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Free State Investment Prospectus

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THE FREE STATE, with 2.8-million residents, accounted for 5% of South Africa’s population in 2017/18 and contributed proportionately to the GDP. In 2018 (the latest available data), the real economy (represented by agriculture, mining, manufacturing and construction) made up 27% of the Free State’s output. The largest real-economy sector was mining at 11% of the provincial economy, followed by manufacturing at 9%, agriculture at 4% and construction at 3%. The Free State contributed 10% of national agriculture and 7% of national mining, but just 4% of national manufacturing and 3.5% of national construction.

FREE STATE KEY SECTORS

FREE STATE KEY SECTORS OVERVIEW WATER THE FREE STATE is bordered by the Vaal and Orange rivers, and the mountainous, river-rich country of Lesotho. The Caledon Valley on the province’s eastern border is one of the best-watered areas of South Africa, and the Gariep Dam is the site of small hydropower and aquaculture projects intended to create employment and tackle food security. The province’s industrial capacity is concentrated in the northern sector around Sasolburg, near to the Vaal River. The power station at Lethabo is served by pipes and pumps maintained by Rand Water while agriculture is irrigated from the flow of the Vaal River. The Vaal- Harts irrigation system is one of the most productive in the country, covering about 44 000 hectares. Bloem Water supplies water to Mangaung Municipality and areas in the southern Free State. Its three treatment plants, at Bethulie, Welbedacht and Rustfontein, supply most of Motheo District Municipality. Sedibeng Water delivers water to an 86 000km² area stretching from the north-eastern Free State across to areas in neighbouring provinces Northern Cape and North West. A new pipeline from Gariep Dam is being built to serve the Xhariep District and Mangaung Metro. INFRASTRUCTURE FIVE MAJOR national highways intersect the centrally located Free State province which is also well served by rail and air links. The Bram Fischer International Airport in the provincial capital city of Bloemfontein is the site of a multi-phase industrial and commercial development. The launch in 2017 of the Maluti- A-Phofung Special Economic Zone (MAPSEZ), located on South Africa’s busiest highway, the N3, was a significant event in the province’s economy. Prioritised sectors include logistics, ICT, automotive, pharmaceuticals, manufacturing and agri-processing. The N8 Corridor covers Bloemfontein, Botshabelo and Thaba Nchu and contains projects including the ICC Precinct (hotel and convention centre in Bloemfontein), Bio-Medical Park, Airport Node (logistics and supply chain, warehouses, residential apartments, hospitals, schools, hotels and new shopping malls), and tourism infrastructure for the Naval Hill development. TOURISM TOURISM is one of the Free State’s fastest-growing economic sectors, with leisure and business tourism at the forefront. Located in the Maluti Mountains, Golden Gate Highlands National Park is one of South Africa’s premier parks, offering caving, hiking, horse riding and bird watching, while the Basotho Cultural Village offers an insight into African traditions and a taste of sorghum beer. A Heroes’ Park is planned at Thaba Nchu and Tumahole with statues of Oliver Tambo and Fidel Castro. The construction of a museum at Brandfort to commemorate Winnie Mandela has been put back on the agenda. DESTEA believes the R7.7-billion game industry could grow further across three subsectors, namely auctions and translocations, game ranching and eco-tourism. South Africa’s largest hotel groups cater to different markets in the province. These include Protea Hotels, Tsogo Sun, the Rantsoareng Group, which operates exclusively in the Free State, the City Lodge Hotel Group, Sun International and Forever Resorts. AGRICULTURE AGRICULTURE makes up 4% of the Free State’s GDP, but the province’s efficient farming operations contributed a total of 10% of South Africa’s agricultural output. The Free State has 32 000km² of cultivated land and a further 87 000km² of grazing land and natural veld. A summer-rainfall region with a mean annual rainfall of 532mm, the Free State’s climate, soil types and topography vary greatly. The province supplies significant proportions of the nation’s sorghum (53%), sunflowers (45%), potatoes (33%), groundnuts (32%), dry beans (26%), wool (24%) and almost all of its cherries (90%). Red meat and dairy are other important products, while game hunting is a growing sector. Crop production represents about two-thirds of the province’s gross agricultural income. The main crops are maize and wheat. Sunflowers, sunflower seeds, sorghum and soybeans are other major crops. The Mangaung Fresh Produce Market plays a vital role in the sector, catering to householders, bulk buyers, informal traders, agents and farmers. The annual NAMPO Harvest Day held in Bothaville is one of the biggest agricultural festivals and exhibitions of its kind in the world. MINING MINING contributes 11% of provincial GDP, with diamonds, coal and gold the main minerals found. Gold mining is less important than it was, though Harmony Gold and Sibanye Stillwater remain major companies in the sector. Free State gold mines supply a substantial portion of South Africa’s silver, while large concentrations of uranium are extracted as a by-product. The goldfields, which form part of the Witwatersrand Basin, stretch from north of Welkom to south of Virginia. A minerals beneficiation strategy is being developed as a key growth area. In 2016, De Beers, the national government and the diamond-cutting industry launched a project to encourage diamond beneficiators. Coal is mostly found in the northern Free State, while sand, stone aggregate, gypsum and granite are found at various sites throughout the province. Limestone and calcrete occur in the western Free State where salt is also panned. RENEWABLE ENERGY OPPORTUNITIES are opening up in the province’s gas and energy sector, with exploration licences being granted, and a R200-million helium extraction plant is under construction near Virginia. The Stortemelk Hydropower Project was built as part of the national Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). The collaboration of Renewable Energy Holdings (REH), Aurecon and Earthworld Architects delivered a facility with installed capacity of 4.5MW on the As River. H1 Holdings and Building Energy are the drivers behind the 4.7MW Kruisvallei Project on the Orange River, powered by flows from the Vanderkloof Dam. The Xhariep, Lejweleputswa and Mangaung regions have among the best direct solar radiation kWh/m² in the country. Rezoning for solar farms has already taken place in Theunissen, Bloemfontein, Fauresmith and Hoopstad. Solar projects include the 60MW Boshoff Solar PhotoVoltaic (PV) park (Sun Edison) and the 64MW Letsatsi Solar PV (Solar Reserve, Kensani Group and Intikon Energy). A solar park is planned for the Xhariep region, which is seen as a driver of growth along the banks of the Orange River. 08 09

