Portfolio Committee Presentations, 2006

Linda Ensor
Political Correspondent

CAPE TOWN - Negotiations between government and Canadian aluminium producer Alcan to establish an R18bn smelter at Coega were in the final stages, Public Enterprises Minister Alec Erwin said yesterday.

Erwin said he was "cautiously optimistic" that the negotiations would be successfully concluded. The parties were in a final contracting stage and all the critical milestones had been reached, although the Alcan board had yet to take a final decision.

Should Alcan pull out of the deal, however, it might have to pay penalties, Erwin told a parliamentary media briefing on the activities of the Coega economic cluster. He was confident that a decision would be made by midyear.

Bedding down a deal would represent a milestone in the establishment of an industrial development zone at Coega. It would also have a huge effect on local economic growth and would close the chapter on a prolonged bid to find an anchor tenant for the Eastern Cape harbour project.

Erwin also told a public enterprises portfolio committee meeting yesterday that arms manufacturer Denel was in the last stages of signing a strategic partnership deal with Swedish arms manufacturer Saab for one of its divisions.

The partner is expected to inject funds into the struggling state arms manufacturer.

Transnet and South African Airways (SAA) would be separated this year, after which SAA would be recapitalised, Erwin said. SAA's profitability was "touch and go" this year, but there was "no logic" in selling the airline. He said if SA did not have its own national airline, the economy would be held hostage by international airlines.

Erwin told the committee that legislation would be tabled next year that would fine-tune the framework for state-owned enterprises. This would involve refining the Public Finance Management Act and defining state-owned entities more precisely.

The task team on biofuels had begun its work, he said, and was focusing on crop suitability, support for small-scale farmers, technical standards for biofuels and economic feasibility. It would also look at the effect of biofuels on the environment and present a strategy to the cabinet in July.

Erwin said an incentives package had been developed for business process outsourcing and offshoring and it had been marketed abroad. Eleven investors from operations focused on offshore business had been short-listed

A local content procurement policy for the capital expenditure of state-owned enterprises would be ready for cabinet consideration in July, Erwin said. Its aim would be to set a target to reduce the imported content of capital goods from 40% to 30%.

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