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The Western Cape’s agricultural export basket is growing

Aerbotics’ Yield Estimation Package for citrus, which was launched in 2019, gives reports on fruit size and colour distribution ahead of the harvest season and projections on yield. (Credit: Aerobotics)

Of the 37 trade agreements facilitated in 2019/20 by Wesgro, the Western Cape’s tourism, trade and investment promotion agency, 25 were in agro-processing and agribusiness and a further three were in the fast-moving consumer goods (FMCG) sector. The total value of these agreements was R3.08-billion and 973 jobs were added to the Western Cape economy.

Examples included a deal in Germany for Cape Dried Fruit Packers (R350-million), in Ethiopia for Good Harvest Market (R700-million), in Ghana for M’hudi Wines (R4-million) and the R200-million contract that Southern Right Foods signed in Mozambique. The last-named company trades as Walker Bay Spice and also exports to Australia, Bahrain, Belgium, Botswana, Dubai, Ghana, Luxembourg, Malaysia, Namibia, the Netherlands, Qatar and the UK.

Total South African agricultural exports reached R175-billion in 2019 with about 40% going to other African countries and 25% to Europe. Fresh fruit accounted for about R50-billion.

Seven of the top 10 exports from the province are agricultural or agro-processed products. As Wesgro notes, the Western Cape is responsible for:

  • Almost half of South Africa’s agribusiness exports.
  • About 70% of South Africa’s beverages exports.
  • About 85% of South Africa’s fisheries exports.

Berries are a growing subsector and two-thirds of production occurs in the Western Cape. More than 70% of the crop is exported and the major production companies are Berryworld South Africa, United Exports and Haygrove SA, an affiliate of UK-based Haygro. Berries thrive between George and Swellendam and sales of chippers have grown because blueberries have to be vigorously pruned.

There is plenty of scope for exports to grow. Current annual exports are 13 500t compared to over 200 000t for table grapes and about 300 000t for apples (South African Berry Producers’ Association). Once producers pass muster with Chinese import authorities, volumes can be expected to grow.

Another subsector to experience rapid export growth is oranges. As a source of vitamin C, oranges grew in popularity as the Covid-19 pandemic spread. South Africa is the world’s second-largest citrus exporter, after Spain, and the number 11 in the world in terms of production. Citrus exports earned South Africa about R20-billion in 2019.

Assessed independently from the country, the Western Cape is the world’s fifth-largest exporter of citrus fruits as it is responsible for 62% of the nation’s volumes. Oranges are the province’s number one citrus export (54% in 2017) and soft citrus (19%) is growing steadily. Europe remains the most important market but Asia and Oceana markets grew from 34% in 2008 to 42% in 2017. The top five countries are the Netherlands, the UK, Russia, the UAE and China.

By contrast, flower growers were badly hit by the effects of the global shutdown. The Western Cape has a strong fynbos sector. Normally, Europe accounts for 80% of exports. National beef exports increased from 8 292 tons in 2001 to 31 888 tons in 2018 with the largest areas of growth in Muslim countries. The Western Cape contributes 15% of national beef output.

The Covid-19 lockdown had a big impact on wine exports and not only because a liquor-export ban was in place for five weeks. Logistics at the Port of Cape Town were reduced to a crawl and with fresh fruit and vital supplies taking priority, wine exporters were at the back of the queue.

Within South Africa, a sophisticated logistics chain can get fruit from harvest to consumer in 40 days (Freight, Logistics and Warehousing). A digital system is to be introduced by the Perishable Products Export Control Board (PPECB) which, along with e-certification launched by the Department of Agriculture, Land Reform and Rural Development, should enhance efficiencies. The Fresh Produce Exporters’ Forum (FPEF) and the Department of Science and Innovation are exploring improved packing and cold-storage methods.

South African winemakers are aiming for better quality instead of greater volumes. Which is not to say that volume is being ignored. Wine exports to Angola and China have doubled. In the four years to 2017, wine exports to China reached 18.2-million litres, an increase of 109%. Wesgro and WOSA (Wines of South Africa) are cooperating on the Chinese market.

A 2006 agreement, the SADC Economic Partnership Agreement, gives produce from the region full or partial exemption from duties on exports into the EU. The three biggest markets by value and volume are the UK, Germany and the Netherlands. The UK is likely to sign a similar agreement, post-Brexit.

South Africa produces about 4% of the world’s wine. The wine industry contributes R36-billion to the country’s gross domestic product (GDP) and employs nearly 290 000 people.

Vinpro is the wine industry organisation which represents 2 500 South African wine grape producers, wineries and wine-related businesses. There are over 3 500 wine producers in South Africa, with the large majority located in the Western Cape.

Agri-tech exports

The Western Cape is not just a leader in products that grow in the ground, but it is also a world leader in products that hover above the ground. Drone and data specialist Aerobotics has more than 900 clients in 18 countries who have signed up for orchard monitoring, yield and harvest projections and pest and disease management. The drones can also be deployed to pick out individual trees that are classified as “problem trees”.

Aerbotics’ Yield Estimation Package for citrus, which was launched in 2019, gives reports on fruit size and colour distribution ahead of the harvest season and projections on yield.

The Cape Town-based company, which featured in an article in the Arena Holdings publication Food Basket in 2020, was founded in 2004 as a drone manufacturer and evolved into a data provider.

Another digital innovation for exporters was launched in September 2020 in the form of the Cape Export Network. CEN, a joint initiative of the Western Cape Provincial Government, Wesgro and Wines of South Africa (WoSA), is a platform that connects wine producers, buyers and importers.

Wine industry relieved about latest regulations

The South African wine industry is relieved about the latest Covid-19 regulations, according to which wineries may continue to sell wine during licenced trading hours throughout the week.

