Date: 18/04/2007

Source: Limpopo Provincial Government

Title: Moloto: Investors meeting

Speaker's notes for Limpopo Premier Mr Sello Moloto during a round table discussion with potential investors, Johannesburg, Gauteng province

Programme director,
My colleague the MEC for Economic Development, Environment and Tourism,
Captains of industry and business people,
Distinguished guests,
Ladies and gentlemen,

This encounter is one of the many which our province initiated for the purposes of interacting with the private sector and other developmental agencies regarding the future of our province and its people. We hope to convince some of you to join us in our quest to make Limpopo one of the biggest contributors to the South Africa's national economy. In this regard we are particularly looking for vibrant and lasting partnerships.

Underpinning this interaction is our determination to attract investment at a faster rate as well as to create jobs and fight poverty. To achieve this we hope that some of you will take advantage of opportunities we shall showcase. We assume that many of you already have some investments in our province and as such have a better sense of what Limpopo offers. This will obviously make our job easier when explaining the minor details entailed in each of the projects available.

Our province is a warm and generous province in South Africa. It is a peaceful, stable and secure destination for doing business and exchanging mutual friendships and investment. At the same time it is a province that is of critical importance to the future of not only South Africa, but indeed the entire subcontinent and the rest of Africa. Due to our proximity to some countries in the region, we believe that economic ventures that take place in Limpopo would definitely have a ripple effect across all our borders into Botswana, Zimbabwe, Mozambique and beyond. This is the reason why we call ourselves "the heartland of Southern Africa," as our strategic location provides easy access to South African and African markets.

Investing in Limpopo therefore means that you will also be contributing to the long-term stability of the Southern African region and the continent. This is in line with the objectives of the African Union (AU) and the New Partnership for Africa's Development (NEPAD) which advocates for the creation of a better Africa and a better world. This understanding is also in line with the stated objectives of Limpopo Provincial Growth and Development Strategy which seeks to attain Regional integration amongst the countries of the SADC region and of the continent.

Limpopo's economic overview

As some of you will know, in the last decade, Limpopo recorded a phenomenal growth rate of 4,0% which is above the country's average rate during the same period under review. In recent years, we have distinguished ourselves as the fifth largest contributor to South Africa's growth rate at 6,7% despite the drought situation we faced in the last two years. Limpopo has in the recent past; distinguished itself as a preferred investment destination in a variety of sectors, such as mining, tourism and agriculture.

We are home to 10,5% of South Africa's population, according to the 2005 estimates. The structure of our economy has changed little over the last decade, although the mining sector has become bigger and more prominent.

International trade

Limpopo has experienced relatively strong growth in international trade in recent years, with exports climbing from R3,9 billion during 2001, to approximately R7 billion in 2003. The European Union (EU) and specifically the United Kingdom (UK), Netherlands, Germany and France remain Limpopo's most important trading partners. Trade with North America and particularly the United States, remains strong. Key markets in Asia continue to be Japan, China, Taiwan, and Indonesia. Limpopo's largest trading partners in Africa are Zimbabwe, Mozambique, Zambia and Tanzania. Trade with Latin America is relatively small. In the Middle East, Israel and Turkey are Limpopo's key markets. Limpopo's main exports emanate from the primary mining and agriculture industries, some manufactured products, arts and crafts.

Programme director,

Towards the end of 2004, Limpopo developed a Provincial Growth and Development Strategy (PGDS) that was anchored on three growth sectors which are critical for the growth and development of people and industries in the province. These sectors include mining, agriculture and tourism. In order to ensure implementation and to drive the process of bringing in investment, seven industrial clusters were identified along the value chain of each one of these sectors. The sectors include: Transport and logistics hub based in Polokwane, Platinum group metals cluster, Petro-chemical cluster, Agro-processing, Red and White meat cluster and forestry.

