SOUTH AFRICA
COUNTRY PROFILE

INTRODUCTION

The Republic of South Africa is situated on the southern tip of the African continent. The country’s capital is Pretoria in the Gauteng Province (see Map of South Africa). The population of 45 million is broadly divided in four main groups, Black 34 millions, White (European) 6 million, Coloured 3 million and Indian 2 million.

Historically South Africa was a British colony and the British influence is visible in most walks of life in South Africa. This includes education. South Africans (especially the South Africans of European origin) were historically educated to British standards and their qualifications compare favourably with that of any European country and the United States of America, especially in the medical/nursing and engineering fields.

SCOPE

Information on some aspects regarding South Africa is included to provide your company with a basic idea of the country and the level of development. My experience is that most foreigners do not have the knowledge that South Africa is a well-developed country with highly skilled employees. When compared to the rest of Africa, South Africa is by far the best developed country and can generally be viewed as a first world country. Few foreigners are aware of the fact that South Africa has a white, well-skilled population of six million, trained to western standards. The following aspects will be briefly discussed (Click on the heading to go directly to the information):

Demographic Data
Environment
Industrial Development
Industrial Overview
Manufacturing Statistics
Attractions
Getting There and Around
Pictures

DEMOGRAPHIC DATA

Full country name: The Republic of South Africa
Area: 1,221,037 sq km
Population: 43.1 million
Capitals: Pretoria (administrative); Bloemfontein (judicial) and Cape Town (legislative).
People: 77% black, 10% white (60% of whites are of Afrikaner descent, most of the rest are of British descent), 8% mixed race, 2.5% of Indian or Asian descent.
Languages: Zulu, Xhosa, Afrikaans, Pedi, English, Tswana, Sotho, Tsonga, Swati, Venda, Ndebele.
Religion: Christian, Muslim, Hindu, Jewish and traditional religions.
Government: Republic and independent member of the British Commonwealth
President: Thabo Mbeki

GDP: US$146 billion
GDP per head: US$2133
Annual growth: 0.9%
Inflation: 7.8%
Major industries: Mining, finance, insurance, food processing
Major trading partners: USA, UK, Germany, Japan, Italy

Currency: The Rand (ZAR) fluctuates between ZAR 10 and ZAR 11 to the US$

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ENVIRONMENT

South Africa is a large country, extending nearly 2000km from the Limpopo River in the north to Cape Agulhas in the south and nearly 1500km from Port Nolloth in the west to Durban in the east. Namibia, Botswana, Zimbabwe, Mozambique and Swaziland run from west to east along South Africa's northern border and Lesotho soars above the grassland towards the south-east.

Its position just south of the Tropic of Capricorn makes South Africa a mostly dry and sunny place but the climate is moderated by its topography and the surrounding oceans. Basically, the farther east you go, the higher the rainfall, but there are also damp pockets in the south-west, particularly around Cape Town. The coast north from the Cape becomes progressively drier and hotter, culminating in the desert region just south of Namibia. Along the south coast the weather is temperate, but the east coast becomes increasingly tropical the further north you go. The north-eastern hump gets very hot and there are spectacular storms there in summer. In winter the days are sunny and mild.

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INDUSTRIAL DEVELOPMENT

ISCOR (Iron and Steel Corporation)

Operations

Iscor’s Vanderbijlpark Works is situated in South Africa’s Gauteng Province and produces 2.7 million tons per annum (Mtpa) of flat steel products. The company’s second flat steel operation is a state-of-the-art mini-mill, Saldanha Steel, based on South Africa’s west-coast near the deep-sea port of Saldanha. The plant has a nameplate capacity of 1.25 Mtpa and is currently producing at 90% of its capacity.

Newcastle Works, located in the northern part of South Africa’s Kwa-Zulu Natal Province, produces 1.4 Mtpa of long steel products. Iscor’s Vereeniging Works has a yearly production of 0.3 million tons of long steel products and is based in South Africa’s Gauteng Province.

Markets

The company’s steel products are marketed internationally through Macsteel International, a joint venture in which Iscor holds a 50% interest.

Offices in major centres in Europe, North America, South America, Asia, the Middle East and Africa, provide the steel operation with a solid, worldwide infrastructure for the marketing and distribution of its products. Bringing Iscor’s relationship management within close proximity to its major customers.

Iscor dominates the South African steel market with a 68% market share, exporting some 47% of its total annual production, specifically to the Far East (19.1%), Africa (7.2%), Europe (7.1%), Middle East (5%), North America (5.3%) and South America (3.3%).

Domestically the company plans to expand its leading position in the market while focussing its international attentions at selective, highly profitable export markets.