“We are grateful for the unchanged trading hours for the sale of alcohol for on-consumption as well as the special mention of registered wineries and wine farms which may continue to offer tastings and wine sales to the public for off-site consumption over weekends,” Rico Basson, Vinpro MD says. “This at a time when the wine sector remains under severe financial pressure and is slowly recovering from the adverse effect of the ban on exports and restricted trade earlier this year.

“We believe that the implementation of a more focused approach and targeted interventions in certain hotspot areas will prove to be more effective in curbing the spread of Covid-19, while preserving livelihoods and keeping the economy going,” Basson says.

According to him, these outcomes are aligned with continuous consultation between Vinpro and the respective national government departments and the Western Cape government, as well as a proposal Vinpro made to the Minister of Health, Dr Zweli Mkhize, during a consultative session in George on 13 November, highlighting the industry’s vital economic contribution and the crucial role of wine tourism as part of the broader wine and agricultural sectors.

“We share the President’s concern about the new wave of infections, and pledge to do our part in fighting Covid-19,” Basson says. Vinpro made an urgent appeal to individuals and businesses in the sector to do their utmost to implement preventative measures.

“It is our responsibility to keep our people safe and healthy and to give momentum to the economy, while still strictly enforcing the existing safety protocols. Let’s promote safe and responsible production, trade, marketing and consumption together,” he says.

A regional overview of the Western Cape

Park Inn by Radisson Newlands is one of the group’s six hotels in Cape Town.

By John Young, Western Cape Business 2021 edition

Cape Town’s status as “Africa’s Tech Capital” gives the city-region the basis for leadership in a range of other sectors such as asset management, financial services, business process outsourcing and others.

Neighbouring Stellenbosch is advancing its reputation for technological innovation and the output of the region’s four universities and six TVET colleges ensures that the tech sector has the necessary human capital.

There are 22 active incubators and accelerators in the region which provide networking and marketing opportunities and links to funders and markets. The City of Cape Town has installed 848 km of fibre-optic cable and the sector supports more than 40 000 jobs with established brands such as Amazon and Panasonic coexisting with startups such as Luno, Yoco, Jumo and SweepSouth. Cape Town hosts more than half of all startups in South Africa.

The Western Cape is one of nine provinces of the Republic of South Africa. South African provinces do not have the kinds of powers enjoyed by states in federal entities such as the US or Nigeria. Health, education and traffic have traditionally been the biggest components of provincial authority. The priority list of the Western Cape Provincial Government, however, includes energy and transport.

The province and the City of Cape Town are lobbying national government for a greater role for municipalities in the generation and distribution of energy. The potential of renewable energy is being realised through the national independent power producer programme and there is a strong lobby to build a gas-to-energy plant in the province. The new Special Economic Zone for Green Technology in Atlantis is attracting investment in renewable technologies.

Siemens wind towers manufactured at the GRI factory in the Atlantis Greentech SEZ.

In 2018 the City of Cape Town launched a resilience assessment, the first step in a larger process. The Rockefeller Foundation chose the city as one of 100 around the world in which programmes would be tested to improve the ability of the city to withstand shocks such as severe droughts. The city wants to expand the lessons it learnt in the period of water shortage into other areas such as energy generation and energy efficiency.

The Western Cape Provincial Government is also investing in resilience. A market intelligence report covering energy, renewable energy, water and waste was created by Green Cape to map the assets and challenges in these areas.

In addition to trying to attract green investment into the province, the province is working for improved regulations related to small-scale embedded generation (SSEG). The City of Cape Town also wants to be able to rent out its infrastructure to a power producer who can supply a user via that infrastructure. This is known as “wheeling”. A start was made with the Darling wind farm, but more work needs to be done on the legislative framework.

Much of this work is done by a unit called the Sustainability Energy Markets within the Energy Directorate. Another area of focus for this group is to investigate energy use by low-income households.

The Western Cape is lobbying hard for Saldanha Bay to be a site for a gas-to-power plant. If a gas plant is built at Saldanha, then it could be a catalyst for the use of gas in many other sectors such as manufacturing and residential.

The Cape Peninsula University of Technology’s Energy Institute is a leader in research in the field of electricity. The South African Renewable Energy Technology Centre (SARETEC) on the Bellville campus of CPUT offers courses such as Wind Turbine Service Technician and Solar Photovoltaic Service Technician and various short courses such as Bolting Joint Technology.

The Centre for Renewable and Sustainable Energy Studies is at the University of Stellenbosch and the University of Cape Town has the Energy Research Centre. The University of the Western Cape is doing research on the possibilities of hydrogen as an energy source.

Ease of doing business

In similar vein to the argument for greater involvement in energy issues, Premier Alan Winde has argued that the control of the railways that serve greater Cape Town should be more localised. He cites a deal signed in the city of George between the national and provincial transport ministers to improve the system as an example of the kind of cooperation which is needed.

Energy and transport are keys to being able to do business, and that is the focus of another provincial initiative, the Red Tape Reduction Unit. Successful at a provincial level, the plan is to now set up similar units at municipal level.

Covid-19 created serious backlogs at the Port of Cape Town but the problems predated the health crisis. In December 2019, the Western Cape Department of Economic Development and Tourism (DEDAT) convened a meeting for every kind of port user, from exporters to logistics companies and for the various divisions of Transnet, the tax authority and the City of Cape Town.

The Port of Cape Town (Photo: Transnet National Ports Authority)

In 2019 the Port of Cape Town received 510 ships at the Container Terminal but it could have had many more if turnaround times were better. All parties are working together to find a solution, which will include better coordination of delivery schedules and more cranes. Cranes able to work in high winds are being tested.

Tourism challenges

The hospitality sector suffered a huge blow from the effects of the Covid-19 global lockdown.

