Richards Bay IDZ guns for investment

INLSA

Ike Nxedlana, the CEO of the Richards Bay Industrial Development Zone.

A 50-year master plan is being developed by the Richards Bay industrial development zone (IDZ) aimed at attracting billions of rand of investment and positioning the IDZ to be ready to take advantage of business opportunities to come out of the government’s new special economic zone (SEZ) strategy.

Speaking at the first “consultation session” with key stakeholders on Friday, Ike Nxedlana, chief executive of the Richards Bay IDZ, said the SEZ Bill was expected to be finalised by the end of the year and the SEZ Act legislated next year.

“The success of IDZs in SA has been a bit shaky… The change to SEZs will hopefully see these zones operate more optimally. There are several changes on the cards, including that these zones attract foreign and local investment in new manufacturing industries that create products for both the local and export markets,” he said.

“The Department of Trade and Industry also have plans to set up a ‘one-stop shop’ service for the SEZs, which will make it easier for businesses to invest in these zones. Right now IDZ investors have to go through so many departments for various approvals and other issues. We don’t want the IDZ issues to affect the new SEZ plans.”

In preparation for the change, the Richards Bay IDZ had appointed consultants Focus Project Management to work with it to develop a plan for the zone.

“It’s all about planning, planning, planning to get all your ducks in a row to make projects like these work and become successful. The Richards Bay IDZ has historically been poorly financed and has suffered from poor planning and numerous problems as a result. Our IDZ has been sitting down, while those in East London and Coega in the Eastern Cape have been flying high in comparison.

The Richards Bay Industrial Development Zone (IDZ) hosted a tour of the Richards Bay harbour last week as part of a master-planning consultation session with key stakeholders including Transnet, Eskom and provincial and local government representatives. Delegates are seen here boarding one of the harbour tugboats. Ike Nxedlana, CEO of the Richards Bay Development Zone, also reiterated calls for a fully-fledged container terminal to be established by Transnet at the northern KZN port.

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“While all three operational IDZs in SA were incorporated in 2002, poor planning at Richards Bay IDZ at the onset meant we have to deal with a lot of the issues now. The Richards Bay IDZ is close to environmentally sensitive land and was originally about 550 hectares in size compared to Coega (1 100ha) and East London (1 500ha). After taking environmental issues into account only about 345ha in Richards Bay could have been used for industrial development. That is tiny compared to the other two,” said Nxedlana.

When Nxedlana took over in 2009, the IDZ had only five staff, three of whom were suspended. Today it is no longer run as a joint venture between the Ithala Development Corporation and City of uMhlathuze, but as a separate provincial parastatal with its own board.

“Our new board was appointed and became effective from July 1. We have a vibrant board and last week they had an induction, so we are looking to see things move,” said Nxedlana.

Last year the IDZ secured its operator permit from the Department of Trade and Industry, which allows it to work more effectively. Its biggest investor so far is Tata Steel’s R670 million plant, which was secured in 2006.

Nxedlana said it was in serious discussions with three potential major foreign investors which, if successful, would see about R4 billion invested in the IDZ.

“One of the investments alone is worth about R2bn and we are looking to have it secured by the first half of 2013. However, we don’t want to talk about potential investors too much. We want to see deals materialise first,” he said.

He said they were identifying other land parcels to enlarge the IDZ in preparation for it to become one of two future SEZs in KZN. They were also evaluating what new industries could be attracted to the zone within the environmental limitations. One of the areas the IDZ was seriously looking into was agri-processing for the local and export markets.

He said establishing a fully-fledged container terminal was crucial for the IDZ to fly and “serious engagements” were under way with Transnet to convince it to invest in such a facility.