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KwaZulu-Natal Business 2022-23

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The 2022/23 edition of KwaZulu-Natal Business is the 14th issue of this highly successful publication that, since its launch in 2008, has established itself as the premier business and investment guide for the KwaZulu-Natal Province. In addition to the regular articles providing insight into each of the key economic sectors of the province, there is a special feature on national government’s campaign to encourage private investment in ports. The vital role of the ports of Durban and Richards Bay in the South African economy cannot be understated and putting them in a better position to deal with commodities and cargoes of every sort is clearly in the national interest. A special purpose vehicle is to be created within Transnet to make dealing with private companies less complicated. The increasing importance of the Oceans Economy to the future of the provincial and national economy is relevant to any examination of the economy of KwaZulu-Natal. This applies as much to trade and ship-repair as it does to the exciting gas discoveries which have been made off the coast of Mozambique and South Africa.

SPECIAL FEATURE Private

SPECIAL FEATURE Private investments in ports are gathering speed Upgrades at KwaZulu-Natal’s two big ports will mean South Africa is better prepared for the next commodity boom. Exports from the Hillside Aluminium smelter keep cranes busy on the docks. Credit: Hillside Aluminium A sharp spike in commodity prices in 2021 meant that the South African government collected R120-billion more in tax revenue than it had thought it would. But it could have been much more. The country’s ports are not as efficient as they might be, and to address this the National Department of Public Enterprises has announced a plan to bring private investors into port and logistics operations to a greater extent. Opening third-party access to the country’s freight rail network is part of the same plan. Transnet National Ports Authority (TNPA) is on a path to become an independent subsidiary of the state entity Transnet. This will enable it to partner more efficiently with private companies. Plans have been presented for turning the Port of Durban, already a large and busy harbour, into a “super terminal” that would deal with more volumes of cargo than any other harbour in Africa. Private investors are being encouraged to investment an amount of R100-billion into the port in the next decade. In early 2022, two companies stepped up. Dormac Marine Engineering has renewed its leases and is undertaking investment in expanding infrastructure its machine shops and cranes. This follows a R400-million investment in a new floating dock which has a lifting capacity of 8 500 tons. Dormac employs 136 employees and the rental paid for the company’s facilities contribute significantly to Transnet’s income and to the economy of the eThekwini Metropolitan Municipality. A new liquid bulk terminal at the Maydon Wharf 6 in the Port of Durban will be developed and operated by Mnambithi Terminals. The investment is worth R1.5-billion and will create more than 1 500 temporary direct and other indirect job opportunities. A -million chemical tanker forms part of the investment. The vessel is the first such vessel to be acquired by a South African company and will be flagged locally. Also at Durban, TNPA and the KwaZulu Cruise Terminal (KCT) consortium – in which MSC Cruises KWAZULU-NATAL BUSINESS 2022/23 18

SPECIAL FEATURE is a partner alongside empowered investment entity Africa Armada Consortium – the new R200- million Cruise Terminal Facility is functioning. In Richards Bay, home to the Richards Bay Coal Terminal which exports most of the country’s coal, Hillside Aluminium, the largest aluminium smelter in the southern hemisphere, announced in early 2022 that it would renew existing leases in the Port of Richards Bay, benefiting Transnet and the municipality with a revenue stream of R338-million and local procurement spend in the amount of R2-billion a year. Transnet and the International Finance Corporation (IFC) are undertaking processes to conduct a feasibility study that will determine the viability of a natural gas hub in Richards Bay. The two bodies have agreed a commitment of R28-million as part of the cost-sharing agreement towards the liquefied natural gas (LNG) storage and regasification terminal to be established at the Port of Richards Bay by 2024. Existing infrastructure The focus on new investment in the ports at Durban and Richards Bay also serves as a reminder of the other strengths of KwaZulu-Natal as a logistics hub, with the King Shaka International Airport and associated Dube TradePort also playing key roles. The N3 highway linking Durban with the Highveld and the industrial hub of South Africa is the country’s busiest road. Durban harbour is South Africa’s premier multi-cargo port and is Africa’s busiest, handling in excess of 80-million tons of cargo per annum (StatsSA). The Port of Durban is a key hub in the transport and logistics chain, with 60% of all imports and exports passing through it. The Port of Durban exports a broad range of products, including automotive vehicles. In 2018/19, the year in which South Africa’s total vehicle exports topped 350 000, Durban’s Car Terminal boasted a record of putting more than 500 000 fully-built-up units (FBUs) through the port. The figure includes FBUs that are not motor vehicles and includes vehicle imports. Toyota’s popular Fortuner is exported at a rate of about 150 per month. Within the Port of Durban there are a number of specialised facilities. Several projects are underway to increase capacity. Transnet National Ports Authority and Transnet Port Terminals (TPT) are combining to upgrade infrastructure and buy new equipment to improve efficiencies at the Ro-Ro Terminal (vehicles and break bulk) and Maydon Wharf (mixed cargo and agriculture) but the biggest project is at the Durban Container Terminal (DCT). DCT has a capacity of 3.6-million TEUs (twentyfoot equivalent unit) and the current project aims to extend that beyond five-million TEUs. The Brics New Development Bank has approved a loan of 0-million for the DCT expansion project. TNPA states that the multiplier effect in the marine sector creates five jobs for every direct job. A large drydock project created direct jobs for 29 skilled employees. The KwaZulu Cruise Terminal (KCT) won the contract to finance, build and run the new Durban Cruise Terminal and started operating in 2019, shortly before the Covid-19 epidemic temporarily put an end to cruises. The cruise terminal is an important step forward for Durban and fits in well with the larger project that links the port to the upgraded southern end of the promenade, the Durban Point Waterfront. A joint venture between MSC Cruises SA and Africa Armada Consortium, KCT will spend about R220-million on the financing‚ construction‚ maintenance and operation of the cruise terminal for a 25-year concession period. The cruise terminal covers 32 000m² and caters for two ships and at least 5 000 passengers. A ship with 2 000 passengers is worth in the region of R2-million per day for the host city. The number of annual passengers is expected to grow from the current 200 000 to more than 700 000 by 2040. Durban’s hosting of 60 ships per annum is expected to rise to 150 or more. South Africa attracts 0.5% of the world’s cruiseship market which comprises about 15.4-million passengers annually. The Port of Richards Bay, 160km to the north-east of Durban and 465km south of the Mozambican capital of Maputo, handles more than 80-million tons of bulk cargo every year. 19 KWAZULU-NATAL BUSINESS 2022/23

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