Eastern Cape to get BAIC car plant

File picture: Independent Media

File picture: Independent Media

Published Apr 25, 2016

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Johannesburg - Construction on a new completely knocked down vehicle manufacturing plant in the Eastern Cape (EC) for the Beijing Automobile International Corporation (BAIC), China’s fifth-largest car manufacturer, is set to commence towards the end of this year or early next year.

This follows BAIC committing in December to invest R11 billion in a manufacturing plant in South Africa. The investment in the plant will be funded largely by BAIC and the Industrial Development Corporation (IDC).

It has previously been estimated that 10 000 direct and indirect jobs will be created by the investment.

Mandla Mpangase, a spokesman for the IDC, confirmed on Friday that its representatives were in China to sign a joint development agreement with BAIC.

Agreement

However, Mpangase said the IDC had not yet decided on the percentage shareholding it would take in the project.

The IDC has previously indicated that it will be taking a between 20 percent and 35 percent shareholding in the venture.

Mpangase said the main shareholders at this stage in the venture were the IDC and BAIC South Africa.

He said the cost to the IDC of its shareholding in the project would be determined by “the bankable feasibility study”.

Mpangase confirmed the partners were looking to commence with the construction of the plant towards the end of this year or the beginning of next year.

The location of the plant has not yet been announced, but it is expected to be built in the Coega industrial development zone (IDZ) in Nelson Mandela Bay.

The Coega IDZ is one of South Africa’s premier locations for new industrial investments and has, since its inception in 1999, enabled the creation of 96 776 direct jobs, with 33 operational investors and an investment portfolio valued in excess of R181bn.

Mpangase confirmed the first phase development of the plant would create a facility with a capacity to produce between 40 000 and 50 000 units a year, with the plant’s capacity doubling in the second phase.

Vehicle platforms

He said they were looking at a number of vehicle platforms in the plant, with the models produced earmarked for South Africa and the rest of Africa.

Mpangase added that BAIC was still planning to enter the South African market from August with completely built up imports.

“We’re looking at potentially sedans and SUV’s (special utility vehicles),” he said.

Ebrahim Patel, the Minister of Economic Development, said in his budget vote speech in Parliament last week that if the proposed establishment of a vehicle manufacturing plant by BAIC met the feasibility study criteria, it would be the first new light passenger assembly plant to be built in the country in more than 40 years.

Patel said the joint development agreement to be signed in Beijing earmarked the Eastern Cape as the proposed location for the plant.

“The IDC and the company are optimistic and hope to finalise the feasibility studies to enable the plant to complete construction by 2018,” he said.

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