A significant investment is already expected to be injected into the proposed Musina-Makhado Special Economic Zone (SEZ) - a boost for the energy and metallurgical industries.
A consortium of Chinese investors, led by Hong Kong Mining Exchange, will be investing more than R40-billion into an industrial park, which they will also develop and manage, in the SEZ. The park will focus on the beneficiation of minerals and agricultural endowments. Some preliminary work such as the identification of the land and environmental-impact assessment has already started.
Minerals such as chrome, manganese, coking coal and lime will be extracted and beneficiated in the park in line with the country’s national industrialisation objectives and minerals beneficiation strategy.
The industrial park will include power, coking, ferrochrome, ferromanganese, ferrosilicon, pig iron metallurgy, lime, steel and stainless steel plants. These projects will be implemented over a period of five years and are expected to create almost 21 000 jobs in the region.
In July, Cabinet approved the decision of Trade and Industry Minister Dr Rob Davies to designate the Musina-Makhado SEZ. According to Davies, the designation is in line with the Industrial Policy Action Plan which has identified SEZs as strategic interventions designed to accelerate economic development through greater investment, export volumes and job creation.
“In alignment with the National Development Plan, this development is intended to accelerate economic growth, attract foreign and domestic direct investment, expand the manufacturing sector and mineral beneficiation, as well as create employment in the region,” said Davies, speaking after Cabinet’s announcement.
He added that the Musina-Makhado region is part of the Trans-Limpopo Spatial Development Initiative and is well-positioned for regional integration and linkages with Mozambique, Zimbabwe and Botswana. Musina is, in fact, the main land-based trade route between South Africa and the broader African continent. This development will also improve rail and road transport links between South Africa and the rest of the continent.
The designation of the zone was preceded by an extensive public consultation process that was undertaken by the Department of Trade and Industry (DTI) in April. During the public hearings and meetings held in Musina, Makhado and Nzhelele, members of the local communities expressed their support for the creation of the SEZ in the area. They emphasised that issues of job creation through fair employment processes, capacity building and skills development, financial support and development of local small, medium-sized and microenterprises (SMMEs) and cooperatives, and empowerment deals for facilitating equitable ownership, needed to be prioritised.
“The SEZ programme is aimed at accelerating economic growth and development in designated regions of the country. The key measures of performance for the programme include increasing foreign and domestic direct investments, increasing value-added exports, creating jobs, building industrial clusters and regional industrial hubs,” said Davies.
He added that the SEZ Act of 2014 had brought about a new approach to the planning and development of SEZs, as well as introduced a new incentives package. This new package includes a corporate tax rate of 15% for qualifying investments in SEZs.
“SEZs will be designated to promote targeted economic activities, supported through special arrangements and support systems, including incentives, business support services, streamlined approval processes and infrastructure,” stated Davies.
The purpose of establishing SEZs includes facilitating the creation of an industrial complex, having strategic national economic advantage for targeted investments and industries in the manufacturing sector and tradeable services, developing infrastructure required to support the development of targeted industrial activities, and attracting foreign and domestic direct investment.
DTI SEZ and economic transformation chief director Alfred Tau says the main objective of the SEZ programme is to change people’s lives for the better through job creation and eradication of poverty. Tau was speaking at a seminar on the SEZ programme that the DTI hosted in Polokwane on July 27.
The seminar was part of the roadshow undertaken by the department to promote and create awareness of the value of SEZs to provincial and local authorities and to potential investors. Representatives of provincial and local government, as well as business chambers and State-owned entities attended the session.
“The SEZ’s programme is about transforming the lives of the people of this country in various provinces and regions. The ultimate objective is to create wealth, eradicate poverty and make sure that job opportunities are available so that people can get employment,” he said.
He added that for the objectives of the SEZ programme to be achieved, the country must be able to produce goods that can be consumed domestically as well as be exported to other countries.
“Industrial development is the only route to sustainable economic prosperity and success. The SEZ programme is one of the tools that government is employing in order to grow our economy through industrialisation,” added Tau.
He also said that the SEZ programme provided certainty of special support measures, special infrastructure, and transport and logistics networks for investors, while host regions and communities benefited significantly from the social and economic infrastructure, skills transfer and integration of local SMMEs in key value chains.