As travel slowly picks up, hotel groups, lodges and bed-and-breakfasts are starting to attract inter-provincial travellers. In time, international travel will follow but what of the meetings, incentives, conferences and exhibitions (MICE) sector?

The economic impact on gross geographic product of the Cape Town International Convention Centre alone in 2018/19 was R4.5-billion (Cape Town Central City Improvement District). Wesgro’s Convention Bureau signed 52 events or conferences in the course of 2019/20 but of course most, if not all, of these events will not take place.

The Radisson Hotel Group has come up with “Hybrid Solutions” as a response to the “new normal”. Incorporating Hybrid Rooms and Hybrid Meetings, the idea is to offer virtual participation options and hybrid formats for small local gatherings, while also broadcasting to remote attendees and satellite locations. Hotels will offer teams to set up the equipment. Park Inn by Radisson Newlands (pictured above) is one of the group’s six hotels in Cape Town.

Investment

The province has a dedicated investment agency, Wesgro. The Investment Promotion Unit of Wesgro has been working with various regions within the Western Cape to attract investment and accelerate exports. Seminars have been held in the Cape Winelands, the West Coast and the Garden Route.

In 2019/20, the biggest investments were in renewable energy and manufacturing. Other important sectors are: Agro-processing, aviation, business services, education and training, financial services, real estate, ICT, light manufacturing, oil and gas, timber, tourism, waste beneficiation and clean energy.

Encouraging investment in Cape Town has been recognised as something that needs a full-time office and a strategy. Invest Cape Town is an agency of the city that works to create the best possible conditions to attract investors. Areas of focus include broadband access, energy security, the reduction of red tape and improving air access to the city.

Economy

Finance, business services and real estate combined contribute 28% to the gross domestic product (GDP) of the Western Cape. The financial services and insurance sector are key components of the economy. Many of South Africa’s biggest companies have their headquarters in Cape Town. Asset management and venture capital companies have been growing steadily.

Although agriculture only accounts for 4.3% of GDP on its own, the sector is responsible for the fruit and vegetables that contribute to agro-processing which accounts for nearly 40% of the province’s export basket. (Agro-processing accounts for 8.1% of GDP.) Citrus, wine, apples and pears, grapes, fruit juice, fruit and nuts and tobacco all appear in the top 10 of the province’s exports.

Seventy percent of South Africa’s beverage exports come from the Western Cape. Grapes and wine sales to Europe remain strong, but the Chinese market is becoming increasingly important.

The province has a diverse manufacturing sector ranging from textiles, clothing, footwear and furniture to coke and refined petroleum products. Excluding agro-processing, other manufacturing makes up 6.9% of GDP.

Simera Sense expands into Europe

Cape Town (South Africa), Leuven (Belgium), 8 December 2020 – Today, Simera Sense, a leading supplier of optical payloads for smaller satellites, announced that it is opening an office in Leuven, Belgium.

Over the last two years, Simera Sense experienced exponential growth in the demand for its optical payloads, globally. The expansion into Europe is assisting this growth and allow Simera Sense to support its international customers better and to be closer to its key suppliers. Furthermore, the Flanders Investment and Trade Agency was instrumental in assisting Simera Sense expanding into Europe.

Simera Sense is a business unit within the Simera Group, specifically created to commercialize the optical payload know-how and IP created within the company over the last 10 years. To date, the Simera team designed and produced multiple optical payloads for space missions.

Since the start of 2018, Simera Sense has a specific focus on the new space industry with the development of their xScape100 and xScape200 products for nanosatellites. The market received these products very well with several already delivered to customers.

Simera Sense selected Belgium not only for its central location within Europe but also to tap into the local industry. Not only is Simera Sense procuring its high-performance sensors from within Flanders, but already has established clients in Belgium.

Earlier this year Simera Sense delivered a space-qualified xScape100 telescope to Aerospacelab, a new space company headquarters in Mont-Saint-Guilbert, Belgium. In partnership with Open Cosmos, Simera Sense was selected to be part of the Phi-Sat-2 mission, an artificially intelligent enabled Earth Observation Cubesat supported by the European Space Agency.

With this move, Simera Sense is positioning itself to tap into the global Earth Observation data and service market, with expected growth to $8-billion by 2029.

According to Euroconsalt, more than 50 new space companies have announced that they want to launch Earth observation satellites over the next decade. This represents about 1,800 small satellites with the majority under 50 kg. According to Johann du Toit, the CEO of Simera Sense, it is this market Simera Sense wants to target through their Belgium office.

More importantly, this expansion allows Simera Sense to plough back into the local South African economy. The company will continue to research and manufacture optical payloads at its headquarters in Somerset West. Initially, the Belgium office will serve as a marketing and sales hub, but it will also support clients with the assembly, integration and testing of its payloads.

“At Simera Sense we are excited about the next phase of the company,” says Johann du Toit, CEO of Simera Sense. “For us, Flanders was a logical choice as an entry point into the European market, not only for its location, technology and economic advantages, but also the historical relationships. During the mid-2000s, a core part of the Simera team (then as part of Sunspace) collaborated on the multi-sensor micro-satellite imager (MSMI) as part of a consortium of universities, private companies and research councils in both South Africa and Flanders, Belgium.”

Mrs. Claire Tillekaerts, CEO of trade and investment promotion agency Flanders Investment & Trade (FIT), welcomes the new high tech investment from South Africa in the Flanders region: “Simera Sense investment fits perfectly in the tech strategy of (Flanders) FIT to attract foreign tech-driven players to Flanders and to become one of the top of innovative regions of Europe in the next 5 years.

