NEF invites French companies to co-invest

Together with other developers, including local and international entrepreneurs and development finance institutions, the NEF has built a portfolio of manufacturing and industrial capacity in strategic economic sectors, which will potentially add 1% to South Africa's GDP, once commercialized".

Mthethwa says "the projects are an opportunity for mutual benefit and not aid, because they offer potentially lucrative value and growth for international investors willing to become partners in a country that is uniquely positioned as the gateway into Africa".

These companies, which are 24 in total, will drive beneficiation, increase South Africa's export-earning potential and reduce import dependency, thus fulfilling some of the objectives envisioned in South Africa macro-economic policies.

South Africa, says Mthethwa, is one of the most sophisticated and promising emerging markets globally. The unique combination of a highly developed first-world economic infrastructure and a huge emergent market economy has given rise to a strong entrepreneurial and dynamic investment environment, which is enhanced through the opportunities that black economic empowerment presents to foreign investors.

The NEF uses a sector-targeted approach in developing its portfolio and the projects are in various sectors, namely Tourism, Mining, Minerals Beneficiation, Agri-processing, Renewable Energy, Business Process Outsourcing and Infrastructural Projects.

This is a sample of these:

Project 1

Mineral Beneficiation - R1.9 billion (US$192 million or €141 million)

In Mineral Beneficiation is a project valued at R1.9 billion, and in which the NEF has invested R40 million. To date SA Metals has spent R25 million studying the feasibility of setting up a mine-dump processing plant that will be substantially black-owned. We are pleased to recount that the NEF provided funding for the Bankable Feasibility Study.

The three largest producing countries of pig iron, manly China, Japan and USA, jointly account for about 50% of global production, and their respective demand exceeds internal production. To date, SA Metals has spent R25 million studying the feasibility of setting up a mine-dump processing plant that will be substantially black-owned. The NEF provided funding for the Bankable Feasibility Study.

South Africa is ranked 9th in the world in terms of reserve base of iron ore and 5th in terms of production of iron ore. More than 75% of the ore is exported with about 10million tones consumed in the local steel production market.

Project 2

Sector: Infrastructure (Telecommunications and Broadband) - R300 million (US$30 million or €22 million)

Project Summary:
The Link Africa project aims to deploy Last Mile Fibre Optic cables across the national landscape of South Africa. Fibre optic infrastructure that is 4 times faster at less than half the cost of normal fibre will be deployed. Licensed patented technology that uses existing sewer and other currently existing infrastructure rather than the normal method of digging up trenches to lay fibre optic cables, will be utilised.

An initial capital investment of R300 million will lead to the establishment of a South African Last Mile Fibre Optic Infrastructure Company, Link Africa. The project will increase broadband access, thus having a huge impact on the liberalisation of broadband access in South Africa

Project 3

Sector: Infrastructure (Healthcare) - R1.2 billion (US$121 million or €89 million)

Project Summary:
South Africa's Health Care sector is dominated primarily by 3 large groups who control more than 75% of total market share, while the balance is largely fragmented. Busa MED intends to be the first black-owned hospital group to compete with the big three. The vision is to be a consolidator of fragmented health care market. This will be kick-started with the commercialisation of 4 hospital licenses amounting to 500 hospital beds, spread over three provinces, namely the Western Cape, Gauteng and the Free State. With the first being in Strand, Cape Town, this hospital will be a world class orthopaedic and sports medicines centre, a first of its kind in Africa. The aim is to develop centres of excellence which will provide world-class services..

Project 4

Sector: Mineral Beneficiation - R15 billion (US$1,5 billion or €1.1 billion)

Project Summary:
In Mineral Beneficiation, a project valued at US$1,5 bn (€1.1 bn or ZAR15 billion), the Rare Metals Industries (RMI) is an investment by a select group of venture capital investors collaborating in the building of the world's first integrated speciality metals beneficiation complex.

This will produce high value industrial metals, namely pure Titanium, Zirconium, Hafnium and Silicon.

Currently, South Africa is the world's second largest producer of Titanium slag, but manufactures no Titanium metal or Titanium components. Titanium as a rare metal is difficult and expensive to produce, but faces strong demand growth and is used mainly in high tech industries like aerospace, nuclear and chemical processes. In the South African context specialist minerals such as iron ore, copper, cobalt, chrome and PGM's are mined locally and shipped to international markets primarily in raw form.

Multinationals further beneficiate the minerals and in certain instance produce finished goods such as super alloys and sell them back to global markets including South Africa, at increased prices. The envisaged plants at full operational capacity will annually produce 5,000 tons of Titanium, 2,000 tons of Zirconium, 8,000 tons of Silicon, 50,000 tons of Magnesium and generate annual revenue in excess of €1.5 billion. This plant will enable South Africa to create downstream beneficiation clusters.

Project 5

Sector: Mineral Beneficiation - R1.1 billion (US$110 million or €81 million)

Project Summary
TFST aims to commercialise South Africa's first Thin Film Solar Technology. The project aims to build and commission a 40MWpeak Thin Film Solar Panel manufacturing plant to be based in Paarl, in the Western Cape Province. ZAR1.1 billion or €81 million will be invested and it is estimated that 150 permanent direct jobs will be created.

The NEF is in the process of exploring potential co-financing or syndication arrangements with international and local strategic equity partners, and this will include both international and local Development Finance Institutions. Should the NEF take up its rights to invest in those projects, the NEF investment required will be approximately R5,5 billion.