WeeklySA_AdminGROWTH: Parastatal in communication with Chinese companies with a view to pursuing co-investments in regional minerals value chains
By Lehlohonolo Lehana
The state-owned national development finance institution, Industrial Development Corporation (IDC) disbursed R15.9 billion into the economy in the year to March 31.
Interim CEO David Jarvis, who stepped into the role in October after TP Nchocho’s departure, said they are satisfied that they’ve been moving in the right direction while working in a difficult operating environment, contending with domestic and global challenges.
“There are areas for improvement, but we definitely think there are green shouts for greater delivery in the coming period.”
“We’re focusing really on catalytic investments that should grow value chains and develop our sectors. And there’s a focus on transformation and inclusive growth which makes a big difference to bring in entrepreneurs who don’t have the balance sheet but do have the capabilities.”
Jarvis said he was confident that approvals would rise towards the target of R22-billion, owing to the more supportive climate for investment and the realisation of some of the projects that had been originated by the IDC itself. Industrial projects valued at R3.7-billion had graduated from development stage to bankability during the period under review.
Notwithstanding weaker commodity markets, which impacted the IDC’s financial performance, Jarvis indicated that the group saw significant potential in critical minerals projects in South Africa and the continent, where it was pursuing projects aimed at developing minerals-related value chains.
“Two of our investments were to support battery-grade manganese projects during the course of the year, as well as a battery-grade graphite investment.
“So these are important investments which we’re making to support that play towards a [critical minerals] industry which is going to grow five times over the next 20 years,” he said.
He also revealed that the IDC was in communication with Chinese companies with a view to pursuing co-investments in regional minerals value chains. This disclosure comes ahead of an upcoming State visit by President Cyril Ramaphosa to China, which will take place from September 2 to 5, where the issue of minerals value addition is expected to be on the agenda.
However, softer commodity market conditions negatively impacted the group’s financial performance during the year as well as the IDC’s listed equity portfolio, the value of which fell to R45.5-billion from R51-billion, largely on the back of a fall in Sasol shares.
In addition, the IDC’s mining and metals exposure made up 42%, or R12.4-billion, of total nonperforming loans, while dividend flows from companies in the sectors also decreased.
Supporting green growth and low-carbon transitions was also high on the IDC’s investment agenda, with the group having already played a role in supporting various renewable electricity projects and having been appointed as the project management office of the green hydrogen and new energy vehicles components of South Africa’s Just Energy Transition Investment Plan.
However, Jarvis also highlighted the IDC’s alignment with the Government of National Unity’s priority to support inclusive growth through jobs-rich industrial development, including in agriculture, manufacturing, tourism and services.
In the key area of manufacturing, the IDC has already announced a partnership with Stellantis to establish a plant that will manufacture 50 000 Peugeot Landtrek bakkies and it is also still aiming to up production at the BAIC plant at Coega, in the Eastern Cape, which has underperformed relative to initial expectations.
The continued commitment to inclusive and sustainable industrialisation is evident in our corporate plan for the 2024/25 to 2026/27 period wherein we’ve committed to deploy over R60-billion of on-balance-sheet funding over that period,” he said.
The IDC also confirmed that it would be returning to the bond markets following a hiatus, which arose because of the liquidity generated from extraordinary dividend income arising from its listed investments during the previous commodity upcycle. – www.fullview.co.za
