Saldanha lease deal opens door to R6.9bn investment

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JIMMY MOYAHA: Transnet National Ports Authority [TNPA] has officially entered into a 25-year lease agreement with Freeport Saldanha – approximately 55 hectares of land within the Port of Saldanha.

We’re going to take a closer look at this with the chief executive officer of Freeport Saldanha. Mr Xola Sithole joins us on the line now to see what we make of it. Xola, lovely having you on the show. Thanks so much for taking the time. Tell us about this particular agreement between the freeport and Transnet.

XOLA SITHOLE: Thank you Jimmy, it’s a pleasure to be here.

This is a unique proposition. Freeport Saldanha is a special economic zone, the only [one] that is designated within port limits.

This provides highly usable land on the southern precinct, which is the port area. It provides the ability for us to do the industrial development that we seek to do as an asset within the port.

This gives over 55 hectares of industrial land for project developers, as well as to get access [to the port].

JIMMY MOYAHA: Now Xola, when you say this is the only piece of land within the special economic zone [SEZ] that sits within port, I want to take a look at the strategic advantage that that brings to the industries and the companies that are looking to develop that area. Obviously from your perspective, the agreement with Transnet Ports Authority opens up what you’re then able to offer any interested parties that want to invest in that special economic zone. Take us through that and some of the strategic advantages it comes with.

XOLA SITHOLE: The immediate thing that comes to mind is that special economic zones in themselves concentrate industrial development and they create opportunities for investors.

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And in order for them to thrive, they require access to port infrastructure, which then makes it easier for them to receive goods and export.

Freeport Saldanha also has a customs-controlled area status, and it allows for industries to locate and import goods and beneficiate export.

It gives them access to a variety of incentive-related data available to special economic zones.

What this does is it unlocks [opportunities] and gives them certainty. Prior to this, before the signing of the lease, we received a number of enquiries.

A number of people have shown a lot of interest in investing in the SEZ, but because we couldn’t yet close on the commercials around the lease between us and the TNPA that would allow for that to happen, we couldn’t advance those projects through the development cycle.

So the significance of this is that there is now certainty, and that allows investors to plan, and it allows investors to know that they have access to industrial land – over and above TNPA-facilitated port access.

That’s done through one front door, making it easier for them to advance their project.

JIMMY MOYAHA: Now Xola, the estimated value of these projects when we last heard was around the R6.9 billion level in terms of the investment that had been pipelined up to this point. I want to get your thoughts on where we go from here. What happens next, now that this commercial agreement has been entered into? Now that we have that element of certainty that you mentioned, what happens to the pipeline, what happens to the investors who are interested? Where do we go?

XOLA SITHOLE: When we had occasion to launch the signing of this lease we had the investors in the room. Over the last few months they have been anxious because these are people that we’ve worked with over time to find out when there would be certainty around the land.

There’s a variety of projects in the pipeline that are in various stages of development which couldn’t move because this lease was not in place.

Now, what the signing of this lease does is it removes what those investors had seen as an obstacle to moving forward with these projects.

We are seized, as we speak, with rekindling those projects and making sure that they are now delivered to expectation. So our job now is to convert that pipeline into signed sub-leases and shovels on the ground, and to break ground.

JIMMY MOYAHA: Xola, before I let you go, I want to take a look at what other businesses or investment opportunities the freeport would be looking to attract. You’ve obviously got the pipeline projects. You’ve perhaps got a clear idea of some of the sectors or businesses or investment opportunities you wish to unlock and wish to see in the freeport area.

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Take us through what sorts of businesses or business opportunities you’re hoping to attract going forward.

XOLA SITHOLE: Well, our value proposition as a special economic zone is built around our unique location near a natural deepwater port.

Industries that make a lot more sense for the special economic zone are marine and bunkering services. It’s industrial manufacturing on the back of the industrial basin, broadly, which includes steel and steel-related industries and fabrication.

It includes energy industries. It includes green hydrogen and its derivatives, projects around that space. We also have opportunities in agro-processing in other sectors.

But fundamentally you have massive opportunities in and around these sectors that I have just mentioned.

JIMMY MOYAHA: A new commercial lease between Freeport Saldanha and Transnet Ports Authority is aimed at unlocking that Port of Saldanha and the investment opportunity that sits within that area – especially given this would be considered a special economic zone.

This could mean that we have very interested parties with very special requirements who are looking to invest in this area.

All the best to you and the Freeport team.

The chief executive officer of Freeport Saldanha, Xola Sithole, joined us to take a look at their commercial agreement with Transnet Ports Authority and what it means for their expansion plans.

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