MAPUTO DEVELOPMENT CORRIDOR
UPDATE ON KEY INVESTMENT OPPORTUNITIES
June 1996
FOREWORD
Documentation presented to delegates at the International Investors Conference in Maputo on 6 and 7 May 1996, included lists of projects in key sectors.
This document highlights projects (from these lists) which are considered to be key projects for consideration by investors at this point in time. This document also mentions important projects which have come to light since the Maputo Conference.
It is the intention of the Interim Co-ordinating Committee for the corridor, and of any future institutional structure created for the corridor, to continually update project lists and profiles and to keep investors informed of key investment opportunities.
The Convenors
Interim Co-ordinating Committee
Maputo Development Corridor
CONTENTS
Key to the success of the Maputo Development Corridor, are a number of transport infrastructure projects. The two governments are giving priority attention to these projects and are seeking to maximise private sector involvement.
1.1 WITBANK - MAPUTO TOLL ROAD
Concessioning to the private sector, under BOT conditions, of a continuous toll road from Witbank to Maputo.
Private sector consortiums are currently developing bids for this concession, the closing date for bids being 28 June 1996.
Estimated Cost: US $150 m
Contact: N Alli
Chief Director National Roads. DOT. South Africa
Tel: +27-12-2902600
Fax: +27-12-3251001
1.2 DREDGING OF THE PORT OF MAPUTO
The dredging company Emodraga is currently in discussion with private sector companies regarding a joint venture for future dredging operations. Key projects include:
1.2.1 Purchase of dredger
A suction dredger with a capacity of 3000m (square).
Estimated Cost: US $20 m
Contact: R Khan (Emodraga)
Tel: +258-1-426576
1.2.2 Channel dredging
This involves dredging of the Polana and Xefina channels (both widening and deepening). The southern channel is presently closed, resulting in vessels approaching from the south having to use the northern channel. This northern channel is only handling vessels of up to 30,000 tons.
The project aims to deepen both channels to 11 metres (allowing for 60 000 ton vessels) and widen both from 100m to 200m.
Estimated Cost: US $40 m
Contact: As Above
1.3 PORT UPGRADING
The port and rail authority, CFM, is in negotiations with Transnet of South Africa, for the possible establishment of a joint venture company. Such company would be responsible for port operations and maintenance and is currently envisaged as having a majority private sector shareholding.
Projects within such an arrangement would include the following:
1.3.1 Pilotage and Tug Boats
The port currently has one Tug Boat and one Pilot Boat in operation. With a view to medium term traffic increases it is considered necessary to:
rehabilitate the existing Tug Boat
purchase two new Tug Boats
purchase one new Pilot Boat
Cost is estimated at: US $20 m
Contact: Mr Dimande
Tel: +258-1-427173
or
Ms Francisca Soares (DTC)
Tel: +258-1-424355
Fax: +258-1-430159
1.3.2 Rehabilitation of Quay
The main quay requires rehabilitation work on the pavement, access roads and rail tracks and support infrastructure (eg power and telecommunications).
Estimated cost: US $54 m
Contact: As above
1.3.3 Upgrading of handling equipment
The port is in need of the following cargo handling equipment:
Estimated cost: US $20 m
Contact: As above
1.3.4 Security
This project seeks to improve security in the port and along the railway system outside the port.
Security improvements for the port include fencing, rehabilitation of security facilities, equipment and material for security services, and training.
Estimated cost: US $10 m
Contact: As above
1.4 RAILWAY UPGRADING
The port and rail authority, CFM, is in negotiation with Transnet of South Africa, for the establishment of a joint venture company. Such company would be responsible for rail operations and maintenance and is envisaged as having a majority private sector shareholding.
Projects within such an arrangement would include the following:
1.4.1 Upgrading of Maputo - Ressano Garcia line
Improving safety and speed of trains (30 km/h to 80 km/h) through spot-upgrading of line, re-opening main stations along line, installing appropriate signalling and communications and demining adjacent areas.
