Overview of the OR Tambo International Airport SEZ
South Africa distinguishes itself as being one of a few net processed food–exporting countries globally. It ranks as one of the top five exporters of grapes, avocadoes, citrus, and plums.
The country has a market-oriented agricultural economy that is highly diversified and includes the production of all the major grains (except rice), oilseeds, deciduous and subtropical fruits, sugar, citrus, wine and most vegetables.
A sophisticated and competitive agro-processing industry also exists and accounts for approximately 23% of the country’s manufacturing sector. Despite the impact of Covid-19 on the economy, 2020 saw the agricultural sector contribute positively with growth primarily underpinned by production in citrus, wine, maize, nuts, deciduous fruit and sugar cane, favourable weather conditions and a volatile exchange rate which had a positive impact on agricultural exports
Given its contribution to the economy, agriculture has been identified as one of the sectors of focus in South Africa’s Economic Recovery Plan. As an Agency of government, the Gauteng IDZ is promoting agro-processing investment opportunities at its SEZ located at OR Tambo International Airport
Benefits of locating a business in the SEZ
- Sectoral & value chain cluster facilitation and support
- Infrastructure development
- Enhanced Security
- Enhanced ease of doing business
- Access to incentives
The OR Tambo SEZ Value Proposition
The OR Tambo SEZ’s value proposition is centred around its competitive location at or in proximity to OR Tambo International Airport facilitating ease of access to the global and African Market
It also includes the following:
- An integrated spatial planning approach that forms part of the broader Aerotropolis development framework in the Ekurhuleni eastern corridor; this includes upgrades planned to OR Tambo International and broader infrastructure capabilities of the Metro;
- The offering & capabilities of Gauteng
- Logistics handling centred around the global capabilities of OR Tambo International’s air cargo facilities;
- Supporting concomitant supply and value chain relationships located in Ekurhuleni;
- Incentives including employment tax incentive, VAT exemption, and duty-free importation of production-related material and assets
- Serviced land
- Supplier development support
- One-stop-shop management arrangements including a single point of contact.
- ORTIA Precinct 2 is a 29ha land parcel forming part of the OR Tambo SEZ
- Located just outside OR Tambo International Airport and accessed off Atlas Road in Kempton Park, this gazetted SEZ land parcel is earmarked for the production of high value light weight goods that utilise air freight as a mode of transport. These include, medical consumables and equipment, electronics as well as perishable food products
Status of Development and Timelines
- Master plan done, indicating a projected GLA of 143 000 sq.m.
- Environmental Impact Studies underway, ROD to be secured by end of 2021, paving the way for bulk infrastructure works to ensue.
- Bulk infrastructure installations: from 2022
- Top Infrastructure Construction: from 2023
|Building sizes||Range from 500m2 to 17 000m2|
|Tenant Lease term||10 years|
|Rental, Parking & Service Rates:|
|Land lease – Investor is responsible for constructing the top infrastructure||R14/m2
Annual escalation to apply
Annual escalation to apply
|Parking (standard parking)||R450 per bay per month|
|Service Contribution / Levies||2,50% of rental income
Annual escalation to apply
|Electricity & Water Rates||R22 / per Kwh (excludes MVA charges) and R10/ per Kilo litre subject to usage|
Proposed Components of the Cluster
|Value Chain Providers|
Underlying Motivation for establishing a PGM Focused SEZ South Africa is vastly empowered by numerous mineral products. However the local value chain is limited to extraction and primary processing. Whilst the overall mining sector continues to contribute to the country’s GDP, various policies and initiatives have been implemented to increase the country’s competitiveness in the mineral beneficiation sector.
One of these initiatives is the proposition to enhance the localisation of PGM products in South Africa, given the country’s position as a major PGM mining producer. Specific to the latter, in 2019, the South African platinum mining sector accounted 71.8% of the global production (WIPC, 2019).
Of the total produced platinum, South Africa exported 120.6t of platinum, with local sales amounting to 4.7t. This resulted to less than 9% of the locally produced PGMs being beneficiated locally, mainly in the autocatalytic application which consumes almost 6% of PGMs.
Underlying motivation for Fuel Cells Localisation in South Africa With the increased roll-out of Battery Electric Vehicles and the phasing out of diesel vehicles in different regions in the world, the demand for PGMs in auto catalysts is under threat. One study shows that the share of diesel vehicles, which primarily use platinum will decline from 15 per cent to 7 per cent by 2030.
For South Africa’s platinum producers, that spells potential slower demand. The reduction in demand will have a direct impact on the PGM mining industry in South Africa which contributed 7.3% or R356 billion (US$26.6 billion) to the country’s GDP in 2019, up from 6.8% in 2017.
