Western Cape has a new large economic development zone with R21 billion investor pipeline

The Freeport Saldanha Industry Development Zone is expecting R21 billion in investment, thanks to the historic signing of a Memorandum of Understanding (MOU) between the entity and Sasol.

Mireille Wenger Finance and Economic Opportunity MEC and Western Cape Premier Alan Winde applauded a collaboration announced Wednesday between Sasol and ArcelorMIttal SA to produce sustainable fuels and chemicals, as well as green steel development, by assisting in the establishment of a green hydrogen (GH2) HUB IN Saldanha Bay.

“The Western Cape Government (WCG) applauds the partnership between these two giants of industry and further welcomes the signing of the Memorandum of Understanding between Sasol and the SBIDZ, which will bring exciting energy capabilities and commercial opportunities to the province,” the local government said.

According to Cayla Murray, MPP – DA Western Cape spokesperson on Finance, Economic Opportunities and Tourism, “This will go a long way in promoting the fiscal independence of the entity while further making use of the significant infrastructure developments that have taken place at the Freeport to date”

It was also revealed that the entity is conducting a feasibility study in order to locate this project on their property, said Murray. “Sasol and ArcelorMittal South Africa will further be studying the use and offsetting of each other’s emissions, with the goal of achieving net zero carbon emissions by 2050.”

The two industrialists are researching how to use the approximately 1.5 million tonnes of CO2 produced by the Vanderbijlpark  Works each year. Murray explained that the CO2 would be transported to Sasolburg and Ekandustria to replace the use of natural gas.

“The green economy is an exciting arena with enormous potential. It is essential that we not only recognise its potential but that we also continue to make use of the resources available to us while positioning our province as the green tech hub of Africa.”

Brent Townes, Commercial property chief operating officer for Lew Geffen Sotheby’s International Realty in Cape Town, said, The predictableness of South Africa’s energy supply, combined with the doubts about the long-term viability of an aging fleet of power stations, has created a perfect storm necessitating a shift away from Eskom and coal-based power and towards alternative energy sources.

“It’s become imperative that consumers have alternative options which, albeit at a higher cost initially, assures them not only of a reliable energy supply but also a much-reduced carbon footprint.

“And, with building owners facing an Eskom application at NERSA for a 32% price escalation for 2022/23, alternative energy sources are likely become cost-efficient sooner rather than later – especially as the increase in the cost per kilowatt during the winter months will result in a double whammy as municipalities pass their inefficiencies on as well.”

He stated that the landlords can mitigate this risk by installing separate meters or even solar systems, but this will not stop the overall business environment’s rapidly increasing cost spiral.

“At the end of the day, the government’s change of heart from their deep reluctance to move away from coal-fired power has almost come too late as the transition is a lengthy process.

“The planning cycle of any such project takes up to 24 months in consultation with all role players before the tender process can begin and then follows the design process, the construction phase, the commissioning phase and so on.”

“Over and above the fact that these stations would be fed coal from surrounding mines and thereby deepening the carbon footprint, both still require considerable corrective work on design faults which are estimated at R28 billion.”

Margeaux Dawe, commerical property practitioner for the group said: “What’s become patently clear is that, with bureaucracy further hampering efforts on government’s part to introduce new energy sources and technologies, assistance from outside sources is essential to getting alternative and cleaner energy up and running.

“And it’s been heartening to see that this has been forthcoming from a number of countries, including Germany, Japan, China and the US, all of whom are keen not only to invest, but also to share their knowledge and experience.”

Dawe pointed out that the time it would take these investors to secure land, build solar and wind power generation system, and then commission them would be much shorter than if the local government initiated the project.

“Their only potential hurdle would be establishing and securing connections to private consumers and the City of Cape Town – although they are far more proactive than Eskom.”

According to Lew Geffen Sotheby’s International Realty, Freeport Saldanha is the first South African Freeport, which is a special economic zone and custom-controlled area within a port dedicated to the Energy  and Maritime sector.

Furthermore, by  establishing the IDZ, Freeport Saldanha has been positioned as an energy hub, facilitating the energy transition and kicking off the ocean economy.

Freeport Saldanha, located 170 kilometres from Cape Town and 137 kilometres from Koeberg, is a deep-water port with shipping lane capacity and a well-planned bonded development node with good road infrastructure, the realty group said.

“With the IDZ being perfectly positioned to be leveraged to deliver, they are now actively seeking suppliers of alternative energy and for their supply chains to reside within the IDZ and its surrounding areas,” said Townes.

“Their turnkey approach underpinned by incentives will hopefully attract both local and international investment and expertise in this sector and we are excited to be working with them to bring this critical project to fruition.”

Dawe stated that the group has 256ha of open space for energy transition supply chains such as cleaner fuels, gas, green hydrogen, and renewables, as well as marine repair, fabrication, logistics, and related services.

“The European Union is setting up Border Carbon Tax so vital that South Africa is on board, fully committed to the transformation and willing to go big if we hope to compete in this arena,” said Dawe.