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With industrial policy back in fashion in many economies, business and policy specialists expect new Trade, Industry and Competition Minister Parks Tau to prioritise measures to support key sectors, including those aligned to the emerging green economy.

The former Department of Cooperative Governance and Traditional Affairs Deputy Minister and City of Johannesburg Executive Mayor has been appointed to the position in the government of national unity (GNU) together with two deputies, Zuko Godlimpi, also of the African National Congress, and Andrew Whitfield, of the Democratic Alliance.

The position was held by Ebrahim Patel, who retired at the end of his term, and debate regarding who would occupy the key economic portfolio was intense ahead of President Cyril Ramaphosa's June 30 announcement, as it was reportedly offered to the Democratic Alliance before being withdrawn.

The Department of Trade, Industry and Competition (dtic) is responsible for a range of economy-shaping policies, including those seeking to redress racial imbalances that persist in the business environment, and it also has implementation responsibilities, through various agencies, in areas as diverse as industrial financing and company registrations, to standards and competition enforcement.

In welcoming the appointments, Business Unity South Africa (Busa) CEO designate Khulekani Mathe told Engineering News that he expected dtic's new political leaders to prioritise the enhancement of the country's industrial policy to support key sectors, while also promoting innovation and ensuring sustainable industrial development.

"Given the ongoing challenges posed by economic downturns and global disruptions, Busa emphasises the need for policies that support economic recovery and growth.

"This includes measures to attract investment, boost industrial productivity, and enhance trade competitiveness," Mathe said.

Black Business Council VP Gregory Mofokeng expressed confidence that Tau would show the necessary political leadership and will to make a meaningful contribution towards turning the fortunes of our economy around.

"The immediate priorities will be to partner with the private sector to enhance measures to re-industrialise our economy, localisation and the effective implementation of the broad-based black economic empowerment legislation to ensure redress and economic inclusivity," Mofokeng told Engineering News.

Meanwhile, Trade and Industrial Policy Strategies executive director Dr Saul Levin told Engineering News that, because industrialisation had been highlighted as a priority for the parties that signed up to the GNU Statement of Intent, an immediate focus would likely be on supportive industrial policy, including at a sector level.

He said this could be pursued through the sector master plans or reviving the industrial policy action plans and that the new leadership team would also need to come to grips with how the different functions of the department interfaced and could be used to stimulate industrial development.

"There is also an important priority in working with industry to take forward inclusive growth that creates much-needed jobs in our economy.

"The third priority will be on the impact of the transition away from carbon-intensive energy and strategies to green our industrial development pathway," Levin said.

Busa, meanwhile, would also like to see the dtic supporting a more business-friendly regulatory environment, by simplifying regulations, reducing bureaucratic hurdles and ensuring policy stability.

It also believed priority should be given to strengthening trade relations and ensuring market access for South African products.

"Given our geopolitical positioning, South Africa needs to proactively engage in trade negotiations and efforts to remove barriers to trade.

"The new dtic lead...

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The decision to establish a separate energy portfolio with the African National Congress's Dr Kgosientsho Ramokgopa as Minister and the Democratic Alliance's Samantha Graham as Deputy Minister has been welcomed by stakeholders and commentators alike.

There are already warnings, however, that the success of the new Electricity and Energy Ministry will be judged not only on ensuring a permanent end to loadshedding but on whether it is able to shepherd South Africa, justly, through the unfolding energy transition in a way that addresses not only the immediate threats to security of supply and affordability but also long-term sustainability and competitiveness.

Business Unity South Africa energy and environment policy director Happy Khambule welcomed the establishment of the standalone entity, which had been merged with mineral resources during the previous administration.

The ministry's separation, along with three others, has resulted in the number of Cabinet posts under the government of national unity rising to 32 from 30 and the number of Deputy Ministerial positions increasing to 43.

The creation of a "focused" ministry was also supported by Energy Council of South Africa CEO James Mackay who told Engineering News that it "bodes well for dealing with our broader energy challenges and delivering a national energy transition".

Likewise, the University of Cape Town's Professor Anton Eberhard described the restructuring as a "good development", arguing that all the provisions of the Electricity Regulation Act (ERA), including electricity planning and procurement, will now fall under Ramokgopa, which should facilitate more effective implementation than was the case under Mineral Resources and Energy Minister Gwede Mantashe.

That said, he warned that "lumping" petroleum with Mantashe's new Mineral and Petroleum Resources Ministry could have unintended adverse consequences for the energy sector, especially for proposed gas-to-power projects that "might be prejudiced as a result".

"South Africa will need gas-fired power plants to complement the growing share of variable renewable energy on the grid.