“Simera Sense will be a valued partner of Flanders’ aerospace and space ecosystem, which already includes more than 150 companies in Flanders. Using Flanders’ Agency for Innovation and Entrepreneurship (VLAIO), the company will enjoy the same support in R&D projects and can, thanks to its local presence, become a lead partner in new EU (e.g. Horizon) or ESA projects. ”

About Simera Sense

Simera Sense is a world leader in the development of optical payloads for nano-, micro-, and small satellites. As part of the Simera Group, Simera Sense does have a shared history with South Africa’s small satellite industry and access to centuries of collective experience in the space industry. The company’s in-house resources and infrastructure allows them to design, build, verify and calibrate world-class optical payloads. Simera Sense is situated in Somerset West, South Africa.

Read more about at www.simera-sense.com

 

Mining exploration, the next frontier

Image: Anglo American Plc

South Africa is currently attracting just 1% of global spending on mining exploration, a figure that normally reaches R160-billion annually.

Several industry leaders have expressed concern about the low level of exploration activity, but in 2020 they were joined by the Economic Transformation Committee (ETC) of the African National Congress (ANC), the country’s majority political party. The ETC sees exploration as a way of broadening the scope of ownership within the mining industry.

Gwede Mantashe, South Africa’s Minister of Mineral Resources and Energy, wants to see South Africa attracting at least 5% of global exploration. For exploration to expand a reliable cadastre is required. A cadastre is a record of property boundaries and ownership. The Council for Geoscience is working on this. Drone technology could take the mapping process forward, allowing for more exploration at a lower cost.

In his 2019/20 budget vote, Mantashe noted that about 4 000 permanent jobs would be created by the recent investment of about R45-billion through projects such as Exxaro’s Belfast expansion (coal), Sasol’s coal mine replacement programme and Vedanta Resources’ huge zinc mine in the Northern Cape.

An overview of the mining sector in South Africa

Many mining companies want to start generating their own power, particularly in the light of unreliable supply from the national utility, Eskom.

African Rainbow Minerals is currently operating just three of its 10 plants in the ferroalloy sector, with the cost of electricity the main reason for reduced activity. ARM is constructing a demonstration ferromanganese plant to test alternative energy systems with the hope that costs can be significantly reduced.

The CEO of Minerals Council SA, Roger Baxter, calls the hurdles faced by mining companies trying to put alternative power projects in place, a “serious challenge”. In 2019 Minister Mantashe wrote to the National Energy Regulator of South Africa (NERSA) granting a deviation from the existing Integrated Resources Plan (IRP) to allow for the quick licensing of generation facilities up to 10 MW.

Coal giant Exxaro has disposed of its stake in Tronox Holdings (mining and processing of titanium ore, zircon and other minerals) but in 2019 took full ownership of renewable energy company Cennergi, which owns two wind farms in the Eastern Cape. Indian company Tata Power held 50% of the company through a wholly-owned subsidiary before the sale.

Despite the global lockdown, Exxaro expected earnings for the first six months of 2020 to be higher than the R3.2-billion earned in 2019. The weaker rand and record coal exports helped to balance lower dollar prices achieved.

Coal continues to be an important part of the South African mining landscape, despite pressure to move to renewable resources. As Baxter points out, “In 2018 the sector employed almost 90 000 people (representing about 19% of total employment in the mining sector), with an estimated 180 000 further people employed as a result of coal mining activities.”

Gold Fields’ earnings for the half-year to June 2020 increased four-fold because of a buoyant gold price. The August 2020 price for gold reached nearly $2 000. Analysts warned against reading too much into some of the more extreme rises in the value of gold mining stocks (DRD Gold went up some 240% between January and July) because the underlying conditions for gold mining in South Africa are tough.

Implats (Impala Platinum) was expecting to report annual headline earnings five times better as a result of improved commodity prices.

Good mineral prices kept mining shares buoyant during the lockdown.

Another company to report improved half-year results was Sibanye-Stillwater which increased volumes at its platinum group metals (PGM) operations and its gold mines in the first half of 2020. Some production was lost due to the steps taken to deal with Covid-19 but, because of the inclusion of the Marikana operations (bought from Lonmin), South African PGM production actually increased by 5% year-on-year to 657 828 ounces.

Gold production within the group was also up after strikes affected volumes in 2019. Production of 403 621 ounces was 17% higher than the previous year’s figure. The group expects all of its South African operations to be running at optimal production levels by the end of 2020.

The sale in 2020 by AngloGold Ashanti of its Mponeng mine and Mine Waste Solutions to Harmony Gold for $300-million (about R4.4-billion) marks the end of an era. Although the company’s headquarters will continue to be in Johannesburg and it will be listed on the JSE, its mines are in Ghana, the Americas and Australia. AngloGold Ashanti was the successor to the mining company formed by Ernest Oppenheimer in 1917.

Harmony Gold’s acquisition strategy, including the purchase from AngloGold of Moab Khotsong mine in 2017, will result in it being the country’s biggest gold producer. With 350 000 new ounces coming from Mponeng, it could produce an annual total of 1.7-million ounces.

Afrimat continued to expand its commodities portfolio in 2020. Previously focussed on construction materials, Afrimat bought a 27.27% stake in a high-grade anthracite mine in Mpumalanga, Nkomati, and followed this with the purchase of Coza Mining, an iron ore and manganese company in the Northern Cape. Afrimat’s first foray into commodities was also in that province, the R322-million acquisition of the Diro mine. In October 2020 Afrimat applied for Nkomati to be placed under business rescue because of the Covid-19 lockdown but stated that it believed the business could indeed be resuscitated.

Diamonds

An ongoing project by De Beers to convert its Musina mine from an open-pit mine to a vertical-shaft mine will extend the life of mine of this northern Limpopo project to 2045. Venetia Mine is by far the most important part of De Beers’ South African operation, accounting for 3.1-million of the 5.4-million carats recovered by the company from its six operations.

