Northern Cape

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Renewable energy in Cinderella province

Northern Cape Regional Director Mehmood AhmedNorthern Cape Regional Manager Mehmood Ahmed 

The Northern Cape is a vast province, much given over to mining. But renewable energy is a growing industry. The challenge is to find ways to keep the towns sustainable once the mining houses pack up and leave.

The projects that the Industrial Development Corporation funds in the Northern Cape, from Karsten Farms to the Kalagadi Manganese Mine, are as big as the province itself.

Much of the corporation’s money was poured into mining and agro-processing, making up almost two-thirds of its funding exposure in the province. But despite these sectors dominating the financial landscape of the province, the biggest story coming out of the Northern Cape is that it is increasingly becoming the country’s hub for renewable energy.

The IDC has approved funding for 12 renewable energy projects in the province, including Abengoa’s Khi Solar One concentrated solar power farm near Upington and the Kakamas Hydro-Electric Power plant that is harnessing energy from the waters of the Orange River. The IDC has acknowledged that renewable energy is a sector on the rise and may just be the one demanding the most funding in the near future.

According to the corporation’s Northern Cape regional manager, Mehmood Ahmed, the sector already makes up R5.5-billion of its estimated R14-billion exposure in the province, second only to mining of R7-billion. “It’s huge injection for this province and it is quite strategic for the country’s energy needs,” says Ahmed. “With the amount of approvals for renewable energies in the province, it has moved the Northern Cape to second in terms of IDC provincial exposure, only behind Gauteng.”

The Abengoa plant, with its 4 000 solar mirrors, will generate up to 50 megawatts of energy and the hydro project in Kakamas will provide 10 megawatts. When it comes to solar power projects in particular, the IDC’s approach is unique compared to other funders: it buys shares for communities that live close to these projects. Once in operation, these solar power plants do not usually employ a lot of people and to offset the limited job opportunities the IDC invested up to 20% in community trusts on behalf of the surrounding communities. Once these projects start generating income, Ahmed says that the dividends will benefit these neighbouring communities.

Cinderella province

Despite its huge land mass, which makes up 30% of South Africa, the province has a population of just one million – 2% of the country. And much of the wealth created in the Northern Cape does not benefit the local population. “We call this province the ‘Cinderella’ province because its potential is always underrated,” Ahmed explains. “We generate huge export revenues from these mines yet everything recognised in Gauteng, because all the head offices are based there.”

“Perhaps the Northern Cape’s biggest challenge”, according to Ahmed, “is the usual South African story. Not enough value addition or beneficiation is done in this country or province. Any beneficiation is done in the historic industrial hubs such as Gauteng, Western Cape and KZN. This leaves the Northern Cape as a primary industry province, which focuses on mining and agriculture with almost no processing and manufacturing.”

“Part of the problem is that the province does not have a strong enough secondary industry, especially when it comes to manufacturing”, he says. "Which makes it difficult for the IDC to convince foreign companies to establish manufacturing facilities in the province.”

And this ties in with the fact that the province does not produce as many entrepreneurs as it should. There are very capable entrepreneurs in the province, but Ahmed believes that a more conducive environment and risk taking can propel local businesses to greater heights.

Passion for the Northern Cape

Ahmed was born and raised in Carnarvon, a Karoo town in the southern part of Northern Cape. He left to study in Cape Town, before joining the IDC, 18 years ago. “I am from this province. That is why I returned to establish the regional office in 2008, in order to make a difference.”

Ahmed took the helm at an awkward time when due to the world recession, diamond and commodity prices fell and mining companies reduced output. Kimberley, where the IDC’s regional office is based, felt the full effect of the contraction of the diamond mining industry.

As regional manager, he hopes to prevent many mining towns from becoming ghost towns because of mine closures. He does not wish for a repeat of the time when major mining houses that dominated Kimberley and other mining towns downsized operations that left the local economy devastated.

Yet while some mining towns in the province are slowly becoming ghost towns, other towns such as Kathu, Kuruman, Postmasburg and Hotazel are growing rapidly due to the iron ore and manganese mining expansions. These towns have attracted retailers, mining services and hospitality companies looking to capitalise on the mining boom.

Future plans

The Presidential Infrastructure Co-ordinating Commission (PICC), has appointed the IDC as coordinator for the Northern Cape-Saldanha Corridor and Green Industries both strategic infrastructure projects (SIP5 and SIP8). SIP5 links the Sishen mine to the Saldanha Bay Industrial Development Zone, along the iron ore railway line. Ahmed says this allows the province to find ways of unlocking business potential in the development zone.

Together with Anglo American, the IDC is in the process of conducting a study into the feasibility of an industrial supplier park in Kathu. This is expected to kick start local manufacturing, he adds. “We want to ensure that after all the iron ore and manganese have been mined, that the local economy is sufficiently diversified to continue to flourish as the case with Johannesburg, a historic gold mining town.”

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