Estimated cost: US $30 m
Contact: Mr M Dimande
Tel: +258-1-427173
1.4.2 Rehabilitation of Maputo Rail Complex
The complex comprises yards, shunting and sidings of Maputo, Machava and Matola areas that feed the port of Maputo and satellite port of Matola. This complex links the port with the main railway system. Particularly important for upgrading are:
Estimated cost: US $23 m
Contact: As above
1.4.3 Railway Equipment Rehabilitation
This project entails rehabilitating goods wagons, rehabilitating and transforming 17 passenger coaches (due to increasing passenger demand), and the procurement of tools/equipment for maintenance purposes.
Estimated cost: US $7.5 m
Contact: As above
1.4.5 CFM Institutional reform
Current staff excesses in CFM would in part be reoriented towards SMME opportunities around the transport sector in general, and port operations specifically.
This project offers opportunities for SMME development.
Estimated cost: US $30 m
Contact: As above
2. AGRICULTURE/FORESTRY/FISHERIES
See Maputo Development Corridor project documentation for Mozambique and South Africa.
Specific projects for priority attention include:
2.1 Lower Letaba development programme. Settlement of small farmers on irrigation scheme of 200 hectares.
Cost US $10 m.
Contact S Khando
Tel: +27-158-2311
Fax: +27-158-24227
2.2 Nkomazi Irrigation Programme. Establishment of 3 672 hectares of irrigation for emerging sugar cane farmers. Programme related to construction of Driekoppies and Maguga dams.
Cost US $20 m.
Contact M Nel
Tel: +27-13-752341
Fax: +27-13-752345
2.3 Moamba II. Revitalisation of large irrigation scheme at Moamba.
Cost approximately US $7m
Contact Mr Macourica
Tel: +258-1-423988
2.4 Agricultural and livestock production: Mafavuca.
Cost US $1.5 m
Contact: As above
2.5 Rehabilitation of fishing port, Maputo.
Cost: US $15 m
Contact Mrs F Malelane
Tel: +258-1-420626
3.1 RED RIVER EXPLORATION AND MINING
The Red River deposit is located in the Northern Province of South Africa in close proximity to the town of Tzaneen.
The ore consists of massive and disseminated ores containing up to 50% Ilmenite and 45% magnetite. Indicated open-pit reserves are in excess of 100 million tons. Indicated underground reserves are in excess of 500,000 tons per vertical meter.
The massive ores contain US $250 worth of Iron, Titanium Dioxide slag and Vanadium pentoxide per ton.
Intended beneficiation includes:
Estimated cost: US $300 m
Contact: R Luck
Tel: +27-11-4772127
Fax: +27-11-6736811
4.1 PETROL-CHEMICAL CLUSTER - SECUNDA
Petrol-Chemical projects recently completed and under construction at Secunda, amount to US $590 million (R2,567 billion) while expansion of US $966 million (R4,202 billion) is being planned.
One of the strengths of Sasol is the quantity and potential value of alpha olefins produced as part of the oil-from-coal process used at the Sasol Synthetic Fuels plants at Secunda in Mpumalanga. The Sasol steams are rich in olefins. All the ethylene and part of the propylene are already separated, purified and converted into high value plastics and fibres. Olefins with a carbon number from 4 to 14 are particularly valuable and are used globally in a number of high value applications. These chemicals are, in the rest of the world, produced from crude oil by making ethylene and then converting the ethylene into butene, hexene, octene and other olefins in a complex process.
In the Sasol case these valuable feedstocks can be simply extracted and purified from streams that are otherwise converted to petrol. Sasol can also produce the odd-numbered chemicals which may have unique applications in the world’s chemical industry. The direct production route gives Sasol a major sustainable competitive advantage in global economics. Sasol has more than 1 000 000 tons of alpha olefins available for use in the value added chemicals markets.
Through its division, Sasol Alpha Olefins, Sasol already produces and markets high purity hexene and pentene as a comonomer for plastics production. In the two years that the plant has been running, Sasol has captured 16% of the global market for these products.
The further opportunities in this area are seen as the following:
These high technology and capital intensive projects will contribute towards the expansion of South Africa’s chemical industry and economic growth. Opportunities exist for investors with market access, technology or finance in joint ventures.