This existential threat to the industry would have a catastrophic effect on mining jobs as well as the country’s economy. It is on that premise that the ORTIA SEZ seeks to promote new applications for platinum; these include the production and use of fuel cell technologies in different uses such as transportation and backup power/electrification.
Desired Economic Impact of the Springs Precinct
PGMs used in fuel cell stacks averages 30g per stack used in vehicles, in contrast autocatalysts only use about 3-7g of PGMs.
Projections for the export of fuel cell products estimate annual sales of R600m (and above) per annum; this would be in support of transport and power generation applications to the EU and Asian markets as well as regional technology uptakes respectively
The Springs Precinct forms part of the Impala Platinum Refinery land holding located in Springs, Ekurhuleni. From a locational perspective, the Precinct is situated within the Region D administrative area of Ekurhuleni, same that includes the towns of Benoni, Brakpan and Springs and forms part of what is known as the “East Rand” industrial development corridor of Gauteng province.
Located on the northern fringes of the Springs urban area – approximately 3.5km north of the CBD and approximately 30km from O R Tambo International Airport, the Precinct is easily accessible with a drive-time of approximately 20 minutes to the Airport and 35- 40 minutes to Sandton, Johannesburg’s financial capital.
All these attributes make the Springs Precinct very competitive for value addition activities in PGMs (including the recycling of platinum) as well as the manufacturing and exporting of PGM related products such as fuel cells through OR Tambo International.
The Precinct will be a mixed industrial development with fuel cells at the core, broadening to other PGM value-adding activities (including other precious metals, where appropriate) and related suppliers. The site also makes it attractive for other advanced manufacturing activities (such as diffusion bonded welding, medical devices, and aerospace) and for other manufacturing sectors where Ekurhuleni has a competitive advantage e.g. transport equipment, mining supplies.
The Value Proposition of the Springs Precinct
Access to Raw Materials
South Africa remains the number 1 producer of PGMs globally, providing a basis for access to the base metal required to support PGM beneficiation.
Specifically, the site is located adjacent to the Impala platinum refinery and in close proximity to other metal refineries in Gauteng, providing efficient refinery streams across PGMs, silver, gold, cobalt, copper and nickel and metal recycling. There is a potential to explore a metal leasing scheme through Impala Platinum for full life cycle for OEMs.
The locality of the site allows for clustering and economic linkages with other suppliers of input materials related to metal and engineering.
Access to Local Technologies and infrastructure required to support the hydrogen economy
The hydrogen economy is undergoing major consideration in South Africa, with local technologies aimed at advancing fuel cells localization having been developed. From a country perspective, the location of the site, including infrastructure deemed essential to establish a fuel cells localisation destination (e.g. gas pipeline) are already available at Springs, making it competitive for the hosting of the hydrogen and fuel cells value chain.
Logistics and Transport
The Springs Precinct is located in proximity to OR Tambo International Airport for airfreight cargo and national highways that link to the seaports for large and heavy cargo. Furthermore, the Springs Precinct is extremely well served by road and rail access, making it a suitable location for the manufacturing of products that could serve the African market.
Proximity to Research and Skills
Gauteng is home to institutions of higher learning as well as research institutions, facilitating easy access to skills. In this regard, the province is home to the CSIR, Africa’s leading research and development institution. In existence for 75 years, the CSIR has various specialised units focused on developing and commercialising South African borne solutions. In addition, Gauteng is also home to University of Pretoria, ranked as one of the top 500 global universities, amongst the top 10 in Africa and amongst the top 3 in South Africa.
Proximity to Established value chain players
Gauteng hosts most of the global multi-national corporations and is also the largest contributor to South Africa’s GDP. This provides for the existence of value chains that can support manufacturing activities.
Cost centre competitiveness
South Africa is typically a medium cost production location and is cost competitive when compared with European and North American locations.
The Precinct is designated as a Special Economic Zone, providing a basis to access incentives packaged to promote investment in South African SEZs; these include VAT exemption, duty free suspension for production related material or assets imported in support of the value addition process as well as the Employment Tax Incentive, the latter that reduces the PAYE paid by the Employer through a cost sharing mechanism with Government.
Status of the Development
A master plan and financial model of the development has already been completed. An EIA and township establishment is also underway and is earmarked to be completed in the first quarter of 2021, paving the way for bulk infrastructure works to commence. Concurrent to this process, the Gauteng IDZ is and remains available to undertake engagements with the market for either infrastructure or manufacturing investment uptake.
Investment opportunities available for market uptake
Infrastructure development with a share in the ROI
Manufacturing localisation or establishment in the following key areas:
- PGM related manufacturing, with a particular focus on the fuel cells value chain viz.
- Catalysts o Membrane Electrode Assemblies (MEAs) o Combined heat and power solutions
- Battery power and transport range extender solutions to support fuel cell electric vehicles
Capital, mining and transport equipment