Chinese investors plan $ 10 billion metallurgical complex in South Africa

JOHANNESBURG (Reuters) – Chinese investors signed agreements to build a $ 10 billion metallurgical complex in South Africa during President Xi Jinping's state visit this week and hope to start construction next year, an executive involved in the project and a provincial official told Reuters .

South Africa President Cyril Ramaphosa said at a joint news conference with Xi on Tuesday that China had committed to invest $ 14.7 trillion in the South African economy, but the leader mentioned the $ 10 trillion complex.

Ramaphosa is on a mission to kick-start economic growth after a decade of stagnation and is targeting $ 100 billion in new investment over five years.

The complex, which is still in planning and construction, has a ferrochrome plant and a silicomanganese plant, is a much-needed vote of confidence in the sputtering South African economy.

Trade and Industry Minister Rob Davies said on Tuesday that he was considering a metallurgical project in a special economic zone (SEZ), but he did not reveal the scale of the project or timeframe.

The executive involved in the project, who did not wish to be named because it was not authorized to speak to the media, said memoranda on the complex were signed before Xi and Ramaphosa gave news conference on Tuesday.

"The investors for the SEZ project were in the room when Ramaphosa and Xi spoke to the press," the executive said.

Richard Zitha, a project executive at the Musina-Makhado SEZ, where the complex will be based, but he declined to name them.

He said the Chinese investors would look for Black Economic Empowerment partners to comply with the law.

The investors were open to investors at a later stage, he said.

"The investors have been in South Africa for a week and have visited mines to look for inputs for the project," Zitha said.

The Musina-Makhado SEZ is in Limpopo province close to South Africa's borders with Mozambique, Zimbabwe and Botswana.

The SEZ plans to house plants with a capacity of 3 million tons per annum of stainless steel, 3 million tons per annum of ferrochrome and 500,000 tons per annum of silicomanganese. These capabilities are subject to change and will be finalized by the end of the year, the executive said.

A coal-fired power plant, a coking plant and coal washer, a presentation prepared for investors showed.

Some of the steel output for the continent, to be exported to China, while other products would be sold to countries in southern Africa, the executive said.

South Africa is already a major exporter of metal alloys to China.

Investors are hoping to receive the necessary environmental approvals by the end of March and then start construction, Zitha said.