Petra Diamonds has made it known that it will consider offers for parts of its business or all of its operations. This follows a strategic review where the issue of a R11.25-billion debt repayable in 2022 loomed large. The review began when the South African Covid-19 lockdown began. Most of the company’s major expenditure on expansion projects is behind it but reduced demand, even before the lockdown, has affected earnings. Revenue for the six months to December 2019 was down by 6%. Of the company’s three South African mines, Finsch (Northern Cape) and Cullinan (Gauteng) generate 90% of output and 75% of revenue.

In the Northern Cape, Ekapa Mining paid R300-million to buy out Petra Diamonds from a JV.

Zinc

When phase three is reached, the biggest new mining project in South Africa will deliver 600 000 tons of zinc for Vedanta Zinc International. Located at Aggeneys in the Northern Cape near the border with Namibia, the Gamsberg zinc project has so far attracted $400-million in investment from the company and has started trucking product to the Port of Saldanha. Phase one of the open-pit operation will deliver an annual load of 250 000 tons of zinc. If it proceeds to phase three, it will likely go underground.

The Northern Cape Province is planning for a deep water port development at Boegoebaai. Part of the strategy involves the creation of a commodities corridor linking the Upington Industrial Park with the port.

In August 2020 Australian miner Orion announced it had raised $6.2-million in share capital towards its Prieska Zinc-Copper Project.

Iron ore and manganese

In 2019, Sitatunga Resources purchased the East Manganese project on the Hotazel-Kalahari ore belt from Southern Ambition. Menar Holdings, which controls a majority share in Sitatunga, is mostly invested in coal.

The overwhelming majority of the world’s manganese comes from the Postmasburg and Kalahari regions of the Northern Cape. Assmang has two manganese mines in the province: Nchwaning and Gloria.

The Northern Cape produces more than 84% of South Africa’s iron ore. The province has two major iron belts, from Postmasburg to Hotazel, and running through Sishen and Kathu. Sishen is the most important iron-ore mine in South Africa, where operations include extraction and four beneficiation plants.

Kumba Iron Ore has the huge Sishen facility at Kathu and Kolomela. Assmang, a joint venture comprising African Rainbow Minerals and Assore, mines at Khumani. The company will spend R2.7-billion on upgrading its Gloria mine.

South32 is active in the Northern Cape: Hotazel Manganese Mines is made up of two mines, Wessels (underground) and Mamatwan (open cut), and the Metalloys manganese smelter.

Online resources

 

The 2021 guide to business and investment in the Free State

The 2021 edition of Free State Business is the 11th issue of this successful publication that, since its launch, has established itself as the premier business and investment guide for the Free State.

The Free State has varied investment and business opportunities and the Free State Development Corporation describes some of these in detail in these pages.

Drilling for natural gas is a new phenomenon which may spark activity in other sectors and this journal notes significant new investments and projects in the chemicals and mining sectors.

The official launch of the Maluti-A-Phofung Special Economic Zone (MAP SEZ) was a significant event for the economy of South Africa’s most centrally located province. Located on the strategically significant N3 highway that links the economic heartland of South Africa to the coast, the MAP SEZ has the potential to attract new investors and spark a revival in the manufacturing sector.

In addition, overviews on each of the key economic sectors provide up-to-date information on trends in the mining and tourism sectors, for example. Regular information about the size and nature of each sector is also included.

Read the publication in e-book format here 

For a hard copy or more information, please contact the publishers

Pilanesberg Platinum Mines, creating lasting legacies

PPM will continuously strive to improve the lives of our people, our immediate communities; and protect the environment, as we contribute to the growth and transformation of this sector.

By Casper Badenhorst, Chief Operations Officer, Pilanesberg Platinum Mines

Despite facing a tough economic period, the mining sector continues to play an important role in our economy and still has the potential to make a significant impact in the socio-economic development of our country.

We trust the upswing experienced in 2019 will spill over into 2020 and reclaim profitability in the industry. Pilanesberg Platinum Mines is cautiously optimistic; a productive 2020 will support the continuation of our plans to expand mining operations thus increasing our staff component and benefitting the communities in which we operate.

Casper Badenhorst, COO, Pilanesberg Platinum Mines

As a growing mine, we are proud that we sustained production in a constrained environment, ensuring continued contribution towards the social and economic development of our wider community. As we enter a new decade, I reminisce on our achievements. In 2019, we purposefully held ourselves accountable to our core values of zero harm, upliftment and innovation.

Our specific focus on zero harm resulted in no fatalities. In fact, because of our commitment to the safety of our people, we wrapped up this past decade with over 5 million fatality-free shifts.

In addition, our efforts in uplifting our female employees, has gained some traction. Tebogo Metsileng was nominated in the mining category for the Women’s Lifestyle Award. Tebogo, a Lab Technician, has been recognised for her community service as a PPM Wellness Team Member and for her contribution as a Lab Technician.

She has also been recognised for her motivation of the youth in her community, making her a worthy recipient of the 2019 Women Lifestyle Award. This recognition will pave the way for many women in this industry.

Furthermore, our commitment to reduce our impact on the environment remains a core focus. We have taken innovative steps towards decreasing our negative impact on the environment, including the termination of polystyrene packaging in our canteens.

We will continuously strive to improve the lives of our people, our immediate communities; and protect the environment, as we contribute to the growth and transformation of this sector. Over and above our operational accomplishments, I am proud of what we have achieved in our respective communities. Our top three achievements include:

Supporting small businesses

In creating a meaningful impact in our communities, we realised that supporting small businesses is critical. The ‘Community Crusher’ which started as a non-profit project is now proving its potential to be a fully-fledged business, rendering a service to most of our building projects.

Most importantly, 14 community members are employed in this project, of which 64% are women – securing future female community leaders!

Furthermore, the ongoing support of the relocated farmers is anchored in our mission to train, develop skills and build capacity of the small-scale subsistence livestock keeper; and grow them to become sustainable and independent commercial farmers.