Downstream beneficiation opportunities have been identified by Sasol’s Research and Development Programme. Sasol has given commitment to the development of small and medium size entrepreneurial activities around the cluster, which will contribute towards growth and job creation.
Contact Person: J Fourie
Tel: +27-11-441-3111
Fax: +27-11-441-3287
4.2 STAINLESS STEEL CLUSTER: MIDDELBURG
The stainless steel cluster at Middelburg will benefit from the recent announcement of the R10 million stainless steel industrial park project. Columbus Steel, one of the biggest capital investment projects in South Africa, has decided to establish industrialists around the plant. This is to improve the competitiveness in international markets. As a result of the development, it is estimated that some 7,000 jobs will be created and that by the turn of the century foreign exchange of R1,000 million will be earned.
Downstream beneficiation projects identified are:
Contact person: A Maree
Tel: +27-11-315-1876
Fax: +27-11-315-1897
4.3 AGRO-INDUSTRY OPPORTUNITIES
Cigarette Manufacturing
Manufacturing of cigarettes for the local low-income market, with export opportunities into Africa. This project has a backward linkage with agriculture and is foreseen to be based in the Lowveld Region of Mpumalanga. The project is estimated to be established at a cost of between R30 million and R40 million, creating some 200 job opportunities. This project has the potential to co-operate with the Northern Province, Swaziland and Mozambique.
Paprika Extraction Plant
Paprika extraction has an identified international market. The investment is estimated at R15 million, creating some 300 job opportunities. The project will be located in the Lowveld Region of Mpumalanga linked to intensive, high return, small scale farming activities. Potential co-operation between Northern province, Mozambique and Swaziland.
Ermelo Meat Beneficiation
The project involves the upgrading of an existing successful abattoir to European standards and establishing a meat de-boning plant to serve the local and international market. The competitive advantage is the location of the plant at Ermelo, which is favourably placed in the whole meat delivery chain. The plant will be in a position to produce high quality products at competitive prices, taking into account the price sensitive industry. The plant will benefit from the current deregulatory processes in South Africa towards a free market economy for the agriculture industry.
The investment is estimated at R10 million depending on the scale of operation.
Contact Persons: A Scheepers
Tel: +27-13-755-4004
Fax: +27-13-755-4004
4.4 MPUMALANGA EQUITY FUND/VENTURE CAPITAL FUND
The Project has been identified by the Provincial Government and private sector as an urgent priority. The shortage of small and medium size businesses in South Africa’s economy is a constraint for sustainable economic growth and job creation. The Venture Capital/Equity fund will be an instrument to address the imbalances and enhance the entrance of small and medium size entrepreneurs into mainstream activities.
Participation of small and medium size entrepreneurs in downstream beneficiation around the identified clusters will be a priority of the fund. Without access to equity it will be difficult for small and medium size emerging entrepreneurs to take part in main stream economic activities. The estimated total investment in the fund is R50 million.
The fund will differ from a conventional Venture Capital Fund because of the developmental nature of the fund.
Contact Person: G Mokuena
Tel: +27-13-755-4004
Fax: +27-13-755-4004
4.5 PALAMIN PROJECT - IRON ORE REDUCTION
A prefeasibility study for a project to produce IC from magnetite at Phalaborwa using gas from the Pande gas field in Mozambique has been completed. IDC Board approved a feasibility study budget of R14.4 million in November 1995. The feasibility study will be completed in January 1997.
Contact Person: V Harvey
Tel: +27-11-883-1600
4.6 PHILOGOPITE PROJECT
IDC/Foskor has been developing a process to produce alumina, magnesia and potassium sulphate from clay and phlogopite, a mineral discarded by Foskor in its tailing at a rate of approximately 1.5 million tons per year. The phlogopite reserves in the Phalaborwa igneous complex exceed 1,500 million tons, sufficient to sustain commercial production of the mentioned products for several hundred years. A commercial project involving capital expenditure of some R3,000 million in 1994 terms, leading to estimated foreign exchange savings and earnings of R448 million and R624 million per annum respectively. Will create approximately 800 jobs.
Contact Person: V Harvey
Tel: +27-11-883-1600
4.7 DOWNSTREAM PHLOGOPITE
These are some projects which have been identified as potential projects for downstream beneficiation of the primary products produced out of the phlogopite project.