The PGDS clearly outlines specific roles for each sector to play, including government and business. While business invests in these areas, government sees its role as that of rolling out infrastructural development programmes such as roads, water and electricity in order to make it easier for investors to reduce their cost of doing business. Our vision is to see overall empowerment of the historically disadvantaged people in line with the new Broad Based Black Economic Empowerment (BBBEE) codes and charters that are in place.

Programme director,

Moving from the general to the specific, this is what our industrial projects entail. Under the Logistic and Transport Hub cluster; the province is looking at the development of the Industrial Development Zone (IDZ) at Polokwane International Airport. This will create opportunities for exporters who add value to Limpopo's raw materials.

Our aim is to promote Polokwane as a destination for people and cargo and the gateway to Africa, constituting a nerve centre for regional economic integration, towards achieving the ideals of NEPAD. Other projects linked to the development of transport and logistics include the building of the International Convention Centre at Polokwane, Peter Mokaba sports complex, a 250 bed Five Star Hotel and a Regional Shopping Complex aimed at capturing both the domestic and the Southern African Development Community (SADC) markets.

All these projects combined, have the potential to turn "the Heartland of southern Africa" into an investor's paradise for the region. The upgrading of Maputo port in neighbouring Mozambique also means that Limpopo-based exporters and importers can use the facility to access world markets. Maputo is much closer to Limpopo than more distant South African ports where congestion often hampers trade.

Limpopo exporters estimate they will save about one third of their transportation costs by using the facility. Linked to Limpopo by road and rail, Maputo port is situated 300 and 400 kilometres from the main mining and agricultural centres of Limpopo. The traditional port of Durban, for example, is 1 000 kilometres from these areas.

Platinum Group Metals Cluster: Mining is by far the largest sector in the province, contributing 21,6% to the total value of our Gross Domestic Product Per Region (GDPR). Our mineral wealth remains unexploited. Eighty percent of the earth's geological history is represented within Limpopo's borders, according to the Council for Geosciences.

The world's largest reserves of: Platinum, Chrome, Diamond, Silicon are found in Limpopo. As we announced recently during the State of the Province Address, the province will see over R10 billion investments in expansions of mining operations by major mining houses during the cause of this year. This will obviously go a long way towards increasing our labour absorption capacity and alleviation of poverty.

Last month we witnessed the opening of two major projects that have the capacity to take mining in our province to even greater heights. These include the construction of the multi-billion rand De Hoop Dam in Sekhukhune and the investment of R1,67 billion by Xstrata on a ferrochrome smelter plant in Steilloop. Already the mining industry is looking at establishing an underground mining academy in Sekhukhune, which will help a great deal in the development and retention of skills in the mining sector.

Our challenge is to ensure that downstream opportunities which include beneficiation activities as well as side stream activities associated with the supply of goods and service inputs needed in mining are done in the province. Both the mining sector and the provincial government are agreed about the need to upgrade infrastructure and logistics in order to accommodate mining expansions. There is a broad commitment from the mines to put up plants in Limpopo for the purpose of warehousing of equipments which are needed for their day to day activities. It is envisaged that even light engineering work and the routine maintenance of machinery could be done in the province.

Programme director,

Another key industry within the province, which has long-term prospects, is in the Petro-chemical Cluster: Waterberg is the third largest coal field in the country. It also hosts 6,5 billion of South Africa's coal reserves. Major coal producing areas in South Africa have reached maturity stage and large scale expansions are limited. There is only one operating mine in the Waterberg, in the name Grootgeluk mine, owned by Exxaro.

SASOL converts 46 million tons of coal per annum into oil and petrochemicals. 90 million tons of South Africa's coal is consumed by Eskom annually; while 60 million tons is exported. As we announced early this year, much of Waterberg flagship projects will now be happening this year. The R26 billion investments by Eskom at Lephalale Matimba power station has resumed and will certainly go a long way in addressing the growing electricity needs of both the province and the country. Exxaro Grootgeluk Coal Mine will be expanding its production capacity to meet the resource needs of this development. This will require an investment of over R7 billion into the Lephalale plant.