"Already, we have a confusing number of State actors doing their own thing (Transnet, Central Energy Fund, the Independent Power Producer Office, Eskom, etc) and the lack of coordination, and the absence of internationally experienced transaction advisers, means there is a high probability that these procurement or investment initiatives will fail or, at best, be too late," Eberhard told Engineering News.

PETROLEUM PUZZLE

South African Independent Power Producer Association (SAIPPA) CEO Brian Day also raised concerns, saying it would be important to outline what was involved in the "petroleum" part of the minerals and petroleum portfolio to create clarity between that and energy.

Khambule, too, stressed the need to treat energy matters in an integrated manner, highlighting that South Africa faced acute energy challenges beyond electricity insecurity.

"While electricity supply issues may be mitigated for the foreseeable future, we confront an impending gas supply cliff, a lack of clarity in energy planning and require crucial decisions regarding energy procurement investments that enable the introduction of new generation capacity and energy infrastructure.

"Additionally, urgent interventions are needed for transmission and reticulation networks to ensure the provision of energy services," Khambule said.

NEW ENERGY

All those canvassed by Engineering News were, nevertheless, highly appreciative of the appointment of Ramokgopa to the role, with energy commentator Chris Yelland praising him for the vigorous approach he had taken to the issue of loadshedding after his appointment as Minister in the Presidency Responsible for Electricity.

"Minister Ramokgopa has really been the face of...

Engineering News editor Terence Creamer discusses the issues tackled during Phase 1 of Operation Vulindlela and the successes achieved thus far; the likelihood of Operation Vulindlela continuing as programme of action under the new government of national unity; and what could be on the agenda during Phase 2.

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Damen Shipyards Group (DSG) has signed a new strategic partnership agreement with the Department of Trade, Industry and Competition (dtic) as part of the National Industrial Participation (NIP) programme.

Under the agreement, Damen subsidiary Damen Shipyards Cape Town (DSCT) will continue its localisation work and industrial participation "to the benefit of the South African shipbuilding industry and economy", says the Dutch-owned group.

In 2008, when the local shipyard, formerly known as Farocean Marine, became part of DSG, the company signed a similar, ten-year agreement with the then Department of Trade and Industry.

Since then, Damen has generated more than R1-billion rand in credits. These have been collected through various activities, including direct investments and job creation, both within DSCT and at local suppliers.

Damen has also participated in South Africa's Defence Industrial Participation (DIP) programme since 2020.

DSCT director Sefale Montsi says the Cape Town facility currently employs 223 people.

"The DSCT yard is agile and able to build vessels of various configurations to accommodate clients' operational needs."

Montsi tells Engineering News Online that the yard has built more than 40 vessels to date, including various types of tugs, patrol vessels, research vessels, cutter suction dredgers and Shoalbusters.

Shoalbuster is the product name of a type of tugboat, designed by Damen, with a shallow draft capability.

DSCT's main customers are Armscor and the South African Navy (SAN), Transnet National Ports Authority and Africa Marine Solutions Group.

"DSCT, as part of the Damen group, has also exported many ships to a variety of countries, including Djibouti, Nigeria, Guinea, but also to countries in the Middle East and the Caribbean," says Montsi.

The yard is currently working on finalising the third multimission inshore patrol vessel (MMIPV) for the SAN under Project Biro.

DSCT in 2018 signed the contract for three MMIPVs, with an option for more vessels of a similar nature.

The navy took delivery of SAS King Sekhukhune I in 2022, as well as the SAS King Shaka Zulu in November last year.

Delivery of the third vessel is planned for this year.

Montsi says the yard is also working on building a multipurpose vessel for Transnet, planned for delivery early next year, while some of its staff have also been deployed to an unnamed country to assist on vessel refits.

DSG industrial participation manager Marijke Winiarski says agreements such as South Africa's NIP are "in Damen's DNA; it is what we do as a company".

She says Damen has 36 locations across the globe, all with a focus on "long-term sustainable partnerships".

"Wherever we are active locally, we are there for the long term and we do it with the aim to grow the business in a sustainable way. This means it is second nature for us to participate in and comply with the NIP and DIP programmes."

In order to ensure DSCT has a steady flow of business, the Cape Town site has been set up as a stock-building site.

This means it is able to build or assist in building vessels for the mother company and/or sister companies within the group, as well as other African countries.

"The fact that DSCT is part of the Damen group has helped us stabilise production at the Cape Town yard, and to retain our shipbuilding capabilities in South Africa," says Winiarski.

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With the expiry of the Africa Growth and Opportunity Act 15 months away, South Africa is continuing to call for an early and substantial extension of the preferential trade arrangement, which has been in place since 2000.