FLAT STEEL

Overview

Iscor’s strategic business unit (SBU) for Flat Steel Products is the largest supplier of these commodities in sub-Saharan Africa.

The SBU produces 2.7 million tons of liquid steel per annum at its Vanderbijlpark Steel Works, which constitutes 84% of South Africa’s flat steel requirements.

Extensive re-engineering and streamlining of this operation has anchored its position among the world’s most efficient producers. Vanderbijlpark is currently ranked the eighth lowest cost producer globally according to a recent survey by a leading research institute.

The SBU’s Saldanha Steel operation is the world’s most technologically advanced and environmentally friendly steel mill, producing ultra thin hot rolled coil for stringent applications in select export markets in the Americas, Europe and Asia.

The state-of-the-art plant has a nameplate capacity of 1.25 million tons and is currently operating at 90% of its capacity.

LONG STEEL

Overview

Iscor’s strategic business unit (SBU) for long steel products is South Africa’s premier long steel producer, servicing 43% of the local market and maintaining a firm footing internationally.

The SBU has two major South African operations located in Newcastle, in the Kwa-Zulu Natal Province and in Vereeniging in the Gauteng Province - together accounting for total sales of 1.7 million tons yearly, half of which is exported.

Of the 1.7 million tons of long steel produced per annum, 1,57 million tons is rolled profile products, 90 000 tons is seamless tube and 40 000 tons is forged products.

Some 55% of the long steel products are exported to the Far East (37%), NAFTA (25%), Europe (20%), South America (7%), Middle East (6%) and Africa (5%).

MOSSGAS

Profile

Although the Mossgas project was launched in 1987, Mossgas (Pty) Limited in its present form was established in April 1989. It owns and operates the offshore production platform on the FA field as well as the onshore plant.

The company is part of the CEF group of companies through which the State's interest in the liquid fuel industry is owned, developed and managed commercially. Mossgas has its own Board, which is appointed by the Minister of Minerals and Energy.

The business vision of Mossgas is to add value to the existing operation. Studies have shown that the company has substantial potential for the production of petrochemical derivatives such as ethylene, propylene and butylene.

Long-term programmes for Mossgas are dependent on the development of economically recoverable gas reserves in addition to those at present available to the company, or on supplementary feedstocks such as crude oil or petroleum condensate.

History

The search for crude oil in South Africa led to the first discovery of petroleum gas deposits in the continental shelf complex off the country’s Southern Cape coast in 1969.

This was followed by further discoveries that included the FA, in January 1984. The FA field, as well as some smaller satellite fields, is situated 85 kilometres south of Mossel Bay, a harbour town some 400 km east of Cape Town.

In February 1987 the South African government announced the Mossgas project for the production of synthetic motor fuels from gas from these two fields to reduce the country's dependence on imported oil. Construction of the onshore plant near Mossel Bay began in May 1988. Fabrication of the offshore platform as well as equipment for the onshore plant started simultaneously at various coastal and inland sites and workshops in South Africa.

The offshore platform supplied the first gas to the onshore plant on 31 March 1992. Construction of the onshore plant was completed in June 1992. On 2 January 1993 the plant went into full production.

Two nearby satellite fields, FAH and FAR, which are situated respectively 16 kilometres and eight kilometres northwest of the FA platform, were brought into production in May 1997.

The EM gas field, 49 kilometres west of FA, was commissioned in September 2000. Together with other smaller fields in the area, it will provide Mossgas with gas until 2009.

Several other gas fields have also been identified during the search for oil in the Bredasdorp Basin. Mossgas also undertakes exploration and appraisal programmes in the area. The company is optimistic that sufficient gas reserves are available off the Southern Cape coast to meet its longer-term requirements.

Economic impact

Mossgas has a significant positive economic effect, particularly in the Southern Cape area.

It employs just over 1 000 people directly. The results of an official survey conducted in 1995 indicated that another 7 000 people owe their livelihood to Mossgas. Of these 3 000 are in the Southern Cape.

SASOL

The Sasol group of companies comprises diversified fuel, chemical and related manufacturing and marketing operations, complemented by interests in technology development, oil and gas exploration and production. Its principal feedstocks are obtained from coal, which the company converts into value-added hydrocarbons through Fischer-Tropsch process technologies, but also using other hydrocarbon feedstocks in Sasol’s global petrochemicals plants.

It also has interests in crude oil refining and chemicals production and marketing through a number of global partners or joint ventures worldwide.

Sasol’s contribution to the South African economy

Sasol is one of the largest and most successful industrial companies in South Africa and is a major contributor to the country’s socio-economic development.

