The industrial future of Nelson Mandela Bay hinges on a number of items, but none so powerful and imagination capturing as PetroSA’s Project Mthombo – a project that will not only change the industrial face of the province, but also diversify and re-dimension the provincial economy.
The possibilities in PetroSA’s Project Mthombo are endless – and businesses need to start planning for this future by looking at, and planning for, the opportunities that will arise. The globally competitive refinery is key to the country’s security of liquid fuels supply and ability to meet international clean fuel standards (currently Euro V.) It needs to be remembered that, by 2015, the country’s liquid fuels deficit will be around 200,000barrels/ day.
Project Mthombo will assist South Africa to achieve a quarter of its energy needs while bringing us into the 21st and 22nd centuries. Project Mthombo, a US$10bn 300,000 barrels/day oil refinery, is set to come on stream in the Coega IDZ around 2020, spurning massive opportunities. The proposed “utility island” serving the refinery will include a desalination plant and power station, which will channel excess capacity into the city’s water and electricity supply networks, enhancing industry’s ability to do business.
The project also presents significant up and downstream business opportunities, which have the potential to contribute substantially to economic growth in both the industrialised urban areas and the rural heartland of the Eastern Cape Province. This will be through localisation
opportunities and the development of a petrochemicals cluster that will include biofuels for mixing with the refinery’s products and potentially fertilisers and plastics. Socio-economic forecasts indicate that the project will create an estimated 18,500 direct and indirect jobs at the height of the construction phase and an estimated 12,000 direct and indirect jobs through its operation. The forecasts also predict an estimated 5.5% increase in economic growth for the Eastern Cape due to direct, indirect and induced impacts.
Kevin Hustler, CEO of the Nelson Mandela Bay Business Chamber, has committed the Chamber as an advocate for Project Mthombo.
“The Nelson Mandela Bay Business Chamber is a proponent of Project Mthombo, the oil refinery at Coega, through the Multi- Stakeholder Interest Group which is preparing the city in terms of infrastructure skills and supply chain development,” says Hustler. “The Business Chamber will continue to advocate for Project Mthombo in terms of its immense potential to impact our region’s socio-economic landscape. The refinery is a path to job creation, industrial diversification, and long-term poverty relief.”
Project Mthombo will contribute to achieving the developmental objectives of the New Growth Path, given its employment generation potential. The project also speaks to national policy in scaling up efforts to promote long-term industrialisation and industrial diversification. Its localisation programme potential is also a very significant factor in leveraging SA’s industry into the global supply chain. Due to its job creation and infrastructure benefits, the project will also impact positively on gross domestic product, gross geographic product, taxes and household income, as well as the rates base of the Nelson Mandela Bay Municipality.
The refinery opens up the opportunity for development of a petrochemicals cluster, making productive use of the additional products and by-products of the refining process, such as asphalts, lubricants, chemicals and polymers (plastics.) This will both support and be supported by agricultural development in rural areas, particularly for bio-fuels. The need for a wide range of support services, such as transport, engineering and ICT as well as “soft skills” for the refinery and its extensive infrastructure will also create on-going business opportunities for new and existing companies in the province. The area has a wide variety of highly-skilled – but often under-utilised – companies that are based in Nelson Mandela Bay but do much of their work, or export most of their product, outside of the province and the country.
Agriculture, Agroprocessing & Rural Development
The National Clean Fuels Programme targets replacement of 2% of petrol and diesel fuels with bio-fuels over the next five years. This requirement generates a demand for agricultural products (soya, canola) from the Eastern Cape’s rural areas and integrates with the provincial economic development strategy, which identifies bio-fuels as a growth industry. As a by-product of the refining process, sulphur could be further beneficiated into sulphuric acid, which is widely used in pulp and paper manufacturing. This links to the Eastern Cape’s strong forestry base that is in need of local beneficiation. Sulphur is also a key ingredient in fertilizers opening up further industrial opportunities as well as the supply of fertilizer to farming activities in rural areas, including the farming of crops such as canola for bio-fuels, which in turn feed into the refinery’s need for a bio-fuel component in its end product. There will also be a positive logistics impact, with rail links being required between the east of the province, the former Transkei and the Coega IDZ. This will also specifically allow other agricultural produce such as maize to get to markets, which is not the case at present. The potential therefore exists for further agro-beneficiation.
The strength of Project Mthombo and the up and downstream opportunities, which it presents, lies in the creation of sustainable jobs. The refinery is an investment in productive infrastructure, which in turn creates other economic and employment opportunities. The backward linkages into the rural hinterland created by the project also support sustainable job creation in agriculture and agro-processing and address the issue of uneven spatial development between urban and rural areas.
The skills developed will largely be in those areas where SA currently has dire shortages – e.g. metal work, fitting, welding, instrumentation, engineering, electrical and electronic – technical skills which are associated with employment in a range of manufacturing environments. Thus skills developed through the refinery project will be portable into other industrial opportunities. There is a strong business case for Project Mthombo. But also there is distinct opportunity for the Nelson Mandela Bay and the Eastern Cape business community – both to benefit and diversify. There is no impediment to Project Mthombo, and hard, but tremendously important decisions must be taken or we will not achieve the first rank among developing countries nor control our own destiny.