To this end, a professional Extension Officer has been allocated to service and capacitate them and all the basic farming support infrastructure has been set up.

Educating the youth

Education is important for our youth, who are the real bastions of tomorrow. Maths and Science are key tools to understand, analyse and impact local communities. We assisted over 200 students with their studies through a Saturday school programme.

As a result, the 2019 academic results have improved significantly from a pass rate of 40% to 80% providing more opportunities to these learners.

Enabling economic development in communities

As part of our contribution to socio-economic development in the Moses Kotane Local Municipality and the Bakgatla Ba Kgafela, our conviction is that infrastructure interventions can play a major role in enabling and catalysing economic development.

Consequently, we have concluded construction of Legkraal-Bofule paving and phase one of the Motlhabe-Ngweding roads. This will enable village to village connectivity and access, with subsequent boosting of the economies of the affected areas.

To secure a sustainable and productive mine is not only about our employees’ jobs, but it is also about the impact that these jobs and our operations have on our people.

As a mine, we are constantly reminded that the future is a legacy in the making and the best tomorrow for all, relies on the crucial decisions we make today.

Logistics property is strongly placed for growth

Credit: Equites

The trend which saw logistics property growing as a sector because of the Amazons of the world needing more space to store their products will speed up in the post-Covid world as more people work and order from home.

The Economist focused in its 30 May 2020 issue on Prologis, Amazon’s biggest landlord. The American company has assets of $125-billion and 90 km² of floor space, and spent $25-billion in 2019 in America and Europe. E-commerce now accounts for about 40% of its construction activity, whereas it was a fifth before the pandemic.

A similar trend playing out in South Africa was noted by Nick Wilson in the Business Times (Sunday Times, 5 July 2020). The logistics property sector had “boomed in recent years due to the growth of e-commerce” but was likely to do even better because of Covid-19. About a third of Fortress’s R30-billion portfolio is in the logistics sector and it signed contracts in 2020 with Takealot and a Netflix production company.

The clients of Equites, a company which focusses on logistics property, include Amazon, Super Group, HDL and DSV, a Danish transport and logistics company. Equites is the only specialist logistics property company listed on the JSE. In six years, its portfolio has grown from R1-billion to R15-billion. There are more than 30 real estate investment trusts (REITs) on the JSE and they generally deliver good value.

FNB, which publishes a regular property barometer, has done an in-depth analysis of previous crises to help understand what may occur in the post-Covid property market. According to John Loos, a property strategist at FNB Commercial Property Finance, the most vulnerable sector is likely to be Retail Property. Smaller neighbourhood centres, with more essential items and greater convenience, will be less vulnerable.

This is borne out by the results announced by Resilient in 2020. Of the company’s 28 retail centres across South Africa, the ones that did best were the smaller, rural malls.

Credit: Fortress Reit Ltd

The South African Council of Shopping Centres calculates that the country has the sixth-highest number of shopping malls in the world. R2-billion was recently spent on Menlyn Park in Pretoria to expand it to 177 000 m² of gross lettable space while the Gateway Theatre of Shopping in Durban, South Africa’s second-biggest mall, recently spent R750-million.

The lockdown accelerated the trend for people to work from home, and so the Office Property sector will come under pressure. Many companies will be reducing office space but, as Loos writes, “Improved technology has gradually been driving a greater remote working trend for some years. Covid-19 has merely sped this trend up.”

Industrial Property will take a hit but is expected to recover strongly while Residential Property is expected to be the least at risk. Prices will likely go down, but people need a place to live and the work-from-home trend will increase the importance of residential property.

The lockdown accelerated the trend for people to work from home, and so the Office Property sector will come under pressure.

Loos concludes that, “In a few decades time, the composition of the property stock may look noticeably different to what it is today, the key features being a smaller portion of the total being retail and office property, and an even larger portion of the stock being residential property than is currently the case.”

Statistics SA has found that the percentage of South Africans living in flats has risen markedly. Whereas 26 out of 100 approved plans in 2013 were for flats, this figure reached 59 in 2016. Although the total number of people living in flats is still relatively small (5.4%), this figure will rise as urbanisation increases.

Construction rebuilding

Job losses and business rescues have been recurring themes in the South African construction sector for some time. The fact that some kind of recovery must happen after the lockdown will give hope to all construction and construction material companies, and they will hope that increased order books will allow them to restart some of their facilities.

Corobrick is a manufacturer of masonry, pavers and concrete earth retaining systems. The company, which has its headquarters in Durban and employs 1 400 people, announced in 2020 that four of its 13 factories would be closing.

PPC Cement suffered losses for the year ending 30 March 2020 with cement demand significantly down from the previous year. The Covid-19 lockdown will have made the situation worse and a rights issue is likely to follow.

Cement and brick manufacturers are hoping for a quick recovery.

Road-building, renewable energy and affordable housing have proved good sectors for Raubex, which returned good results in 2020, despite the lockdown occasioned by Covid-19. The company’s Earthworks and Materials division delivers two-thirds of its operating profit but it is upbeat about its Roads division winning contracts in South Africa in the short term. Tenders were entered for R22-billion worth of road construction in the six months to March 2020.

The Inner City Local Area Plan (LAP) for Durban has been developed for the Strategic Planning unit of the eThekwini Municipality by a Joint Venture called IPPU. A major milestone was reached in 2019 when the beachfront promenade extension reached the harbour. The project began in early 2018 and cost R400-million.

According to the organisers of the 2019 KZN Construction Expo, infrastructure will attract more than R200-billion in investment over seven years and R35-billion will be spent over 15 years at the Point Waterfront development.

Online sources: 

Coega is fast-tracking infrastructure projects

Cecilia Makiwane Hospital is a large, provincial, government-funded hospital situated in the Mdantsane township of East London, Eastern Cape.