Its ability to manufacture synthetic fuels contributes significantly to South Africa’s energy supply. Sasol currently supplies 41% of South Africa’s liquid fuel requirements and, as a result of its activities, the South African economy benefits substantially.

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INDUSTRIAL OVERVIEW

Steel

According to the International Iron and Steel Institution, South African steel mills produced 7.6 million tons of crude steel in 1998, which makes it the 21st largest steel producing nation. This was about a 9% drop from 1997. It is by far the largest in Africa, producing 63% of the continent's steel. Much of the production is exported, and South Africa is the seventh largest exporter of raw steel.

Electricity

Parastatal company Eskom, one of the largest utilities in the world, generates nearly all (approximately 95%) of South Africa's electricity. Eskom also owns and operates the national transmission system. Generating capacity (35,200 megawatts -- MW), which is primarily coal-fired, also includes one nuclear power station at Koeberg (1,930 Mw), two gas turbine facilities, two conventional hydroelectric plants, and two hydroelectric pumped-storage stations. In addition to serving the domestic market, Eskom also exports power to Botswana, Lesotho, Mozambique, Namibia, Swaziland and Zimbabwe.

Almost four million households could soon benefit from subsidized electricity. In September 1998, the National Electricity Regulator introduced a subsidy for low-income residents to help cover costs in basic cooking and lighting for the poorest 60% of the population from early 1999. This move could save the health industry money, as at least 16,000 South African children are hospitalized each year as a result of paraffin poisoning. The Regulator indicated that financing options for these and other costs associated with the installation of pre-paid meters in poverty tariff households would include channeling a portion of Eskom's prospective tax bill back into the industry or cross-subsidization of these costs by wealthier consumers. Eskom has been faced with the issue of non-payment of electricity bills from certain cities. For example, in October 1998, the farming town of Leandra in Mpumalanga was faced with the possibility of no electricity if it did not pay its electricity bill. The town's water supply had already been reduced by 80% after the town was unable to pay its water bill.

Coal

Coal is the primary fuel produced and consumed in South Africa. South Africa is the third leading coal exporter in the world, and coal is South Africa's second largest foreign exchange earner after gold. South Africa's coal reserves are mainly bituminous, with relatively high ash content (about 45%) and low sulfur content (about 1%). Three fields (Waterberg, Witbank, and Highveld) hold 70% of total recoverable reserves. Several areas, including parts of the Waterberg field, have been identified as having potential for future coalbed methane development.

Estimated South African coal production in 1998 was 246.8 million short tons (mmst). Several South African companies are planning mine expansions or new mine developments to help boost production. Ingwe, the nation's largest producer, is currently looking at the possible merger of some of its mining operations to supply Eskom, the parastatal electric utility, more cost effectively. Ingwe operates the Delmas, Douglas, Ermelo, Glisa, Khutala, Koornfontein, Malta, Middleburg, Optimum, Rietstruit, Welgedacht, and Zululand coal mines.

Coal exports (nearly one-third of total production) are shipped almost exclusively through the Richards Bay Coal Terminal (RBCT), the world's largest coal-export facility. Europe is the primary export market destination, followed by the Pacific Rim countries.

Estimated domestic consumption of coal was 177.1 mmst in 1998. The majority of domestic consumption is steam coal used to produce electricity. Other major steam coal consuming sectors include: gold mining, the cement industry, and the brick and tile industry.

ISCOR's steel plants are the main consumers of domestic coking coal in South Africa. Three-fourths of the requirements (about 3.9 mmst annually) are met by ISCOR's mining operations (the fourth largest) in South Africa. ISCOR also utilizes imports of coking coal and supplies from other local producers to satisfy the remainder of its requirements. A bulk storage facility with the capacity to handle 220,000 short tons of imported coking coal is currently under construction at the RBCT. Sasol's synthetic fuel and petrochemical operations is another significant domestic coal consumer. In 1995, the facilities consumed nearly 40 mmst of coal, and Sasol's mines met 95% of those requirements.

Oil Refining

South Africa is one of the major refining nations in Africa. Its refined products are both sold in the local market and exported, mainly to East Africa, but also into both the Indian and Atlantic markets. Multinational companies (including BP, Shell, Caltex, and Total) are major participants in South Africa's downstream petroleum markets. Several firms (local and foreign) are involved in South Africa's downstream. Two Black-owned firms, Naledi Petroleum and Afric Oil are also involved in downstream activities. Worldwide African Investment Holdings (WAIH) recently purchased (in October 1997) 51% of the South African firm, Zenex Oil, consolidating its position as South Africa's largest Black-owned oil group. WAIH currently holds 67% of Afric Oil. The purchase of Zenex increases the number of retail outlets held by WAIH from 55 to 205.