Department of Trade, Industry and Competition chief director for bilateral trade relations Malose Letsoalo reported this week that South Africa remained optimistic that Agoa would be extended beyond its September 2025 expiry date.

Speaking during a Trade and Industrial Policy Strategies (TIPS) discussion, Letsoalo highlighted ongoing bipartisan support for Agoa in the US Congress, which could consider extending the scheme for up to 16 years to 2041 in line with a Bill put forward by Democratic Senator Chris Coons and Republican Senator James Risch.

African governments have argued that an extension of at least ten years was necessary to provide the certainty required for more countries to take fuller advantage of the unilateral scheme.

South Africa, whose Agoa status came into question last year when tensions over an alleged arms sale to Russia almost prompted an out-of-cycle review of the country's eligibility, remains one of a handful of countries that genuinely benefits from the arrangement.

TIPS executive director Dr Saul Levin quoted joint research undertaken with the Congress of South African Trade Unions (Cosatu) showing that, while much of South Africa's commodity exports enter the US duty-free outside of Agoa, the country's agriculture and manufacturing exports benefitted disproportionately from the country's eligibility.

The research shows that 75% of agriculture and 59% of manufacturing exports to the US utilise the Agoa preferences. Besides automobile exports, South Africa's largest Agoa beneficiary by value, various agricultural and food products such as citrus, nuts, wine and even ice-cream benefit under the scheme.

Exports from South Africa under Agoa reached $3-billion for the first time in 2022, the TIPS-Cosatu research shows, and have consistently hovered at about $2-billion for much of the programme's recent history.

In 2022, exports under Agoa made up 21% of South Africa's exports to the US, while trade under Agoa and America's generalised system of preferences (GSP) scheme combined made up 25% of total exports.

"This likely underestimates the true scale of Agoa/GSP usage, since 2022 featured an unusually high degree of platinum group metal exports and, on average since 2010, Agoa/GSP have made up 33% of total exports to the US."

Levin added that, in the absence of a trade agreement, the Agoa platform also provided for ongoing trade-related engagements between South African and American firms and ongoing eligibility remained a "development imperative".

The research also points to jobs benefits in both South Africa and the US, where the total cost of foregone tariff revenue is almost negligible.

However, director of the Nelson Mandela School of Public Governance Faizel Ismail, who was South Africa's ambassador to the World Trade Organisation between 2010 and 2014 and who participated in the negotiations for the country's continued eligibility in 2014 and 2015, which was threatened by an out-of-cycle review triggered largely by a dispute over poultry, stressed that access to Agoa was not "cost free".

He highlighted the concessions made in the areas of poultry, beef and pork, as well as risks associated with out-of-cycle reviews, where various domestic trade and industrial policies could be challenged in the process.

Ismail recommended that South Africa and Africa should seek not only a long-term extension, but for Agoa's "artificial division" between sub-Saharan Africa and North Africa to be scrapped in the interest of aligning Agoa with the framework provided by the African Continental Free Trade Area Agreement.

He also argued that t...

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The 'second wave' of government's Operation Vulindlela initiative is poised to be widened to include additional structural reforms to those that have been pursued to date in electricity, freight logistics, telecoms, water and skills with the goal of stimulating higher levels of economic growth over the coming five years.

Established jointly by the Presidency and the National Treasury in October 2020 to accelerate priority structural reforms to overcome problems identified as "binding constraints" to economic performance, Operation Vulindlela is expected to continue as a flagship programme under the government of national unity.

The Presidency's project management unit head Rudi Dicks told attendees to a conference convened to deliberate on "Phase 2" that the intention was to consolidate the progress that had been made under the initial set of reforms, while adding additional reforms.

The initiative will continue to focus on a small set of priorities but could include new areas with the potential to lift South Africa out of its current low GDP growth trajectory, which had averaged at a paltry 1.1% since 2010, resulting in South Africa decoupling from other middle-income countries where growth had been significantly higher.

Operation Vulindlela's Saul Musker said that the reforms pursued during Phase I, including those to alleviate loadshedding and improve the performance of the logistics system, would provide a significant boost to the economy in the medium term.

However, they were insufficient to drive a structural transformation of the economy and additional reforms would be required in the next phase to stimulate higher and more jobs-rich growth.

While the new priority areas were still to be finalised, Musker indicated that there was an opportunity to harness South Africa's unique strengths and advantages to unlock growth that was both "green and digital".

"Over the next five years, South Africa has an opportunity to accelerate growth through massive new investment in the energy sector, leveraging its unique solar and wind resources to reduce energy costs and power green manufacturing."