INVESTMENT OPPORTUNITIES Infrastructure Infrastructure Infrastructure Infrastructure PROJECT SECTOR: Water Board: Bulk Water PROJECT LOCATION: Xhariep Dam to Bloemfontein INVESTMENT VALUE: R80 billion JOB CREATION: Yes PROJECT SECTOR: Water Board: Bulk Water PROJECT LOCATION: INVESTMENT VALUE: R1.5 billion JOB CREATION: 426 jobs in Phase 1 PROJECT SECTOR: Water Board: Bulk Water PROJECT LOCATION: Botshabelo to Thaba Nchu INVESTMENT VALUE: R80 million JOB CREATION: Yes PROJECT SECTOR: Water Board: Bulk Water PROJECT LOCATION: Thaba Nchu INVESTMENT VALUE: R500 million JOB CREATION: Yes PROJECT DESCRIPTION: Mangaung Water Augmentation Project: Xhariep Pipeline • Phase 1: Detailed feasibility study, preliminary design, design and EIA and application • Phase 2: Construction will proceed once the Department of Water and Sanitation has secured funding estimated at R8-billion for the 180km-long pipeline to bring water from Xhariep to existing Bloem Water infrastructure FINANCED BY: Feasibility study financed by the Department of Water and Sanitation PROJECT PROMOTER: Bloem Water – Executive: Engineering and Projects INSTITUTION CONTACT DETAILS: Themba Ngubeni, Executive: Engineering & Projects Email: themban@bloemwater.co.za Tel: 051 403 0800 PROJECT DESCRIPTION: Design and construct steel bypass pipeline parallel to existing Caledon/ BFN PCP line for the 33.7km from Leeuwkop offtake to Brandkop • Phase 1: Construction of steel bypass pipeline parallel to existing Caledon/BFN PCP line for the 33.7km from Leeuwkop to Brandkop • Phase 2: Construction of the remaining 71.3km from Leeuwkop-Welbedacht WTW not done FINANCED BY: Phase 1 finance committed by the Department of Water and Sanitation PROJECT STATUS: • Phase 1: Construction in progress, 27% • Phase 2: Construction of Leeuwkop- Welbedacht pipeline of 71.3km pending, funding not secured, estimated at R1-billion PROJECT PROMOTER: Bloem Water – Executive: Engineering and Projects INSTITUTION CONTACT DETAILS: Themba Ngubeni, Executive: Engineering & Projects Email: themban@bloemwater.co.za Tel: 051 403 0800 PROJECT DESCRIPTION: Construction of Tabali-OK pipeline • Phase 1: Design of 10km, 600mm steel Tabali-OK pipeline for the increase of water supplied to Thaba Nchu • Phase 2: Construction of 10km, 600mm steel pipeline FINANCED BY: N/A PROJECT STATUS: • Phase 1: Designs completed • Phase 2: Construction pending budget of R80-million secured PROJECT PROMOTER: Bloem Water – Executive: Engineering and Projects INSTITUTION CONTACT DETAILS: Themba Ngubeni, Executive: Engineering & Projects Email: themban@bloemwater.co.za Tel: 051 403 0800 PROJECT DESCRIPTION: Extend Treatment Capacity of Rustfontein • Phase 1: Designs for additional 50Ml/day capacity of Rustfontein Water Treatment Works to augment water supply to Botshabelo, Thaba Nchu and Bloemfontein • Phase 2: Construction to extend treatment capacity of Rustfontein Water Treatment Works from 100Ml/day with an additional 50MI/day to a total of 150MI/day FINANCED BY: Feasibility study financed by the Department of Water and Sanitation PROJECT STATUS: • Phase 1: Completed design • Phase 2: Construction pending, to secure funding of R500-million for construction of additional 50MI/day extension of Rustfontein WTW PROJECT PROMOTER: Bloem Water – Executive: Engineering and Projects INSTITUTION CONTACT DETAILS: Themba Ngubeni, Executive: Engineering & Projects Email: themban@bloemwater.co.za Tel: 051 403 0800 10 11

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