String of new investments cause for hope – a R9.4bn injection

CAPE TOWN — In the volatile, transitioning South Africa, where business confidence dipped to a seven-month low this March, a sudden R9.4bn investment in mining and manufacturing is cause for celebration and sustained hope. In Pretoria we now have Nissan pledging R3bn more towards its South African plant in order to produce the latest Navara pick-up for global consumption. Among things that government has done right is extending the manufacturing incentive (tax breaks) program to 2035. At Richard’s Bay, Rio Tinto, through its operator, Richards Bay Minerals, RBM, is pouring R6.4bn into expanding its mining operations for the hugely sought-after sand-encased minerals; rutile, zircon, titania slag and high purity iron. Construction starts within months and the operation will be self-funded from RBM’s cash flows. RBM paid R2.5bn in taxes and royalties in KwaZulu-Natal alone last year. A BBBEE consortium of lead investors and the four host communities, owns a 24% stake, while the remaining two percent of the shares are held in an employee trust. The investments follow – among others – the recent R5.6bn zinc mine investment by Vedanta in the Gamsberg, Northern Cape. Hope springs… – Chris Bateman

Nissan pledges $213m to South Africa for Navara model

By John Bowker

(Bloomberg) – Nissan Motor Co. plans to invest a further R3bn ($213m) in its South African plant to prepare for production of the latest version of the Navara pickup.

The decision by the Japanese carmaker may add 30,000 units to the plant’s current annual volume of 35,000, Mike Whitfield, managing director of Nissan Africa, said at the factory north of Pretoria on Wednesday. The manufacture of the Navara from 2020 will also create about 400 direct jobs in a country which has an unemployment rate of 27%.

“Automotive is already the largest part of South Africa’s manufacturing sector, contributing around 7% of gross domestic product annually and accounting for a third of manufacturing output,” South African President Cyril Ramaphosa said at the Nissan facility in Rosslyn.

Nissan’s investment is the first significant commitment by an automaker since international firms agreed with the government late last year to extend a manufacturing incentive program through 2035. The plan has also seen the likes of Toyota Motor Corp., Volkswagen AG and BMW AG operate plants in the country, in return for generous tax breaks. The majority of vehicles are produced for export.

Nissan plans to more than double its industrial reach in the Middle East, Africa and India by 2022 by adding more factories, Peyman Kargar, chairman of the car-maker’s operations in those three territories, said in an interview last month.

“By 2022 we want to double our presence in Africa and South Africa is the most important base for this growth,” Kargar said on Wednesday. “We export to more than 45 countries from South Africa and with the new Navara this will be even more.”

Rio Tinto approves $463m investment in Zulti South

Media release

Rio Tinto has approved the next stage in the development of Richards Bay Minerals (RBM) in South Africa through the construction of the Zulti South project. The $463m (Rio Tinto share $343m) investment will sustain RBM’s current capacity and extend mine life.

RBM currently operates four mines in the Zulti North lease area, a mineral separation plant and smelting facility. The Zulti North orebody grade is declining, hence the Zulti South mine is required to maintain the output of high-margin zircon and rutile, and provide sufficient ore to support TiO2 sales.

The Zulti South mine (Phase 1) will underpin RBM’s supply of zircon and ilmenite over the life of mine. Construction is scheduled to start in mid-2019, subject to the granting of all necessary permits, with first commercial production expected in late 2021. The investment will be fully self-funded from RBM’s cash flows, with no additional debt or recourse to Rio Tinto. The project is expected to deliver an internal rate of return of 24% (Rio Tinto share).

Rio Tinto chief executive J-S Jacques said “Rio Tinto has a long history in South Africa, and today’s investment underscores our commitment for the coming decades and beyond. Zulti South is one of the best undeveloped minerals sand deposits in the industry, and will significantly extend RBM’s position as a world-class, first-quartile asset. The long-term fundamentals of the market remain strong, and production from Zulti South will commence in time to fill a widening supply gap, ensuring RBM’s position as a leader in the sector, and delivering strong returns to our shareholders.”

Rio Tinto Energy & Minerals chief executive Bold Baatar said “RBM is an outstanding business, South Africa’s largest mineral sands producer and, equally importantly, a fully beneficiated metallurgical complex. We not only mine, but produce value-added products for customers around the world. We are proud of the value we create, and retain, in South Africa. This is underscored by our position as KwaZulu Natal’s leading taxpayer, paying $79 million in taxes and royalties in 2018 alone.

“Our investment in Zulti South will ensure we maintain our contribution to the province and our partner communities. We want to recognise the support from the Government of South Africa, the KwaZulu Natal provincial leadership and, most importantly, the invaluable support of our host communities – Mbonambi, Sokhulu, Mkhwanazi and Dube – in securing the future of this world-class business.”