In addition, there was potential to position South Africa as "a major player in the digital economy, creating jobs in business process outsourcing and digital services while encouraging a dynamic ecosystem for high-growth startups".

Harnessing these new areas of growth, Musker said, would require a substantial increase in renewable-energy generation, as well as significant investment in digital public infrastructure.

Keeping Operation Vulindlela's focus narrow could prove challenging, however, with delegates proposing various other potential areas of priority, from land and rural health reform, to literacy, water, critical-minerals exploration, housing and even competition and industrial policy.

The conference also deliberated on several other "binding constraints" that also needed to be addressed in addition to the five focus areas tackled during Phase 1, including the deteriorating performance of local government and persisting spatial inequality, which meant that poor households continued to be located far from economic opportunities.

Modelling by the Bureau for Economic Research (BER) presented at the workshop highlighted the economic upside of persisting with the reform agenda.

It showed that reforms pursued under Operation Vulindlela could boost real GDP growth by 1.5 percentage points by 2029, which would translate to growth of 3.5% compared with the 2% growth assumed in its baseline scenario.

"The largest driver of this improvement in the growth trajectory stems from fixed investment, which is four percentage point higher by 2029, underpinned by robust private fixed investment," BER's Craig Lemboe told delegates.

"Given the improved energy availability and access to ports and ...

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Ford South Africa (SA) has celebrated the assembly of the one-millionth Ranger at its Silverton plant in Pretoria.

While the first million bakkies has taken 24 years, the second million is set to happen before the decade is out, should production continue at the current rate of roughly 200 000 units a year.

Ford SA operations VP Ockert Berry says there is no luck involved in reaching the almost magical production number, but "rather a focus on four or five things that must be executed correctly in the South African environment".

"You need the right facilities and tooling."

This, says Berry, provides the local arm of the US car maker with the ability to repetitively assemble the same product at the same quality.

The second is an investment in upskilling people, especially in terms of technical skills and leadership.

"You can't run an operation of this size from a boardroom," notes Berry. "You need to be hands-on. You need to constantly communicate with the 5 200 people it takes to produce a Ranger here in Silverton."

In the same manner, Berry and the Ranger's main local component suppliers meet virtually each evening to tackle any issues that may have arisen during the day.

The supplier park next door to the plant - a byproduct of the new Ranger programme - houses 12 suppliers, some of them new to the country.

The third weapon in Ford SA's production arsenal is to have the right product.

"We have a fantastic product with many accolades won here and in Australia and in Europe," says Berry.

The final ingredients in a successful production recipe are to have above average engineering, engineering support and an operating system that brings everything together seamlessly.

"If you don't have that guidance, the facility will start running you instead of you running your business," states Berry.

He believes that the decision by Ford to bring the stamping plant and chassis frame line in-house has been key in improving Ranger build quality.

"We are now buildings vehicles out of our body shop with zero reworks on them and we have no warranty issues with regards to steering, handling, chassis rust, corrosion or dimensional issues on the frames at all. This takes a lot of noise you previously had to manage out of the way."

Ford SA has produced three Ranger generations to date.

The company started production of its first Rangers in 2000, which coincided with the official return of Ford Motor Company to South Africa.

The first-generation Ranger was produced between 2000 and 2011, which included Ford SA's first foray into the export market.

Exports started in 2008, with right-hand-drive and left-hand-drive models shipped to markets in Africa.

Production on this generation ended in late 2011, with more than 100 000 Rangers manufactured in what was a multiplatform assembly facility at the time, producing light commercial vehicles as well as passenger cars.

As Ford's first global pick-up truck, the introduction of the second-generation Ranger saw production at the Silverton plant transition to a high-volume, flexible single platform in 2011.

The initial installed capacity was 110 000 vehicles a year.

This new model also led to investments in the Struandale engine plant in Gqeberha for the component machining and assembly of Duratorq TDCi engines.

The second-generation Ranger chapter drew to a close at the end of 2022, with 873 751 bakkies produced in South Africa in total, and two-thirds shipped to export markets across world.

The launch of the third and current-generation Ranger at the end of 2022 saw installed capacity increase to 200 000 vehicles a year - or 720 vehicles a day - with fresh investments at the Silverton assembly plant and Eastern Cape engine plant.

Ford SA has subsequently announced a further investment to enable production of the Ranger plug-in electric hybrid (PHEV) a...

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Eskom reports that it has appointed five transformer companies to a panel of suppliers that will compete for upcoming contracts for a total of 101 large-scale transformers that will be installed over the coming four years as part of its Transmission Development Plan (TDP).

