16 INVESTMENT
16 INVESTMENT OPPORTUNITY KATHU INDUSTRIAL PARK A catalyst for multi-sectoral growth. It is envisaged that the Kathu Industrial Park (KIP) will serve as a catalyst for accelerated growth of other economic sectors. PROJECT LOCATION Kathu, Gamagara Local Municipality, John Taolo Gaetsewe District Municipality. PROJECT BACKGROUND The Sishen Iron Ore Company (Pty) Ltd (SIOC) and the Industrial Development Corporation (IDC) have funded various studies to assess the feasibility of developing an industrial park to stimulate sustainable long-term economic development for the Northern Cape region. The envisaged development will attract a variety of tenants delivering industrial goods and services within a synergistic environment supported by centralised services and complemented by a business incubation and training complex. With the mining industry being the largest real economic sector in the Northern Cape economy, the town of Kathu is the preferred location due to its central proximity to the Postmasburg-Hotazel iron-ore/manganese belt and various established and pending REIPPPP projects. The bankability study has not only confirmed extensive interest from businesses (potential tenants) but has also confirmed the support of various key stakeholders and the commitment of investors and financiers. This development, located on the R380, is easily accessible from the N14 and the Kathu airport. The project is considered a key enabler for localised manufacturing initiatives anticipated via the Northern Cape Shared Value Initiative and Impact Catalyst. KIP COMPONENTS • Central Hub: central administration offices, conferencing facilities, an auditorium, a security office, a restaurant and other social facilities. • A Business Incubation Centre and Training Centre. • Customised warehouses, industrial buildings and mini-factories. • Security fencing and lighting. • Additional infrastructure such as an internal water reticulation system. TARGETED SECTORS The KIP targets all economic sectors requiring serviced industrial space in the region, but with the major portion of the initial tenant makeup (study phase uptake) primarily serving the established mining sector, by virtue of the KIP’s central proximity to the Postmasburg-Hotazel iron-ore/manganese belt. The KIP is also well positioned to serve the emerging REIPPPP sector in the region. Local companies such as Mdux Instrumentation and Control Systems, pictured, are already active in the rooftop solar panel sector. In addition to the ongoing development of business opportunities within the tenant supply chains, it will be the role of the KIP Business Incubator to expand the coverage of the KIP into other sectors. Study-phase tenant engagement and commitment to the project has covered all possible prospective tenants, regardless of size or level of development. The KIP development caters for every kind of tenant facilities, from large, customised facilities through to smaller economically efficient mini-factories. PROJECT FINANCING • Phase 1: Debt and equity commitment provisionally secured from private sector (mining stakeholders) and public sector (IDC). Engagement is ongoing with Northern Cape Provincial Government and Department of Trade, Industry and Competition (dtic). • Phase 2-3: Current indication is that tenant uptake surplus to Phase 1 will support a further phase of at least R500-million. PROJECT STATUS Bankability Study, Project Development Plan, Environmental Permitting, Land rezoning and various scope realignment and market studies completed. Investor Engagement Phase substantively completed with provisional commitment secured from IDC, Kumba, SIOC-CDT, Assmang and South32, but with a funding shortfall still to be resolved. The project has been submitted to Infrastructure South Africa to register as a catalytic project.
17 Providing services to the mining industry will be a major driver of development within the Kathu Industrial Park. INDUSTRIAL PARKS IN CONTEXT As defined by the National Department of Trade, Industry and Competition (dtic), Special Economic Zones (SEZs) are geographically designated areas of a country set aside for specifically targeted economic activities, supported through special arrangements (that may include laws) and systems that are often different from those that apply in the rest of the country. SEZs can include Industrial Parks such as the Kathu Industrial Park. South Africa’s Industrial Policy Action Plan, IPAP, identifies SEZs as key contributors to economic development. They are growth engines towards government’s strategic objectives of industrialisation, regional development and employment creation. The purpose of the SEZ programme is to: expand the strategic industrialisation focus to cover diverse regional development needs and context; provide a clear, predictable and systemic planning framework for the development of a wider array of SEZs to support industrial policy objectives like the IPAP and National Development Plan (NDP); clarify and strengthen governance arrangements, expand the range and quality of support measure beyond provision of infrastructure; and provide a framework for a predictable financing framework to enable long-term planning. The same principles apply to various Industrial Parks which are either being built or revived. Apart from attracting foreign direct investment (FDI) and boosting employment, SEZs can be instrumental in adding new sectors or subsectors to an economy. An obvious candidate in that category is Kathu Village Mall is a vibrant shopping centre. renewable energy which needs manufactured components such as solar panels and towers for wind turbines. Incentives include tax breaks from the South African Revenue Service, subsidised interest rates from the Industrial Development Corporation, subsidies for employees earning below a certain level, training grants from the dtic and discounts from national electricity utility Eskom. The SEZ is also a customs-controlled area. The SEZs are located in a municipality and for the SEZ programme to succeed, municipalities must be part of the planning, design and implementation of these spatial development catalysts. The local government sector is, therefore, an important stakeholder in the drive to build sustainable and successful SEZs.
