economic outlook in recent years.

In its Quarterly Labour Force Survey for the fourth quarter of last year, Stats SA indicated that the official unemployment rate had remained unchanged at 29.1%.

In the same report, Stats SA said that the number of discouraged jobseekers increased by 62 000 nationally.

“We have completed the environmental impact assessment study for the northern side [of the Musina-Makhado] SEZ, while the process is at 90% for the southern side,” Mathabatha revealed.

He said they were finalising discussions with the Zimbabwe government regarding the issue of water availability for the Musina-Makhado SEZ.

A total land area of 7 262 hectares has been designated for the SEZ, which is located 40km south of Musina and 50km north of Makhado.

In his Sopa last year, Mathabatha revealed that the SEZ had managed to attract investment of up to R150 billion to the province.

The Musina-Makhado SEZ was promulgated by the department of trade and industry in December 2017 as part of a deal struck by President Cyril Ramaphosa and his Chinese counterpart, Xi Jinping.

The Bank of China is expected to pump at least R15 billion into SEZs in South Africa, including the Musina-Makhado SEZ, which is one of Limpopo’s flagship projects. The SEZ is expected to create about 21 000 jobs in its initial stages.

“In terms of the Musina-Makhado SEZ, we have recorded significant progress. As we speak, we have since completed the external master plans for both the southern and northern parts of the SEZ. Additionally, the internal master plan for the southern part is complete,” Mathabatha said.

“I have no doubt that we are indeed moving from expressions to practical actions. It is also pleasing to report that the Musina-Makhado SEZ has recently signed an additional $1.1 billion [R17.1 billion] investment commitment.

“On the other hand, Shaanxi CEI Investment Holdings has made a commitment of $5 billion for a vanadium and titanium smelter project.”

He added that there had been a notable improvement regarding economic growth in the province, which has grown at an average rate of 1% in the recent past.

Limpopo Premier Chupu Mathabatha says that, while the mining sector had shed in excess of 11 000 jobs due to a fall in platinum prices and mines being placed under care and maintenance, the industry has committed to investing R36.3 billion over the next five years. Picture: Lucas Ledwaba/ Mukurukuru Media

Mathabatha acknowledged that this was certainly far less than what the province needed to achieve its developmental objectives. However, the province can take solace in Finance Minister Tito Mboweni’s announcement in his budget speech last week that global economic growth was expected to strengthen to 3.3% this year.

Mathabatha said one of the spin-offs of the SEZ was that a local company had committed to manufacturing new energy solar system products, electric vehicles, energy storage systems and high-density polyethylene water pipes.

“We are equally delighted to report that the training of young people is taking shape. In this regard, we have launched a fully fledged training centre in Musina. We therefore implore all young people to seize the opportunities presented by these developments around the SEZ.”

Mathabatha revealed that government had finalised the master plan and the infrastructure needs for the Tubatse SEZ project.

“This project has an investment value of R25 billion and it is projected to create more than 8 000 job opportunities. In line [with] the new requirements, we will submit our revised business plan for the Tubatse SEZ to the minister of trade and industry by the end of September,” he said.

As part of the drive to create jobs in the province, Mathabatha also announced that the programme to revitalise industrial parks was well on track.

“This programme is aimed at breathing the life of economic activity into our townships,” Mathabatha said.

He revealed that the Seshego, Nkowankowa and Thohoyandou industrial parks had a combined occupancy rate of about 80%.

The industrial parks are set to be hubs for agroprocessing, manufacturing, storage and recycling. Mathabatha said the industrial parks had created a total of 6 256 jobs.

“In keeping with our commitment to industrialise the economy of our province, we will, together with the department of trade and industry, strengthen our investment in these industrial parks. This will go a long way towards stimulating the much-needed economic activity and creation of more sustainable jobs,” he said. – Mukurukuru Media

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