Undertakings will add to foreign direct investment in SA and boost its beneficiation drive, says trade department Industrial Correspondent

Government was convinced that two large defence offset projects, said to have a combined value of more than R1bn, would go ahead, the trade and industry department said at the weekend.

The projects will add to foreign direct investment in SA and boost government's beneficiation drive substantially.

The most advanced of the two projects would be a plant to make stainless steel, refrigerated box containers at the Coega industrial development zone near Port Elizabeth, said trade and industry deputy director-general Lionel October.

The project, said to be worth R700m and involving a Chinese container manufacturer, could become Coega's first tenant.

Coega management could not confirm this, but business development manager Eugene Heeger said there had been talks on the project with the parties involved.

The other project at a location still to be chosen was a stainless steel, precision-strip mill. The project has been on the cards for more than two years. October said the mill would probably be established in Eastern Cape, as government was pushing for investment in that province.

Heeger was commenting on progress on the German Submarine Consortium's offset obligations. The consortium, which is supplying three submarines to SA, had to create economic benefits in nondefence activities in SA worth à 2,85bn over the lifetime of the submarine procurement programme.

A review of government's national industrial participation programme released this month claimed to be "a detailed report on actual projects that have been facilitated". But while talks may have been facilitated on the submarine consortium's projects listed in the report, few of these have materialised.

In fact, a cold-rolling mill venture on the list of 10 projects had been scrapped. October said the mill was replaced by the stainless steel, precision-strip project, which also appeared on the list.

He said the list was of projects submitted by obligors and which had not been withdrawn.

A condom manufacturing project on the list was also being reconsidered by the main investor, German company Condomi. The report stated that the project would create 520 direct jobs. Six of the 10 consortium projects were scheduled to start only this year, and a seventh was under discussion.

The largest project in terms of job creation, at 1500, was an agriculture and floricultural production project in the Western and Eastern Cape provinces.

The starting date of this project was in 2001.

October was confident, however, that the consortium was on track to meet its obligations.

"The submarine consortium is doing fewer but larger projects, which take longer, as opposed to many and small projects," said October.

"We are comfortable we will get some really good projects from the consortium."

The two stainless steel projects would take SA further downstream, he said.

The submarine consortium was also working on a skills and training offset project in Atlantis outside Cape Town, he said.

This project was not listed as it had been approved by government before the report was published.

With acknowledgements to Carli Lourens and the Business Day.