Contact Person: V Harvey
Tel: +27-11-883-1600
5.1 SONGIMVELO TOURISM FACILITIES
Set on the banks of the Nkomati River in the spectacular Songimvelo Game Reserve, close to Barberton and Badplaas. Few wildlife reserves can match the extraordinary diversity of vegetation zones and habitats that exist in the 49,000 hectares of Songimvelo. Currently Songimvelo has ten luxury Safari-style tents each tastefully furnished with permanent ensuite bathroom, carefully situated to ensure complete privacy. The Mpumalanga Parks Board, together with the private sector, is planning the development of several tourism facilities in the Songimvelo Game Reserve. This will include a diverse range of products from resort type accommodation, exclusive game oriented accommodation, adventure tourism etc. A total of 400+ bed accommodation facility proposed.
Estimated cost of US $50 m.
Contact person: A van Wyk
Tel: +27-13-753-3931
5.2 ELANDSKRANS TOURIST COMPLEX - WATERVAL BOVEN
Waterval Boven lies at the edge of the escarpment where the Highveld makes the transition to the Lowveld. The name refers to the little railway town at the upper end of the well-known waterfall in the Elands River. Waterval Boven is two hours drive from Johannesburg and within immediate reach of well known tourist attractions ie Kruger National Park, God’s Window, etc.
The Elandskrans Complex envisages a main hotel and chalets offering visitors a range of leisure and business activities. The estimated cost is R458 million. It concretises the same sensation of arriving at the edge of the escarpment, before entering the lowveld, by receiving the visitor at the plateau at the top of a 100m cliff and then, breathtakingly descending down into the cliff-face hotel which extends vertically down for 23 storeys.
Contact Person: B Mkhize
Tel: +27-13-755-4004
Fax: +27-13-755-4004
5.3 HAZYVIEW/BUSHBUCK RIDGE DEVELOPMENT
The project seeks to develop a unique, living Cultural-Tourism village - an experience for the tourist, i.e. African accommodation, food and cultural activities. This is to expose the uniqueness and beauty of the different African cultures and its own indigenous characteristics with pride and dignity. The project will include a tourist information centre, lapa for traditional dances, restaurant, craft and curio shop, conference facilities, lodge and selected recreational facilities. The architecture should have the African theme including some accommodation facilities of a genuine kraal style. The cost is estimated at R60 million. The project is on the tourism route close to the Kruger National Park.
Contact Person: B Mkhize
Tel: +27-13-755-4004
Fax: +27-13-755-4004
5.4 THE XIVALA ECO TOURISM PROJECT
The development of a large Craft Centre linked to an Eco-Tourism school at a cost of US $3 million. The project is on the main tourism route and close to the Kruger National Park.
Contact Person: G McLachlan
Tel: +27-1524-5681
5.5 MODJADJII ROYAL VILLAGE
Overall concept involves the construction of a simulated Royal Kraal at Modjadji Village, appropriate overnight tourist accommodation, facilities for staging "sound and light" displays, opening up of trails, a tourism training school and improved day visitor facilities. Regarded as Letaba District's prime "eco-tourism spot". Cost is estimated at US $1 million. The community support the project.
Contact Person: MV Gardner
Tel: +27-152-76-4307
5.6 LEGALAMEETSE TOURISM DEVELOPMENT
The Lekgalameetse Nature Reserve, The Downs Nature Reserve and the Wolkberg Wilderness Area are contiguous areas of extremely attractive countryside which hold considerable tourism potentials and yet are totally underdeveloped. Overall concept includes the following:
Cost is estimated at US $5 m
Contact Person: MV Gardner
Tel: +27-152-76-4307
5.7 MOZAMBIQUE TOURISM PROJECTS
See MDC project documentation and particularly:
5.7.1 Upgrading of Four Seasons Hotel at Maputo.
Cost US $38 m
Contact Mrs F Malelane
Tel: +258-1-420628.
5.7.2 Expansion of resorts at various places along coastline.
Specific project at Ponta Mamoli US $80 m
Contact as above.