The Coega Development Corporation (CDC), developer and operator of the number-one Special Economic Zone (SEZ) on the African continent, namely the Coega SEZ, provides expertise in the fast and efficient delivery of minor and mega complex infrastructure development projects in South Africa and the rest of the African continent.

The CDC has a 20-year proven record in infrastructure development and facilities maintenance.

“We can assist all government departments to fast-track the implementation of their infrastructure projects, amid the coronavirus pandemic challenges, to stimulate the local economy, lift local SMMEs, and create job opportunities.

“We are the infrastructure implementing agency of choice in the country because of our cutting edge customised solutions, international best practices and methodology. Coega has ISO-certified systems and processes that guarantee the effective delivery of the projects within scope, time and budget. We can even save our clients money through our project accounting solutions. Our record of unqualified audit opinion by the Auditor General of South Africa on our projects speak for itself,” said Dr Ayanda Vilakazi, CDC’s Head of Marketing, Brand and Communications.

The CDC’s Infrastructure Project Management Services include:
  • Project methodology and system.
  • Development of reporting and monitoring services.
  • Stakeholder analysis and engagement programmes.
  • Integrated planning and budgeting.
  • Development of business plans.
  • Procurement of service providers and required equipment.
  • On-the-job training and contractor development.
  • Human capital solutions.
  • Post-implementation monitoring and facilities maintenance.
La Mercy Maths, Science and Technology (MST) Academy in KwaZulu-Natal. Coega is an Infrastructure Implementing Agency.

The CDC’s infrastructure project expertise and strategic solutions are utilised by various government departments and the private sector, locally and in the rest of the African continent.

Our clients include, among others, the Eastern Cape and KwaZulu-Natal Departments of Basic Education, Eastern Cape and National Departments of Public Works and Infrastructure, and National and Eastern Cape Departments of Health.

Furthermore, the CDC has worked with other clients outside of these departments to fast-track the implementation of their projects. These include, among others, the Mpumalanga Economic Growth Agency (MEGA), Northern Cape Development Agency (NCEDA) and Richards Bay SEZ.

Kingsburgh Primary School, Lovu Town, KwaZulu-Natal.

On the African continent, the CDC is taking full advantage of inter-Africa trade, which has been made possible by the signing of the African Continental Free Trade Area (AfCFTA) agreement by African countries to promote greater economic integration across the continent.

To this end, the CDC’s International Business under Coega Africa Programme is managing the implementation of infrastructure projects in Zimbabwe, Central African Republic and Cameroon, among other countries.

For more information on the CDC’s Project Management Services, please contact our expert in Infrastructure Project Management:
Mr Chuma Mbande: 
Email: chuma.mbande@coega.co.za
Tel: +27 43 711 1600
Pretoria Office: 
Tel: +27 12 451 8300

Oceana Group, integrally invested in the Oceans Economy

The Ocean, or Oceans Economy, is positioned within the South African Government’s National Development Plan (NDP) as a key driver of economic activity and growth which will help eliminate widespread poverty and inequality by 2030.

As Africa’s largest fishing company, and home to the South Africa’s iconic brand, Lucky Star, Oceana is focused on protecting the integrity of the country’s marine ecosystems, promoting sustainable employment opportunities, and contributing to the country’s food security.

Oceana believes that South Africa’s more than 3,000 km of coastline along a major international strategic shipping route presents the perfect platform for sustainable and long-term usage of our oceans and coastline for responsible growth and development and shared prosperity.

A sustainable oceans economy incorporating both the traditional and newer industries such as fishing and maritime transport, allied to newer sectors such as marine tourism, renewable energy, aquaculture and marine biotechnology, have the potential to meet the needs of all peoples, particularly those who make up rural coastal communities who have borne the brunt of poverty.

From humble beginnings in the tiny West Coast fishing village of Lamberts Bay when the Lamberts Bay Canning Company Ltd was established in 1918, Oceana has over the course of the last century grown to be a leading global fish protein company and Africa’s largest fishing company. Oceana is ranked among the top 5 most empowered companies on the Johannesburg Stock Exchange and listed on the Namibian Stock Exchange as well.

The Group operates in South Africa, Namibia and the USA and markets fish-based products in 46 countries across the world.

The fishing industry estimates that it accounts for 20,000 direct jobs and a further 60,000 indirect jobs across the economy in South Africa, where the Group continues to drive economic empowerment, real transformation and environmental stewardship for current as well as future generations.

Government launched Operation Phakisa (“hurry up” in Sesotho) in mid-2014 to spur sustainable economic growth across key areas in a bid to address poverty, inequality and unemployment. The Oceans Economy was one of seven targeted sectors, and listed six priority areas including offshore Oil & Gas, Aquaculture, the further development of Small Harbours, Coastal and Marine Tourism, Marine Transport and Manufacturing & Marine Protection Services and Ocean Governance.

The fishing sector was not included as one of the key priority areas under the Oceans Economy despite its significant socio-economic contribution which is estimated at over R14-billion a year.

The fishing sector is far more established than some of the newer maritime industries punted under Operation Phakisa but this does not mean that fishing is not a key contributor and enabler to national imperatives of economic growth, job retention and creation, and sustainable economic development, particularly in coastal areas and communities where unemployment and underdevelopment are chronic issues.

The commercial fishing sector, of which Oceana is an important stakeholder, makes a socio-economic contribution of R14.3-billion per annum, employing in excess of 20,000 people directly and a further 60,000 indirectly, and has an annual spend of over R1-billion in developing and supporting around 2,000 SMMEs all across South Africa.

The sector is also noted for its capital intensive nature and, as such, lists fleet and processing facilities valued at over R13,5-billion, with further capital investments of R7,5-billion over the last 15 years.

