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 Location

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.

Manufacturing Focus

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.

Clustering capabilities

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.

 

Incentives

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

 Component manufacturing