The suppliers were not immediately named in the statement, with Eskom saying only that most of the five suppliers were "local with an international footprint" and had been selected following an open tender issued on March 14.

The tender for the first batch of 26 power transformers has been issued to the suppliers and is expected to be awarded by July.

The current schedule requires this first batch of large-scale transformers to be delivered between 12 to 36 months from order placement to meet an urgent requirement to increase transmission capacity, which has emerged as a constraint to connecting new generation.

Eskom reports that contracts worth an estimated R7-billion will be awarded over the coming four years to unlock 28 GW of grid capacity, and it argues that the framework agreement has been designed to facilitate competition among the suppliers for various tenders over the coming years.

The TDP will be overseen in future by the National Transmission Company of South Africa (NTCSA), which is developing 47 transformer projects that have the potential to unlock 37 GW of grid connection capacity between 2025 and 2033.

These projects are at different stages of implementation in terms of design, procurement and construction.

Transmission MD Segomoco Scheppers reports that the aim is to be in a position to connect 53 GW of new generation capacity over the next ten years through the installation of 170 transformers, which will add 105 865 MVA of transformer capacity, alongside 14 218 km of new transmission lines.

The contracting strategy, Eskom states, has been designed to reduce lead times and promote localisation and enable the delivery of approximately 28 GW to the grid by the end of the 2028 financial year.

Eskom indicates that subsequent tenders will encourage higher levels of local content as the supply chain becomes more established.

"An initiative to accredit more companies both locally and internationally has resulted in the NTCSA already accrediting 22 factories for various classes of transformers," Eskom reports.

Engineering News editor Terence Creamer discusses the City of Tshwane's plans to procure 1 000 MW of new electricity generation capacity and how it is likely to proceed with the procurement processes for that capacity.

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The City of Tshwane is signalling its intention to proceed with plans to procure and/or revive 1 000 MW of electricity generation capacity by 2026 as part of a strategy aimed at improving security of supply and reducing its dependency on Eskom.

Executive Mayor Cilliers Brink told delegates attending the inaugural Tshwane Energy Summit that the city was seeking to find a way to partner with independent power producers (IPPs), as it was not in a financial position to pursue generation projects on its own.

The strategy being canvassed includes an aspiration to revive generation at the mothballed Pretoria West and Rooiwal coal station sites, where 40-year leases are being proposed, while also pursuing utility-scale renewables generation on greenfield sites within the metropolitan area.

In February, the city issued a request for information to gauge the appetite of IPPs to build alternative and renewable-energy projects and it recently completed an evaluation of the responses, which would be used when drafting a request for proposals (RFP).

It is also in the process of securing the services of a transaction adviser to oversee the prospects of reviving generation from the Pretoria West and Rooiwal sites; transactions that were likely to be far more complex.

This includes a potentially controversial plan for restarting coal generation at Rooiwal, which had a nameplate of 300 MW when it was completed in the early 1970s and where the city argues much of the core infrastructure remains intact, even though the station has not operated for some ten years.

Prospects for a resumption of coal generation at the even older and fire-damaged Pretoria West plant were more remote, with Brink acknowledging that the key asset at both sites was their proximity to the grid networks capable of evacuating power.

The city will, thus, be guided by both the transaction adviser, the appointment of which could be made in August, and the market, with regard to technology options, before issuing an RFP.

"We don't want to restrict the solution upfront. We want to say, this is our infrastructure and be guided by the transaction adviser so that we get the optimal uptake from the market," Brink told Engineering News on the sidelines of the summit.

It is also possible, therefore, that the RFP for greenfield renewable-energy projects will be released separately and in advance of the RFP for Pretoria West and Rooiwal.

No clarity was provided about the potential financial model other than it being tariff-funded, nor whether there was any prospect of Tshwane offering any power purchase agreement guarantees, which have underpinned all the renewables projects procured by national government to date.

Brink acknowledged that the city's procurement ambitions would have to be coupled with supportive policy in the form of a new wheeling framework, which delegates indicated would help lower the risk by allowing IPPs to contract with multiple customers, rather than a financially unstable single buyer.

Recognising this constraint, the executive mayor stressed that his first priority remained the "financial rescue of the city", with a project management office having been set up to collect R6-billion of its R23-billion in outstanding debts in the near term.

"As much as we say we want to become independent of Eskom we understand that in order for us to have a meaningful relationship with IPPs, we also have to restore our own credibility, our own creditworthiness and our financial position."

Besides procuring new utility-scale generation, work is also under way to review Tshwane's feed-in tariff with the aim of making it more attractive to business and household prosumers to sell into the grid following a recent surge in rooftop installations across the region.

The role of prosumers and embedded generators will also feature...