Construction will take
3 years and cost R300m
a year
Portnet is understood to be close to making a formal decision to finance the R1-bn Coega harbour development.
This will remove the last main stumbling block to the development and will relieve the Department of Trade and Industry of the burden of finding funds while finance minister Trevor Manuel is committed to keeping within the deficit targets set by Gear.
Portnet officials have been unwilling to comment on persistent rumours that the parastatal was going to finance and construct Coega. Transnet managing director Saki Macozoma is understood to be one of the driving forces behind the decision.
Portnet's new head, Rob Childs, was also fully briefed on developments at a special weekend meeting with trade and industry minister Alec Erwin soon after joining Portnet.
The parastatal, which has an annual surplus of
R1,7-billion, will not even have to go to the market to raise the funds. Construction will take three years, which means that, on average, it will cost just over R300-million a year.
There could be further savings if Portnet restricts itself to the bulk infrastructure and invites private enterprise to equip and operate the quays.
Development of the adjacent Industrial Development Zone (IDZ) will be the responsibility of the Coega Implementing Authority, which was established by cabinet last year.
Billiton has reacted to reports of the Portnet decision by confirming that Coega remains its first choice for the building of a R2,7-billion zinc refinery. Billiton is one of the key anchor tenants - and the catalyst behind dusting off 20-year-old plans to develop a deepwater harbour at Coega.
Coega project director Doug Reed says negotiations for a steel mill and ferro-manganese plant in the IDZ are well advanced, as are the necessary feasibility studies and impact assessments.
Portnet's giant scale model of Algoa Bay, which has been built in Stellenbosch, will start running simulations soon.
While the Billiton project on its own will make the port financially viable, Portnet could be considering the future needs of container operators. Coega will be a deep-water harbour capable of handling the next generation of giant container ships.
In a recent interview with a Sunday newspaper P&O Nedlloyd managing director John Turner singled out Port Elizabeth as the ideal hub for these ships. When bigger ships are introduced, they won't be able to afford to make more than one port stop in South Africa, and Port Elizabeth will be that port of call, he is quoted as saying. Port Elizabeth's existing harbour, although it is working at only 50% capacity, will not be able to accommodate those ships. That means Portnet will have to provide shipping companies with an alternative - and that will, in all likelihood, be Coega.
Reed is confident that construction will begin in August this year.
By Ed Richardson