SASOL on the other hand is much advanced with its plans for the liquefactions of these coal resources into fuel and other chemicals. These are major capital investments with potential to stimulate the up-spring of other related industries.

Agro-Processing Cluster: The varied climate in the province allows Limpopo to produce a wide variety of agricultural products. We can certainly say with confidence that, Limpopo is the food basket of South Africa producing 75% of the country's mangoes, 65% of its papayas, 36% of its tea, 25% of its citrus, bananas and litchis, 60% of its avocadoes, 67% of tomatoes and a whopping 285 000 tons of potatoes are grown in Limpopo. Other crops include coffee, nuts, guavas, a burgeoning sisal industry, cotton, tobacco and timber in addition to staples such as sunflowers, maize, wheat and table grapes. Cattle and game farming are also thriving.

The value chain down stream includes processing, packaging and exporting. Improvements to logistical capacity and investment in plant biotechnology will also contribute significantly to increased competitiveness of this cluster. The provincial government is establishing an Agri-business academy at former agricultural colleges of Tompi Seleka in Sekhukhune and Madzivhandila in Vhembe to enhance the capacity of small agricultural farmers and our extension officers. This initiative will go a long way in harnessing agri-business skills both in the sector and within the province.

Red and White Meat Cluster: This cluster is build around current and emergent cattle, goat and poultry production as well as animal-feed production. There is also a development of a growing range of processed products, such as fruit juice and concentrates. Considerable opportunity exists in the areas of processing and packaging, as well as the export of beef, pork, goat products, chicken and eggs, as well as fruit and vegetables. The Limpopo Provincial Government is also facilitating development of new types of farming and further value-added processing of products as diverse as sugar, soya, marula fruits and essential oils. The scene has been set for bio-diesel. The South African Bureau of Standards (SABS) recently approved the European Union (EU) based specifications for bio-diesel which are backed by major players in the fuel industry. We are looking at investors who are interested in exploiting the benefits of bio-diesel fuel as an alternative energy source to supplement traditional forms of energy.

Tourism Cluster: Well established as an eco-tourism destination, Limpopo offers numerous opportunities for the development of nature based tourism with strong appeal to international tourists. The biggest draw card in the province, is the proliferation of game reserves and Limpopo is home of the world's greatest concentration of national parks. One of our major wildlife sanctuaries is the renowned the Great Limpopo Trans-frontier Park straddling Mozambique, Zimbabwe and South Africa. Apart from the Kruger National Park, of which 80% resides within our borders, there are 53 state owned nature reserves which are to be commercialised, with potential for local and foreign investment in terms of ownership, management and concessionary activity.

As we announced early this year, the province has an enormous amount of unexplored possibilities in health tourism in the form of health spas and wellness getaways. The potential for Agri-tourism, which is a new concept in tourism, is also huge and has not been fully tapped. Our view is that Limpopo offers a lot of Agri-tourism potential which is of a similar kind and nature, as the wine and garden routes in the Western Cape province. The hospitality industry is invited to explore and calculate the actual benefits of these possibilities.

Forestry Cluster: Existing plantations including the production of macadamia are at the centre of this cluster. Up-stream activities include nurseries and plant material production, whereas down-stream activities refer to sawmills and other timber processing facilities.

Ladies and gentlemen

Apart from the projects we have just mentioned, you should know that our capital Polokwane, has been selected as one of the nine cities to host the 2010 FIFA World soccer games. The process of constructing a world-class stadium has already started. The provision of requisite skills or human capital and infrastructure for water, road network, energy, Information and Communication Technology (ICT) and telecommunications and other services would therefore be required in abundance.

Programme director,

Let us use this interaction wisely, to explore possibilities of harnessing the opportunities that are available in order to maximise the benefits for our people. We are grateful for your willingness to engage with us in facilitating investments with our business people and trust that this programme will be followed up, well into the future. Trade and Investment Limpopo (TIL) is most happy to assist investors of any size in identifying appropriate opportunities.

I thank you

Issued by: Office of the Premier, Limpopo Provincial Government
18 April 2007