South Africa’s Saldanha Bay has finally arrived

Saldhana Bay, an erstwhile sleepy fishing town, iron ore export hub and historic seaside town on South Africa’s northwestern Atlantic coast, is heading for boom times thanks to its recently conferred IDZ (industrial development zone) status.

If only Saldhana Bay had had a reasonably-sized water supply, it might have reversed historical roles with Cape Town. But when Portuguese explorer, Antonio de Saldhana, arrived there in 1501, he was unimpressed with the near-desert conditions of the surrounding territory but spoke highly of the natural harbour in his writings. He later gave his name to the bay.

A little over 300 years later, English diplomat Edmund Roberts visited the Bay and noted, in 1833, that it was “well sheltered from violent winds, having a sufficient depth of water, but the country is very sandy and agriculture but little attended to; a few cattle and sheep are raised among the scanty herbage”. He suggested that it was an “uneventful area to visit”.

In the meantime, Cape Town was rising fast, and while its mountainous surrounding beauty, plentiful water and fertile lands were friendlier for settlers, as a harbour it couldn’t hold a candle to Saldhana Bay, later discovered to be “the biggest and most suitable natural deepwater harbour in the southern hemisphere”.

But such accidents of nature and history could well be on their way to reparation as economic events unfold rapidly and Saldhana Bay suddenly finds itself one of the most desirable investment destinations in Africa. The water scarcity issue has long been solved with artesian wells and desalinisation. It is entirely possible that the town of Saldhana Bay, current population around 72,000, could quite quickly begin to challenge Cape Town as a busy and wealthy industrial metropolis.

The port has developed into a modern harbour relatively recently, primarily as an export facility for iron ore from the Northern Cape Province’s prolific ferrous deposits.

This required the laying of an 800km railway line linking the mines at Sishen with a deepwater jetty in Saldanha Bay designed to accommodate the Cape-size ore carriers. The first shipload of iron ore was exported on the carrier Fern Sea in September 1976.

Now investment and opportunity are arrowing in from the world over as the rail link from Sishen transforms into a development corridor and the rapidly expanding offshore oil fields in western and southwestern Africa cry out for facilities for repair, maintenance, fitting and chandlery; and the manufacturing sector expands correspondingly.   

When South African President Jacob Zuma officially launched the Saldanha Bay Industrial Development Zone (IDZ), he introduced a major boost to the country’s drive for enhanced industrialisation and job creation. “It is estimated that overall direct and indirect employment creation will be around 25,000 over a period of 20 years,” says Zuma. “It is expected to generate around R62bn ($6.2bn) in foreign exchange. We are determined to turn these forecasts into reality.”

The South African Revenue Service defines an IDZ as being a purpose-built industrial estate linked to an international air or sea port which might contain one or multiple customs-controlled areas tailored for manufacturing and storage of goods to boost beneficiation, investment, economic growth and the development of skills and employment.

GDP generator
According to South Africa’s Trade and Industry Minister Rob Davies, a feasibility study has shown that the Saldanha Bay IDZ could potentially contribute 86% to the gross geographic product of the Western Cape and create in the region of 12,000 new jobs.

“Additionally, the Saldanha Bay IDZ is likely to attract foreign direct investment worth approximately R9.3bn ($930m) over 25 years,” Davies says.

A feasibility study conducted by WesGrow, the Western Cape’s investment promotion agency, identified three industrial clusters with significant potential for Saldhana Bay: a renewable energy production and manufacturing cluster, an oil supply base serving the oil and gas sector, coupled with a maritime ship building and repair cluster, and a steel and minerals production and manufacturing cluster.

Construction has already started on a liquefied petroleum gas (LPG) import and storage terminal in Saldhana Bay.

The first phase of the project, developed to mitigate anticipated LPG market supply shortages in the Western Cape, is scheduled for commissioning in the second half of 2015.

Meanwhile, the Western Cape Minister of Finance, Economic Development and Tourism, Alan Winde, confirms that the Saldanha Bay IDZ is drawing strong international interest, with several lease agreements signed and a surge of global oil and gas companies negotiating joint ventures with South African firms.

“The Saldanha Bay IDZ licensing company has signed six lease agreements with international and South African oil and gas companies.

“These include firms specialising in oil field services, oil rig operations, logistics, ship repair, engineering and market support,” notes Winde.

Representative of foreign direct investment deals is a joint venture between South African companies and German company Oiltanking GmbH to build a commercial crude oil storage and blending terminal at Saldanha.

“Saldhana is  an excellent location for a crude oil hub because it is close to strategic tanker routes from key oil-producing regions to major oil-consuming markets,” says a company spokesman.

“It is ideally situated for the blending of west African and South American crude oils, and has the potential to establish itself as a global crude transhipment hub focused on certain established trade routes.”

Winde says the Western Cape government has invested R25m [$2.3m] over five years to create the IDZ.