The Journal of Commerce / February 13, 2006
By Larry Luxner
PORT ELIZABETH, South Africa Half an hour's drive east of Port Elizabeth on the Indian Ocean, thousands of workers are turning a windswept, desolate bay into what will likely become Africa's deepest commercial port.
By 2008, the brand-new Port of Ngqura should become operational, its 16-meter depth allowing the largest post-Panamax ships to navigate its channels. That'll generate some 800,000 TEUs of container traffic annually for Ngqura, making it second in South Africa only to the Port of Durban, which handles 1.2 million TEUs a year.
South Africa's National Ports Authority (NPA) says Ngqura the country's largest single infrastructure project will require five million tons of rock just for the breakwaters alone. Also needed are 380,000 cubic meters of concrete, and 30 trucks working 24 hours a day to transport rock and aggregate from the quarry to the construction site.
Chris Matchett, a resident engineer with the National Ports Authority of South Africa, supervises the work in progress from his headquarters in an air-conditioned trailer overlooking the vast construction site. Outside, monkeys scamper around a dusty parking lot, hunting for food scraps, while inside the trailer, a bulletin-board notice advertises "condoms available here" a reminder of South Africa's nightmarish AIDS crisis.
If successful, the Port of Ngqura a barely pronounceable word in the Xhosa language spoken by millions of South African blacks could lift the Eastern Cape province out of poverty and alleviate the region's 42% unemployment rate.
"The whole concept of this port originated from the idea of an industrial zone adjacent to a deepwater port, which would facilitate the creation of primary and secondary industries all aimed at export promotion," Matchett said.
"The idea was to create an export production zone but call it an IDZ (industrial development zone) where all the labor laws of the country would apply. It would be a customs-free zone, on the basis that if you import raw materials and export products, you didn't have to pay excise on the income."
Ngqura has been on the drawing board in one form or another since 1995, when then-President Nelson Mandela who was born in the Eastern Cape proposed it as a way of boosting South Africa's share of international maritime traffic.
As such, a $2 billion aluminum smelter was to have been built, along with a huge zinc refinery. But then the Asian financial crisis of 1997-98 hit, and the investors got cold feet, so it became necessary for the government to find other interested parties to get the project moving.
In 1998, the Ngqura Port Act was enacted, and the following year, the Coega Development Corp. (Pty) Ltd. was established, followed in 2001 by the proclamation of the Coega Industrial Development Zone, a 11,500-hectare industrial park adjacent to the port.
Several months ago, Belgium's Sander International announced it would build a factory in the zone, eventually employing 500 people in the manufacture of fire-retardant textiles for the automotive industry.
"This is the first company that's formally announced an investment in the IDZ, " said Rustum Mohamed, executive manager of enterprise development at the Coega Development Corp. "There are discussions going on with some automotive companies that we also think might be interested. It's not a question of moving existing producers in there, but for those who do not have a dedicated presence here yet."
Initially, said Mohamed, the government had planned to run the IDZ as well as the port, later offering the operations in concession to private companies down the road.
"Our strategy has since changed to bringing in strategic partners with the government," he said, estimating that to date, $526.3 million has been invested in the port.
A visit to the construction site at the mouth of the Coega River, 20 kilometers from Port Elizabeth, shows where that money has been going. Enormous cranes lift gigantic puzzle pieces known as dolosse into position along the 2.6-km main breakwater.
The dolos, a South African invention that has been adopted around the world, prevents erosion, strengthens structures and protects the breakwaters. Each one weighs 30 tons, and the Port of Ngqura calls for 26,500 of these massive structures.
"This project is in its ninth year," said Andrι De Wet, the Eastern Cape's minister of economic affairs, environment and tourism. "It has repositioned the metropolitan area [of Port Elizabeth] as a hemispheric maritime destination for commercial shipping and transshipment."
Zeph Ndlovu, head of corporate strategy at South African Port Operations, said 98% of South Africa's exports go by sea, ranking the country 21st in world shipping trade volume.
"We've seen a massive growth in containerization," said Ndlovu. He estimated that South Africa handled nearly 3 million TEUs last year, but warned that the country must slash its logistics costs by a third in order to sustain its competitiveness.
"International breakbulk is on the decline, as global producers migrate to containerization," he said, speaking at the recent Trade and Investment Conference 2005 in Port Elizabeth.
According to Matchett, "originally, this was spearheaded as an adjunct to the industrial zone, but the port now has a life of its own. The zone can't exist without the port, but the port can exist without the zone. That's where the depth question comes in."
The existing facilities in downtown Port Elizabeth are obsolete, he says, because that port is dredged to a depth of 12.2 meters, meaning it can handle vessels of up to 2,400 TEUs.
"The berths in the harbor are concrete blocks on the seabed, so if you try to deepen it, it makes the walls unstable," he said. "We've got at least three container vessels that are around 4,000 TEUs each. They're already coming into the port, but they come in light. The shipping lines are just waiting for a deepwater container port to be finished."
Matchett said the new Port of Ngqura will be 16 meters deep, meaning it can handle 6,500-TEU vessels and maybe even more.
"This will free up Port Elizabeth to handle the auto industry. Motorcar carriers do not have a big draught because they're carrying a lot of air and are not very heavy."
Even so, volumes at Port Elizabeth have increased from 260,000 TEUs three years ago to around 300,000 TEUs today. Car volume has jumped from 10,000 to 50,000 over the same period and will likely increase even more with a boost in exports to Japan by the sprawling Volkswagen factory in nearby Uitenhage.