South Africa's total refining capacity (excluding synfuel plants) is currently 468,547 bbl/d. The Sasol/Total joint venture announced in November 1998 that it will undertake a $186 million capacity expansion project at its Natref refinery. The project will increase refining capacity at Natref by more than 30%, and include the ability to produce low-sulfur diesel. The project is expected to be completed by the end of 1999. The existing pipeline that supplies crude to the Natref refinery will be unable to carry the additional crude. An additional pipeline between Durban and Sasolburg is being planned. Petronet, a South African pipeline transport company is a joint-venture partner in the $181 million pipeline project. Shell and BP are also studying a possible expansion project for their Sapref refinery. The Sapref plan entails a staged expansion, adding from 100,000- 150,000 bbl/d of additional refining capacity. When completed, the expansion would nearly double Sapref's current 165,000 bbl/d refining capability. Engen is studying expansion plans for its Gencor refinery in Durban, while Caltex has shelved plans for expanding its Cape Town-based Calref refinery. In November 1998, Petronas, Malaysia's oil and gas company, completed its takeover of Engen. It is believed Petronas will seek to strengthen business ties with Black-owned enterprises.

Oil Exploration

With the exception of offshore gas reserves in Mossel Bay, South Africa has been slow to develop its reserves of conventional oil and natural gas. The country imports crude oil primarily from the Middle East, with Iran as its chief supplier. South Africa has been trying to diversify its sources of imported crude and reduce its dependence on oil from Iran. Iranian imports have been decreasing while imports from Kuwait, the UAE, Saudi Arabia, and Nigeria are growing. In November 1997, President Mandela signed a memorandum of understanding (MOU) with King Fahd and Crown Prince Abdallah ibn Abdul Aziz of Saudi Arabia to increase Saudi crude exports to South Africa.

The South African parastatal oil firm, Soekor, plans to concentrate its exploration efforts on South Africa's West and South coasts. The company believes that significant oil fields can be found in the deeper water basins and potential gas fields on the South African continental shelf. Consequently, plans to open to tender potential oil and gas fields off the west and south coasts to international investors have been launched. In May 1998, the offshore Oribi field began production. Soekor operates the field, which is 140-km (84 miles) offshore southwest of Mossel Bay. Oribi is currently producing 25,000 bbl/d. Soekor has estimated that Oribi has a field life of 4 years, but the projected development of adjacent discoveries could boost this by an additional 6 years. The Oribi satellite fields could yield 15-40 million barrels of oil. Currently Soekor's activities outside South Africa are in Mozambique and Zimbabwe where technical assistance and training are being provided.

The South African Government announced plans to fund development of satellite fields off Mossel Bay in order to extend Mossgas reserves beyond 1997. Development drilling on the F-A (the source of current Mossgas production) field and the adjacent E-M field began in early 1997. Mossgas has requested a $213 million investment in the E-M field from SAG. Mossgas estimates that the E-M field could extend the life span of Mossgas' synthetic crude output by 15 years. In December 1998, Mossgas awarded a $300 million contract to U.K.-based Dresser-Kellogg Energy Services Ltd. to help develop the E-M field. Initial production from the E-M field is scheduled to begin in April 2000.

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MANUFACTURING STATISTICS

Total Manufacturing

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ATTRACTIONS

Cape Town

Like all South African cities, Cape Town is ambivalent - European but not European, African but not African - a mixture of the third and first worlds. But when it comes to being one of the most beautiful cities in the world, it is unequivocal. Even the transient visitor will appreciate this city, its mountains and the sea. Cape Town, South Africa's oldest settlement, is dominated by the kilometre high flat-topped Table Mountain and superb mountain walks, vineyards and beaches are all within easy reach. Despite an increase in street crime in recent years, Cape Town remains one of the most relaxed cities in Africa, which can instil a false sense of security. Paranoia is not required but common sense is.

The city centre lies to the north of Table Mountain. The commercial centre, known as the City Bowl, takes in many of Cape Town's attractions. The Castle of Good Hope was built between 1666 and 1679 and is one of the oldest European structures in Southern Africa. The South African Museum is a good old-fashioned place, with cases and cases of stuffed animals and bloodthirsty dioramas of dinosaurs. Exhibitions of indigenous cultures include some startlingly lifelike displays of San communities. If you see only one museum in Cape Town make it the District Six Museum, a much simpler place dedicated to residents of this formerly vibrant and now bulldozed community. The Victoria and Alfred Waterfront is to the north of the city centre. This area is unashamedly pitched at tourists but it avoids the glossy unreality of comparable port revamps. It's atmospheric, interesting and packed with restaurants, bars, music venues, shops and a great aquarium. This area kicks on late so head down anytime.

