Position of the Kathu Industrial Park (KIP) Project

Kathu Industrial Park (KIP) Project

Project Location:

District: Gamagara Local Municipality
City/Town: Kathu
Physical address: Farm Sekgame, 461 Kuruman Road
GPS Coordinates: S27° 42’ 52.5” E23° 02’ 33.8”

Investment Value:

Total Project Cost: ~R1.5-Bn (pending Phases 2-3 business model and timing)
Phase 1 estimate: R530m

Project background

Sishen Iron Ore Company (Pty) Ltd (SIOC) and the Industrial Development Corporation (IDC) have funded various studies to assess the feasibility of developing an industrial park to stimulate sustainable long-term economic development for the Northern Cape region.

The envisaged development will attract varied tenants delivering industrial goods and services to an environment leveraging economies of scale from centralised facilities and complemented by a business incubation and training complex.

With the mining industry being the largest real economic sector in the Northern Cape economy (based on contribution to GDP), the town of Kathu – located in the Gamagara Local Municipality (GLM) – is the preferred location due to its central proximity to the Postmasburg-Hotazel iron-ore/manganese belt and various established and pending Renewable Energy Power Producer Procurement Programme (REIPPPP) projects. It is envisaged that the KIP serve as a catalyst for accelerated growth of other economic sectors.

The bankability study has not only confirmed extensive interest from businesses with a vested interest in the Northern Cape region (i.e. potential tenants), but has also confirmed the support of various key stakeholders as well as the commitment of investors and financiers.

This development, located on the R380, is easily accessible from the N14 – a major service route between Johannesburg, the West Coast of South Africa and Botswana – and the Kathu airport.

The study process has included an assessment of infrastructural requirements and has confirmed integration with GLM planning. The project is considered a key enabler for localized manufacturing initiatives anticipated via the Northern Cape Shared Value Initiative and Impact Catalyst.

Project description

The KIP development comprises the following:
  • Central hub: This will comprise various facilities and the associated infrastructure network supporting KIP management structures. The scope of facilities is envisaged to include: central administration offices; conferencing facilities; an auditorium; a security office; a restaurant; and other social facilities. These are to be located in a hub within the park in a centrally located single-level building, with visitor parking and appropriate landscaping.
  • A Business Incubation Centre and Training Centre
  • Customised warehouses and industrial buildings and (standard specification) mini-factories
  • Security fencing and lighting
  • Additional infrastructure envisaged for the functionality of the KIP includes: internal roads (tarred and paved), a storm-water system and an internal water reticulation system.
Facilities & Infrastructure Layout (Phase 1 & 2 Provisional Layout)

Targeted sectors

The KIP targets all economic sectors requiring serviced industrial space in the region, but with the major portion of the initial tenant makeup (study phase) primarily serving the established mining sector, by virtue of the KIP’s central proximity to the Postmasburg-Hotazel iron-ore/manganese belt.

The KIP is also well positioned to serve the emerging REIPPPP sector in the region.

In addition to the ongoing development of business opportunities within the tenant supply chains, it will be the role of the KIP business incubator to expand coverage of the KIP into other sectors.

Study phase tenant engagement and commitment to the project has covered all possible prospective tenants, regardless of size or level of development.

The KIP development caters for all nature of tenant facilities – i.e. from large customised facilities through to smaller, economically efficient mini-factories.

Project Finance

Phase 1 (~R530m): ~R410m debt and equity commitment provisionally secured from Private Sector (mining stakeholders) and Public Sector (IDC). Engagement ongoing with Northern Cape Provincial Government and Department of Trade, Industry and Competition (Dtic) to resolve funding shortfall and crowd out IDC equity investment.

Phases 2-3 – Current indication is that tenant uptake surplus to Phase 1 will support a further phase of at least R500m but with this position likely to increase substantially once project is launched and also subject to the nature of further demand (i.e. rental vs ownership options).

Project status

Bankability Study, Project Development Plan, Environmental Permitting, Land Re-zoning and various scope re-alignment and market studies completed.

Investor Engagement Phase substantively completed (including investor term sheets and KIP formational agreements), with provisional commitment secured from: IDC, Kumba, SIOC-CDT, Assmang and South32 – but with a funding shortfall of ~R120m still to be resolved prior to concluding KIP Formation and undertaking Phase 1 design development.

Partnerships

  • Private Sector
  • Industrial Development Corporation
  • Provincial government
  • Local government

Contact:

Interested private sector companies and investors are encouraged to contact the project team via the contact form below, using KIP Project as reference in the subject line:

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