IDZ motive was to use deep-water ports says Erwin

Posted On Thursday, 01 March 2012 02:00 Published by eProp Commercial Property News
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The main motive behind the establishment of the Industrial Development Zones (IDZs) in 2000 was to use the deep-water ports, former Trade and Industry Minister Alec Erwin has said

Alec Erwin"We wanted to use our deep-water ports as the anchors for the Spatial Development Initiatives (SDI), so that is why we did not opt for Free Trade Zones (FTZ) or Special Economic Zones (SEZ), which were also under consideration," he told I-Net Bridge/Business LIVE.
SA introduced IDZs on December 2000 through the Manufacturing Development Act. The purpose of IDZs was to assist in the creation of industrial complexes that had strategic economic advantage.

SA's major trading partners in Europe, the US, Latin America, India and China have used special trade zones as a policy instrument to attract investment, stimulate exports and create employment for decades. China has a large number of different trade zones that can be categorised into special economic zones, enterprise zones and industrial or commercial free zones.

The earliest SEZs in China were set up in the 1970s and 1980s in Shenzhen, Zhuhai, Shantou and Xiamen to attract foreign direct investment.

"Our purpose was to attract advanced manufacturing and beneficiation plants and in hindsight we may have spent too much time chasing anchor tenants, instead of just making sure that well-serviced land was available at attractive rates," he added.

The SA government is hoping the new SEZ policy will create the framework for the development of new industrial nodes outside of the traditional industrial heartlands of Gauteng, the Western Cape and KwaZulu-Natal, while improving the performance of the existing IDZs.

Under the proposed legislation, municipal and provincial authorities, or even public-private partnerships, are empowered to approach government with plans to develop SEZs, where such concentration of industrial infrastructure could improve prospects for investment, growth and job creation over a sustainable period.

The proposed law also aims to improve the funding, governance and operational performance of the four existing IDZs, as well any future SEZs. A SEZ board has been proposed to oversee zone designation and permitting, as well as to manage a dedicated fund that will be established to create a funding pool for the new SEZs.

A key difference from the prevailing IDZ model is the fact that future SEZs can be set up in areas that are not directly associated with a port or airport, as is the case with the Coega, East London and Richards Bay IDZs, as well as the OR Tambo International Airport IDZ.

Not a single South African cabinet member was present on June 30 2004 when the valve was "cracked" and seawater started flowing into the massive dry basin that eventually formed the port of Ngqura at the Coega IDZ, the largest public sector project in SA of the past few decades.

Some six million cubic metres of water filled the basin and it took ten days. The first ship was expected to berth in September 2005, but the lack of container cranes, which had mostly been ordered for booming Chinese ports, meant that Ngqura had to wait until 2010 to start fulfilling its potential.

In January 2012 Ngqura handled 44,298 containers compared with 70,933 in Cape Town and 211,276 in Durban.

A total of 14 million cubic meters of sand was removed from the basin area to create space for the basin and the quays, which used 270,000 cubic meters of concrete.

The main reason for the relatively slow inflow of water is so as to not damage the massive main 12,700 ton caisson that has been cast in the basin area and which form the end of one of two breakwaters.

Four smaller caissons will be used for a secondary breakwater inside the main breakwaters. The eastern breakwater is 2.6 kilometres long and the western breakwater 1.1 kilometres long.

Canadian aluminium group Alcan was set to make a decision in mid-2004 about its involvement in SA's proposed US$2.2 billion Coega smelter, but the numerous delays eventually meant that Rio Tinto, which bought Alcan, decided not to go ahead with the project.

In February 2004, Alcan completed its $4.8 billion acquisition of French aluminium group Pechiney. Pechiney had planned to take a 49% stake in the Coega project, with the Industrial Development Corporation and power utility Eskom each taking stakes of 12.5%.

Pechiney was the technology partner in Gencor's Hillside aluminium smelter at Richards Bay, which later became part of BHP Billiton.

The Coega smelter's environmental impact assessment study was completed in 2002, and Pechiney signed a long-term energy agreement with Eskom and a port usage and services agreement with SA's National Ports Authority.

Pechiney had previously expected the Coega smelter to come on stream with aluminium output during 2006. The load-shedding during January 2008 meant that most electricity-intensive projects were put on hold.

On January 9 2012 peak power demand of 30,282 Megawatts (MW) was met by available capacity of 30,742 MW or a margin of only 460 MW (less than one generating unit at a modern coal generating plant) or only 1.5%. The internationally accepted safe margin is 15%.

The reason for this low margin in SA is that Eskom carries out planned maintenance on its power stations during the seasonally low demand summer months, so that the power stations are ready to handle the peak winter demand months of June and July, when service delivery protests also peak.

This year and next Eskom does not have the spare capacity to be able to have a large generating unit fail, as the first unit of the new Medupi power station will only come on line in late 2013.

"We will probably have to use coal for the next base load power station after Kusile, as it would just take too long to build a nuclear power station, but I am firmly in favour of having nuclear as part of our energy mix. What we need is a public education strategy on nuclear power. I believe it was a big mistake to close down the Pebble Bed Modular Reactor (PBMR) project, as that provided SA with industrial capacity in the nuclear power industry," he concluded.

Last modified on Wednesday, 14 May 2014 17:15

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