The sector furthermore can speak to demonstrable transformation, having moved from one of the most untransformed sectors into one of the most transformed. Under Apartheid only 1% of commercial fishing rights were held by black South Africans, but black ownership has grown and has continued to rise, from 35% in 2004 to over 75% currently.

Oceana operates 11 factories across the world and also manages a fleet of 54 vessels and eight cold storage facilities.

The Oceana Group works hard to empower communities and contribute to environmental sustainability throughout all the communities in which the company operates. Oceana is also committed to job security, investing in skills development, and bringing new technologies to bear to support and uplift coastal communities.

Oceana holds the popular pilchards brand Lucky Star, which enjoys 80% of market share in South Africa.

The Group is working hard to drive positive transformation in fishing to ensure that the small-scale fishing sector participates in and contributes towards the broader economic development of South Africa by creating better job opportunities, shared prosperity, and enabling sustainable development in coastal communities.

While the commercial fishing industry is well transformed in terms of broad ownership, here is still a need for greater transformation at participation levels. Continuity through certainty and long-term stability provides the platform for significant further growth and economic development and it is imperative that all stakeholders work together with a unified sense of purpose.

A fully transformed commercial fishing industry is key to unlocking economic development in South Africa because the fishing value chain offers enormous opportunities for inclusive growth and employment and enterprise development in coastal communities.

At Oceana, we believe that any company that is afforded the right to fish must prove their tangible commitment to converting these rights into broad-based social and economic benefits.

This should at all times be done in a sustainable and inclusive manner. As such, the company launched the Oceana Empowerment Trust (OET) in 2006 to unlock and convert the value of harvesting fishing rights into shared, broad-based value for eligible black South African employees.

The OET has a 10% shareholding in Oceana with a market value of almost R1-billion, making the Trust the largest 100% black-owned fishing entity in South Africa in terms of ownership value. As of September 2019, 2,447 beneficiaries had received over R400-million through the Trust, allowing them to become financially empowered and active participants in South Africa’s formal economy.

The Oceana Group will also continue to play its part in skills development as it is vital for South Africa and the greater continent’s growth. Oceana’s interventions are premised on the fact that holistic skills development is central to enabling young people and women in particular to be active economic participants and not mere bystanders.

Oceana recognises that the development of the small-scale fishing sector and the enhancing of skills in this area is paramount to longer term success, to empower individuals and communities to participate to a greater degree in the formal economy, but crucially, also creating the opportunities and platforms to support and meet these ambitions.

Communities need to move beyond just survival mode to a state where they are empowered enough to become agents of economic change, where dignity is restored and long-held dreams fulfilled.

Imraan Soomra – CEO, Oceana Group

I am confident that we have a sustainability strategy that enables us to convert fishing rights into shared value and continue to deliver social and environmental dividends to society.

Areas of potential growth include marine science, engineering, vessel crewing, supply chain, artisans, food safety and supply of vessels and related equipment.

Oceana invested R28.3-million in skills development in South Africa and Namibia in 2019 and offered leamerships, internships and graduate programmes to empower the youth.

A key part of the Oceana Group’s strategy in terms of empowerment and greater participation in the Oceans Economy is the Oceana Maritime Academy which will be launched and fully operational in the first quarter of 2021.

Oceana has launched this exciting initiative with an initial R40-million capital investment and will spend R35-million a year on fishing sector skills and training with a particular focus on small-scale fishers.

The state-of-the-art facility in the Hout Bay harbour precinct is an investment in the future of the South African and international fishing industry, being the only academy in South Africa that focuses exclusively on the needs of the fishing industry, both small-scale and commercial.

Seeking to address the scarce and critical skills shortage in the industry, the Oceana Maritime Academy will offer world-class, accredited and industry relevant maritime skills and training that will provide the industry with new talent while enabling small-scale fishers to fish more productively, profitably and sustainably.

The Academy will draw attendees from the local Hout Bay community, the small-scale fishing sector from all over South Africa, Oceana Group employees, as well as anyone interested in a career in the fishing industry, and offer training in a broad range of skills.

This shared value initiative will not only strengthen the Oceana business and the talent pipeline pool for the entire industry, but will help build a stronger, more prosperous and equitable country.

While Oceana’s strength lies in fishing, with its core business being the catching, procuring, processing, marketing and distribution of canned fish, fishmeal, fish oil, horse mackerel, hake, lobster and squid, the Group has a diversified portfolio of operations which extend to the provision of refrigerated warehouse facilities and logistical support.

Oceana markets and sells close to 300,000 tons of fish and fish products in 46 countries in Africa, North America, Asia, Europe and Australia and as part of further diversification in the Blue Economy, is seeking to move into longer term sustainable fish supply in aquaculture.

Oceana views the Oceans Economy as a key driver of sustainable economic growth, job creation and food security, yet the Group remains fully committed to protecting the integrity of the country’s marine ecosystems.

Yet fishing is but one way in which the Oceana Group is seeking to empower the communities in which it operates.

Through the Group’s flagship brand Lucky Star, the company has partnered with the West Coast Business Development Centre (WCBDC) to assist aspirant and existing business owners in the small West Coast towns of Laingville, Steenberg’s Cove, Stompneusbaai, Velddrif and Lamberts Bay.

Lucky Star provided the WCBDC with the building to be able to provide its services to the St Helena Bay community, resulting in the WCBDC in 2019 assisting almost 200 entrepreneurs with a variety of services.

Oceana recognises that the Small and Medium-sized Enterprise (SME) sector will be one of the key drivers of economic growth and development and employment in years to come and therefore is an active enabler and supporter through initiatives such as interest-free loans, training and infrastructure support, which seek to unlock the inherent potential in this sector, particularly for rural coastal communities.

At Oceana, we believe that by working together, the glaring inequalities which so blight South Africa’s beautiful landscape, can be overcome and we can create a country where opportunity, inclusivity and prosperity for all can find a home.

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