COEGA Development Corporation: briefing

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Trade and Industry

31 October 2000
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TRADE AND INDUSTRY PORTFOLIO COMMITTEE
1 November 2000
COEGA DEVELOPMENT CORPORATION: BRIEFING

Relevant document:
Slide Presentation on Coega - text outline only (see Appendix 1)

SUMMARY
The COEGA Development Corporation gave a presentation on the proposed Ngqurha port in the Eastern Cape, explaining the project and addressing concerns such as the impact of the port on the environment, the need for local residents to re-locate, skills development of the local population and job creation possibilities.

MINUTES
Mr Pepi Silinga and Mr Raymond Hartle of COEGA gave a presentation on the proposed Ngqurha port in the Eastern Cape, explaining the project and addressing concerns such as the impact of the port on the environment, the need for local residents to re-locate, skills development of the local population and job creation possibilities.

Mr Hartle gave a slide presentation to explain and illustrate what is happening and what is planned at the Ngqurha project (see attached presentation). He spoke of the development framework plan for the project, calling it a “long term” project, and not one that will happen overnight. He said part of the project will involve identifying the local skill levels. He said these are low due to chronic unemployment.

Following the presentation, Mr Silinga and Mr Hartle responded to questions.

Discussion
(Q) ANC Member: Will Ngqurha be interacting with universities and businesses to promote the development of skills?

(Q) Chairperson Davies (ANC): The port at Ngqurha will deal largely in exports. What impact will this have on existing ports? How many jobs will be created? What addition to the GDP will this project make? What will be its environmental impact?

(A) We think Ngqurha can be more than a container terminal. At this point, we think it will create 4 000 jobs, but all of these will not be sustainable. We want to introduce “life skills” to the local community whose usefulness will extend beyond the existing project. As far as the environmental impact is concerned, the project has no critical flaws. This is fundamental. At the same time, we must accept that any industrial development will have an impact on the environment, but this impact can be mitigated. We feel that some of the concerns about the impact of the project on the environment are facetious in that they go to concerns other than the environment. We intend to use “world’s best practices”. In addition, we have an environmental management plan.

(Q) Mr Frolick (UDM): What about highly specialised skills? Who will be brought in to supplement the shortage of highly-skilled locals?

(A) We are looking into this skills shortage. We want local people to be able to take advantage of the opportunities this project presents. We want programs to be instituted locally, including at the tertiary level, that will help people acquire skills.

(Q) Ms September (ANC): The Eastern Cape is a very economically depressed area but with lots of development potential. Will the jobs created be new jobs or merely the absorption of the already unemployed? What investors do you have? Are they still on board?

(A) There is a definite interest from investors. There tends to be a “herd” mentality, where none want to “miss out” on an opportunity.

We take a serious approach to job creation. We realise the expectation created by this project will be hard to meet. We don’t want to under-deliver. This project will have a direct impact on the Eastern Cape, but we have to remember that it is not a panacea for all the economic problems of the region. It is only one project. More are required. The Eastern Cape is a vast area.

(Q) Mr Rasmeni (ANC): What about the resettlement of the people? How many people are we talking about? What about schools and businesses? Where will they go? Will their personal preferences be respected?

(A) There are 300 families in the area. The resettlement package includes the preservation of graves. As for schooling, discussions are now taking place. As for businesses, we will do an evaluation and agree on what they need to be paid.

(Q) Member: How will businesses that are already on site be accommodated, such as the salt works? What about the water supply? The Eastern Cape is a dry province. How will toxic waste be disposed of? What about the Aloe Elephant Park close by? This is another job creator. What impact will the project have on tourism development? Do you have an “anchor investor”?

(A) We are looking at the potential of recycling water. Yes, there may be hazardous waste and we do not want this to be a reason for investors not to invest. We are looking for a suitable venue to dispose of any hazardous waste.

As for the elephant park, it and our project are not mutually exclusive. They can co-exist. Our project will have no negative impact on the park, even in terms of pollution. Jobs will be created by both the park and our project. But long-term development will come from us.
As for the re-located people, each household will get one person trained and no one will be precluded by the project from accessing other jobs. We will also provide financial compensation.

The notion that we needed an “anchor investor” created a delay. There was a dangerous notion that we needed one before we could proceed. The goalposts are shifting and demands increase. So we have moved away from the anchor investor strategy but could still change our minds if we found a good one.

(Q) Member: Eightyper cent of the land is privately owned. Have you taken this into account?

(A) Yes, the land is privately owned, but the owners have been amenable to buy-outs. Price has been the only issue.

Appendix 1:
COEGA
Presentation to Parliamentary Portfolio Committee
Cape Town: Wednesday, November 1, 2000

HISTORY OF ‘THE COEGA PROJECT’
 · Section 21 Company set up to explore Coega Industrial Development Zone initiative and undertake relevant technical, economic and environmental studies
· Billiton, Kynoch, Portnet part of the initiative
· Feasibility studies completed in July 1997, established viability of project
· Coega Implementing Authority
established to take forward
the project as wholly
Government initiative
· Project part of SDI programme

WHAT IS COEGA
· Industrial development zone
· Covers 17 000 hectares
- 4000 developed in first phase

COEGA DEVELOPMENT CORPORATION
· Mandated by Government to ensure implementation of the Coega Project in the shortest timeframe
· DTI / Provincial Government funding
· Gravitation to fully-fledged, fully-funded project team
· Areas of focus: Technical, environment and zone permitting, HR, finance, marketing / business development

GOVERNMENT DECISION
· Port Authority to develop common infrastructure for Port of Coega – investment of R1,65 billion in breakwaters, dredging, quays
· P & O  Nedlloyd / TCI be a preferred private partner on the Coega Project to develop a common user containers terminal and logistics parks 

CONSEQUENCES OF DECISION
· Break ground in November: temporary haul road; secure site; clearing
· Land acquisition and rezoning
· Environmental permits
· Relocation – political agreements
· Operator’s Permit – mandate
· Skills development – integrated approach, supply & demand, Government support Marketing and business development  

DEVELOPMENT FRAMEWORK PLAN
· Phased development masterplan
· Allocations for land use
· Physical infrastructure
· Nelson Mandela Metropole Urban Plan

DRAFT EIAs 
·  Ngqurha Port Environmental Impact Report (EIR)
· Rezoning EIR for the Core Development Area
· Environmental Management Programme Report (EMPR) for the mining of the western Coega kop Quarry
· Algoa Bay Management Plan
· Scoping Report for the proposed Port of Ngqurha: Subsequent Impact Assessment.

Potential Investment Opportunities

Container Terminal

Common-user hub terminal - R0,6 billion

Stainless Steel Mill

Export of stainless steel sheet - R1 billion

Speciality Steel Mill

Eexport of specialist steel product - R1,8 billion

Galvanising Mill

Galvanising of steel sheet & export - R1,8 billion

E-commerce Park

E-commerce and info technology - R0,1 billion

Port Infrastructure

Breakwaters, quay walls, dredging - R1.65 bn

Fuel Depot

Storage and handling of liquid fuels - R0,3 billion

Bulk Materials Export

Bulk materials storage and handling - R0,4 billion

Cement Plant

Export of clinker & finished product - R0,25 billion


DELIVERY TIME FRAMES 
· Site preparation / haul road – November 2000
· Main marine tender – January 2001
· Marine construction – May 2001
· Serviced land available for industrial investors –     June 2001
· Completion of port  - December 2003



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