Counter trade deal involves steel mill at Coega
THREE new submarines for the South African navy have saved the Eastern Cape's Coega project from sinking into the sea of good intentions.
In one of his last acts as defence minister Joe Modise announced on Sunday that the government had signed a draft agreement on the procurement of three class 209 submarines for R4,5-billion.
In return the winning German consortium, GSC has signed counter-trade deals worth around R19-billion.
GSC includes two German submarine builders, and Ferrostaal, which will be responsible for the export marketing, financial and trade agreements, including the building of a stainless steel mill at Coega.
The mill is the biggest part of the counter-trade deal. It will also give Portnet its first client for the port, and means that work will be able to start on the harbour.
Recently Dr Peter Inman of consultants Gibb Africa told a Port Elizabeth conference that the Ferrostaal project was much more attractive to Portnet than the original anchor tenant Billiton, as it would generate more freight through the port.
Portnet will, he said, design the harbour facilities to meet the exact needs of the Coega tenants. The steel project and its two subsidiary factories are expected to be the vanguard of investment in the 14000 hectare Coega IDZ.
"We need between 7,5 and eight million tons of freight through the port to make it financially viable," he said.
The steel mill and the possible routing of ore from Sishen through Coega would provide the necessary tonnage.
Other options include the moving of an existing tank farm and manganese ore terminal from the Port Elizabeth harbour to Coega. The removal of the two is seen as an integral part of the upgrading of the city's beach front and the establishment of a waterfront development.
The waterfront will be linked to a casino development further along the beachfront by a promenade.
Plans for a casino in the waterfront have been scrapped. The Eastern Cape Gambling board favoured a casino complex in the city's old camping ground over a bid for a casino in the harbour area.
In his statement to the media conference Modise said the defence force had decided on submarines because the waters around South Africa were particularly well suited to submarine activity.
Submarines, which were fuel-efficient and used small crews, were more cost-effective than surface craft for the protection of South African waters and shipping lanes, he said.
Chief government negotiator Jayendra Naidoo says MSG's financial commitment includes the setting-up of two downstream plants to feed off the steel mill.
Previously disadvantaged groups will be able to obtain 5% of the shares of these companies. Emerging builders are also to be granted 50% of the building contracts for the stainless steel factories.
Naidoo said the steel mill was aimed at exports. The first steel could roll out of the mill in four years.
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