Concerns over electricity supply has prompted the scrapping of a R24-billion Coega aluminium smelter project near Port Elizabeth.
This was confirmed yesterday by the Trade and Industry Department, the aluminium giant Rio Tinto Alcan, Eskom, and the Industrial Development Corporation.
A joint statement read: "We acknowledge that although some progress was made in discussions regarding the supply of electricity to the Coega aluminium smelter project, it was insufficient to proceed."
This led to the termination of the supply agreement.
Reacting to the news the DA shadow minister for trade and industry, Kobus Marais, slammed the government.
"It is becoming increasingly difficult - as the scale of the ANC's maladministration and the consequences that have resulted from it escalate exponentially - to properly articulate the degree to which our economy and ordinary South Africans are affected," he said.
"The decision by Rio Tinto to scrap its plans because Eskom's electricity supply is unreliable and its proposed tariff hikes unreasonable, is a largely self-inflicted economic blow of staggering proportions.
"Our economy at large and the creation of new jobs in particular will suffer dramatically.
"If Rio Tinto's decision becomes a yardstick against which other potential international investors gauge the economic climate in South Africa, there could be further consequences for other projects involving direct foreign investment," Marais said.
Infrastructure
"The problem is plain to see: years of poor investment in our infrastructure produced a tipping point, with country-wide blackouts and load-shedding (not only Eskom's electricity infrastructure, but roads, railways, water and other elements of South Africa economic mainframe). Every day Eskom still hovers on the red line as a result," he continued.
"That shortcoming, the result of neglect and poor planning, resulted in massive loans to Eskom, money which only served to keep the parastatal on the edge of the abyss, as opposed to falling over.
"Needing more money still, it has been forced to hike its tariffs, to a degree that far exceeds what can reasonably be expected from a public who have had to watch on helplessly as the administration they invested their faith in flounders and obfuscates. Almost every day, a new component to Eskom's mismanagement surfaces," he continued.
He went on to say that this had resulted in one of the largest companies in the world declaring that South Africa was no longer a destination in which it could, in good faith, invest money, because the services were unreliable and the prices it charged, unaffordable.
Marais said that coupled with the cost of the R64 billion loaned to Eskom, the costs of Rio Tinto's decision mean the mismanagement of Eskom had cost South Africa a breathtaking amount of money.
"Our entire budget deficit is in the region of R200-billion. No doubt it could be halved had Eskom been properly managed. It is an indictment; the impact will be felt, especially those in Port Elizabeth and surrounds, who would have been looking to the smelter for new jobs," he said. - Sapa and Own Correspondent