The Table Mountain cableway is such an obvious and popular attraction you might have difficulty convincing yourself it's worth the trouble and expense. It is. When it's clear, the views from the top are phenomenal and there are some excellent walks on the summit, especially in spring when the plants are flowering. The Kirstenbosch Botanic Gardens on the eastern side of Table Mountain are among the most beautiful in the world and are devoted almost exclusively to indigenous plants. A trip to Robben Island comes highly recommended: The island was a political prison until majority rule, and its most famous inmate was Nelson Mandela.

City Bowl is a good place to sniff out hostels, guesthouses and hotels. Sea Point, on the Atlantic Ocean, west of the centre, is another good place to stay. Observatory is a nice neighbourhood popular with students. It's east of the centre and a bit out of the way, but is good for budget to mid-range accommodation. It's also not a bad place to eat, if the shimmer and shine on the Waterfront gets a bit much.

Garden Route

Heavily promoted and heavily scented, the Garden Route runs along a beautiful bit of coastline in southern Western Cape. The narrow coastal plain is well forested and is mostly bordered by extensive lagoons which run behind a barrier of sand dunes and superb white beaches. The Garden Route has some of the most significant tracts of indigenous forest in the country - giant yellowwood trees and wildflowers - as well as commercial plantations of eucalypt and pine. The area is a favourite for all water sports and the weather is kind year-round. There are some tacky developments dotted along the route, but you can steer clear of the worst of it, and hostel accommodation isn't too hard to find. Some of the quieter places are Mossel Bay, Herold's Bay and Buffalo Bay.

George is the major transport hub for the area and is a pleasant enough town to park your pack while you get your bearings. If you're travelling between Cape Town and the Garden Route, there's a gruelling but spectacular alternative through the mountains of the Little Karoo or Klein Karoo. This area is renowned for ostriches, which thrive in the dry and sunny climate; for wildflowers; and for the kloofs (ravines) and passes that cut through the mountains.

Kruger National Park

As well as being one of the most famous wildlife parks in the world, Kruger National Park is among the biggest and the oldest - it turned 100 in 1998. You can see the 'big five' here (lions, leopards, elephants, buffaloes and rhinos) as well as cheetahs, giraffes, hippos, all sorts of antelope species and smaller animals. Although most people will have seen African animals in zoos, it is impossible to exaggerate how extraordinary and completely different it is to see these animals in their natural environment. That said, Kruger is not quite a wilderness experience: it's highly developed, organised, accessible and popular.

The park runs for 350km along the Mozambique border and has an average width of 60km. There are about 2000km of roads in the park, so even on weekends and school holidays, it's possible to isolate yourself and just see what comes along (it could be a fleet of BMWs). The main entry points to the park are through the towns of Skukuza and Nelspruit, both about a day's drive from Johannesburg. Accommodation is usually in well-managed huts run by the National Parks Board. Facilities vary from communal and basic to private and swish.

Drakensberg

The awesome Drakensberg (Dragon Mountain) is a basalt escarpment forming the border with eastern Lesotho. Although people have lived here for thousands of years - there are many San rock painting sites - some of the peaks and rocks have only been tackled by Europeans in the last few decades. Much of the range is taken up by national parks, perhaps the most spectacular of which is Royal Natal National Park. The southern boundary of the park is formed by the Amphitheatre, an 8km stretch of cliff that is spectacular from below and even more so from the top. Here the Tugela Falls drop 850m in five stages (the top one often freezes in winter). There are some superb wilderness trails in the area, the flora is rich and varied and the mountain-climbing opportunities are heart stopping. Bergville is the jumping-off point for Royal Natal. It's accessible by minibus taxi from Ladysmith.

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GETTING THERE AND AROUND

Although about 30 airlines now fly to South Africa, it still isn't exactly a hub of international travel and the fares reflect that. Johannesburg International Airport remains the main international airport, but there are an increasing number of flights to Cape Town and a few to Durban.

South Africa is geared towards travel by private car, with some very good highways but limited and expensive public transport. If you want to cover a lot of the country in a limited time, hiring or buying a car might be necessary. If you don't have much money but have time to spare, you might organise lifts with fellow travellers and, if you don't mind a modicum of discomfort, there's an extensive network of minibus taxis, buses and trains. Two major national bus operators cover the main routes and will usually be pretty comfortable.

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PICTURES

Johannesburg

Pretoria Sun City (Lost City)

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SOUTH AFRICA COUNTRY PROFILE

SOUTH AFRICA
COUNTRY PROFILE