Kevin Crowley
SHANGHAI Zendai Property’s plan to develop a suburb north-east of Johannesburg into what chairman Dai Zhikang termed the “New York of Africa” was “extremely ambitious”, AECI, which sold the land, said yesterday.
Shanghai Zendai bought the 1 600 hectare plot for R1.06 billion from AECI, a South African chemicals and explosives manufacturer last year and announced plans to build a financial centre and 35 000 houses to rival Johannesburg’s business hub of Sandton.
“The problem is a lot of it is agricultural land,” chief executive Mark Dytor said. “You have to open it up, you have to put in roads, sewerage lines, water and so on. Of course, you have to do that and fund it yourself.”
The area will become a hub for Chinese firms investing in sub-Saharan Africa, Zhikang said in November 2013.
Modderfontein used to house an explosives factory that opened in 1896 to support the mining industry that is the source of a third of all gold the world has yet produced. The company would spend R80bn on the development over the next 15 years, he said.
“In reality, they will use the low-hanging fruit that is available for office parks and residential housing,” Dytor said. “To build another Sandton in Modderfontein right now is extremely ambitious,” he noted, referring to Africa’s biggest financial district in northern Johannesburg.
Special dividend
AECI declared a special dividend after the land sale. The payout of R3.75 a share was in addition to an ordinary dividend of R2.25 a share for 2014, itself a 7 percent increase from 2013, AECI said.
Profit attributable to ordinary shareholders climbed 16 percent to R1.1bn last year from a year earlier. AECI’s sales from its chemicals and international operations mitigated a drop in income because of last year’s five-month platinum strike, Dytor said.
“That’s the diversification of the group,” he said. “We’ve purposely decided not to be in any one geography or any one mineral.”
AECI rose as much as 8 percent, the most since November 2012, to R132.45 on the JSE and yesterday traded5.67 percent up at the close, to end at R129.66 .– Bloomberg