Here are some of the major developments planned for South Africa – including car factories and new borders

Nedbank has published its fixed investment report for the first half of 2021, detailing some of the major developments announced for South Africa.

The bank noted that fixed investment was exceptionally hard hit by the strict lockdown of last year.

While some sources of demand bounced back quite convincingly, the recovery in fixed investment has been much more subdued, running out of steam in the first quarter of this year, contracting by 2.6% every quarter.

“The main drag came from a drop in capital outlay by the private sector, which declined by 8.9% q-o-q, hurt by weak confidence. Business confidence has not improved much as the economic outlook remains plagued by many uncertainties, including the pandemic, recurring lockdowns, the slow vaccination drive, frequent load-shedding and persistent policy doubts.

“Added to this, most companies still sit with excess capacity, reducing the need for expansion. Given the damage done to the bottom line of companies in 2020, most companies remain cautious, focusing on restoring profits and strengthening balance sheets. Risk appetites, therefore, remain weak.”

Nedbank’s Capital Expenditure Project Listing shows a total of 28 new projects worth R117.7 billion were announced during the first half of this year.

On an annualised basis, this translates to 56 projects valued at R235.4 billion. While this represents a significant improvement over last year, it remains weak compared with the value of new projects announced and undertaken between 2005 to 2013.

The private sector announced more new projects than was the case last year, but the boost came from a revival in the public sector’s investment plans. For the first time since 2012, the value of new projects announced by the public sector exceeded that of the private sector.

“The improvements in public sector investment appears to be related to government’s infrastructure plan, announced last year to accelerate economic recovery and job creation from the depths of strict lockdown in April 2020,” Nedbank said.

“Although it is encouraging that the rollout of some of these projects has started, infrastructure investment relative to the size of the economy remains alarmingly low.

“The rollout will therefore have to gain considerable momentum, and this will need to be sustained for several years, to lift the constraint on the economy, lower production costs and raise the country’s potential growth rate.”

Some of the major developments are outlined in more detail below.


 Manufacturing sector

The manufacturing sector featured strongly, recording new projects worth R38.3 billion, the highest since 2018.

The value was boosted by the expansion plans of Ford and Ford SA will invest R15.8 billion to upgrade its Silverton vehicle assembly plant in preparation for the launch of a new Ranger pick-up bakkie, while Toyota South Africa Motors will spend R3 billion to upgrade its Prospection plant in Durban to produce the new Corolla Cross and Corolla Quest models.


Electricity, gas and water

The electricity, gas and water sector announced projects worth R6.5 billion, which also included projects listed in the government’s strategic infrastructure plan.

These include the second phase of the Crocodile Mokolo water augmentation project (CMWAP), valued at R3 billion, which aims to increase the water supply from Crocodile River to Steenbokpan and Lephalale to support mining activities, including Eskom’s Medupi coal-fired power station.

Other projects include the Coegakop Wellfield and Water Treatment Works worth R260 million, which will produce 26 megalitres of water a day for Nelson Mandela Bay Municipality.

Activity in this sector is expected to pick up in the coming months when the projects from the fifth bid window of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) will be published.

New projects are also expected to come from small energy projects following the government’s decision to allow private companies to generate up to 100MW of their own electricity.


Mining

The mining sector announced projects worth R21.4 billion, the highest since 2013.

The largest project is the African Rainbow Minerals’ Two Rivers Merensky project, worth R5.7 billion, which is expected to produce 182,000 ounces per year of 6E platinum, 1,600 tonnes per year of nickel and 1,300 tonnes per year of copper once the project is fully ramped up.

Sibanye Stillwater will invest R3.9 billion in its K4 platinum group metals project in Marikana, which is expected to reach sustainable production of about 250,000 ounces per year of platinum, palladium, rhodium and gold (4E) in about seven years.

Theta Gold Mines will spend R1 billion on the Transvaal Gold Mining Estate Ltd (TGME) underground project, which comprises the Beta, Frankfort and CDM mines that will produce about 419,000 ounces of gold over the initial life-of-mine of eight years.


Community, social and personal services

Community, social and personal services are also showing signs of life, announcing projects worth R9.8 billion, the highest since 2017.

The biggest project is the Student Housing Infrastructure Programme valued at R3.4 billion, and the One-Stop Border Posts project, worth R1.5 billion.

Both projects are part of the government’s Strategic Integrated Projects.

The Student Housing Infrastructure Programme entails building new residential student facilities in eight South African higher education institutions, while the One-Stop Border Posts project will be rolled out at the borders with Zimbabwe, Mozambique, Botswana and eSwatini to ensure the seamless movement of people in and out of the country.


Read: The best and worst places to be during the pandemic right now – where South Africa ranks

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Here are some of the major developments planned for South Africa – including car factories and new borders