China inks in R11-billion deal with Port Elizabeth
The plant will manufacture pick-up trucks, service utility vehicles (SUVs) and sedans for the African market.
The hefty investment is set to create 2500 direct jobs and thousands of indirect ones.
This follows an agreement signed in China at the weekend between the Industrial Development Corporation (IDC) and China’s fifth largest vehicle manufacturer Beijing Automobile International Corporation (BAIC).
Some of the Chinese vehicle manufacturer’s subsidiaries include passenger car maker BAIC Motor, military vehicle and SUV maker BAW, and truck, bus and agricultural equipment maker Foton Motor.
Construction on the Nelson Mandela Bay plant, which represents the company’s biggest single investment in Africa, is set to start before the end of the year or early next year.
IDC spokesman Mandla Mpangase said the plant’s exact location has not been made public and is still subject to a feasibility study.
“We have just signed the agreement to set up the plant in PE, which will have some really great economic spin offs for that region,” he said.
“The final selection of the actual location will be finalised shortly before the completion of the bankable feasibility study. However, because of the export element, it would make sense for the production facility to be located in the coastal area.”
While the bulk of the construction bill will be footed by the BAIC, the IDC will co-fund the development.
Mpangase said the amount of funding the IDC pumps into the plant would depend on the feasibility study.
Nelson Mandela Bay municipality economic development political head Zukile Jodwana said any investment that would help cut into the massive unemployment rate and fatten the local economy was always welcome.
“This is a boost for the city. We are faced with massive unemployment, particularly among the youth, so any investment that will help address these challenges is welcomed,” he said.
The new plant is expected to produce about 50000 vehicles during its first phase, with capacity set to double in the second stage.
BAIC joins a host of other vehicle manufacturers that have made significant investments in the city.
This includes Volkswagen SA’s R4.5-billion expansion and FAW’s R600-million manufacturing plant at the Coega IDZ.
The latest investment forms part of 26 bilateral agreements – valued at about R94-billion – between South Africa and China signed by president Jacob Zuma and his Chinese counterpart Xi Jinping in early December.
The investment has been met with excitement, as one that will strengthen and sustain the city’s economy as well as help dent the region’s high 36% unemployment rate.
Nelson Mandela Bay Business Chamber chief executive Kevin Hustler said: “An investment of this scale…could be a major catalyst for the region’s economy.”
He said five multinational vehicle manufacturers were already operating in the region.
“This enables the region to have a shared skills pool of qualified labour, as well as a diversified and strong local supplier base, off which the new vehicle manufacturer could most certainly leverage and benefit,” he said.
“Relations between China and SA continue to grow, leading to an increase in economic activity between the two countries, and we welcome the attendant job creation potential of the partnership.”
Nafcoc regional convener Litemba Singap said the organisation would support lobbying to get the plant set up in the city’s automotive hub, the Coega IDZ.
“We are definitely excited by this investment as it will be a big boost for job creation and for small business participation in the construction of the new plant,” he said.
The Coega IDZ was one of a number of potential sites visited by a BAIC delegation last year.
But Coega spokesman Ayanda Vilakazi said yesterday that was as far as discussions went with the car manufacturer. “There was an initial discussion at the beginning of the year and it has not progressed from that,” he said.
The IDC, which provides financial support to businesses and investment projects, is partnering on these agreements in a bid to bring large-scale investments to South Africa.
This in turn will create jobs, increase exports and hasten economic growth while maintaining cooperation with China.
A BAIC subsidiary, BAW South Africa, opened a minibus taxi assembly plant in Gauteng four years ago in a R196-million investment venture that saw 469 people getting jobs. — email@example.com
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