TO: His Excellency, Mr JG Zuma, President of the Republic South Africa
Minister of Trade and Industry, Dr Rob Davies
Chief Executive Officer: Coega Development Corporation, Mr Mninawe Silinga
FROM: Bantu Holomisa, MP
Government not honouring contractual obligations at the expense of small businesses – Dimbaza
See below, correspondence from Mr B Willows, representative of SBM Iron and Steel Manufacturers (Pty) Limited from Dimbaza, near King William’s Town in the Eastern Cape. Mr Willows clearly outlines the history of the situation and the company’s frustrations with government’s non-payment since February 2012.
This is yet another example where government’s administrative bungling results in the non-payment of its service providers.
This unacceptable situation is proof enough that the promises recently made by the national chairperson of the ruling party, Ms Baleka Mbete, are hollow. Government touts small business development and entrepreneurship as a focus points to generate jobs, however actions speak louder than words.
It is an undeniable fact that government is responsible for ruining many companies, because of its non-payment, thus forcing them to close their doors. Clearly the past, and current, election promises of the ruling party is nothing more than election rhetoric that never realises at grassroots level.
We call on you and the relevant authorities to urgently attend to this matter.
Bantu Holomisa, MP
To: The Honourable Bantu Holomisa 17th April 2014
My name is Barry Willows and I represent SBM Iron and Steel Manufacturers (Pty) Ltd herein after referred to as (SBM).
In September 2011 we were in the process of concluding a deal to open a Steel Plant in the Coega Industrial Development Zone (CDZ). We had a site reserved right next to another applicant, called Agni Steel SA.
In October 2011, we were approached by Economic Development Department (EDD) asking us to please consider moving our operation to Dimbaza, as Scaw Metals were closing down their foundry and retrenching 500+ staff.
We agreed to look at it and after a rapid Due Diligence, and decided that it would be beneficial to construct a steel plant in Dimbaza, but would need to conduct a Detailed Feasibility Study (DFS) first.
EDD agreed and they applied to the Employment Creation Fund for funding to conduct the DFS, and the structure was that EDD owned the Dimbaza DFS Project, and SBM were appointed as the Implementing Agency to conduct the study.
In February 2012 the ECF approved the funding for the DFS. Memorandum of Agreements were drawn up between the DTI and EDD, and EDD and SBM respectively. These were signed by all parties in January 2012, and the transfer of funds was to occur within 30 day thereafter.
Initial investigations by SBM showed the potential to open a steel mill and a Direct Reduced Iron (DRI) Plant, which combined has the possibility to create 700+ direct jobs. A support Letter was received from the ECDC offering SBM the use of any or all vacant factory space in Dimbaza.
Besides the steel mill and DRI plant, the DFS is designed to convert all disused factories in Dimbaza into a steel hub or cluster whereby small businesses will be set up to fabricate products from the steel mill such as window and door frames, reinforced concrete, nuts, bolts, screws, nails, Eskom pylons, a galvanising plant etc. The aim is to create between 3000-5000 jobs and entrepreneurs in Dimbaza.
To cut to the chase; let us fast forward to April 2014. Despite many promises of payment, continued correspondence, pleas, requests etc, absolutely nothing has happened.
In fact, just last month March 2014, the DG of the DTI has requested a re-verification of all projects, whether approved or not to be conducted by Ernest and Young. So in effect the Dimbaza Project is right back to BEFORE we started.
Whilst EDD and SBM felt this was unnecessary as this is only a feasibility study, SBM complied and a re-verification has been done on the Dimbaza Project, there has still been no further communication from the ECF and both EDD and SBM do not know what is happening.
Agni Steel have since opened a R400 million billet plant at Coega, whilst SBM have still not received one cent to conduct the DFS to assess the viability of a Steel mill and cluster in Dimbaza.
This has clearly frustrated job creation in the area, and we are concerned that this may continue as SBM and EDD receive information from the ECF that continuously fails to materialize.
SBM has been promised the “Transfer of Funds” on so many occasions, but absolutely nothing ever comes of it. It continuously gets delayed for some reason or another.
We have (and have had for over 14 months now), signed legal and binding agreements but still nothing ever materializes.
All documentation is complete and with the ECF including tax clearance certificates etc, so there is absolutely no reason whatsoever for these hold-ups, but still they persist.
We are appealing for your intervention as we know the Eastern Cape is very close to your heart, and we pray that we will be able to conclude the DFS as soon as possible so-as to possibly get a steel mill up and running and change the fortunes of the unemployed and destitute in Dimbaza.
It would be greatly appreciated if you could intervene in the hope that you may be able to accelerate the process so that the Dimbaza Project can actually materialize and an employment initiative can be explored.
Thank you and we look forward to implementing this exciting project soon.
SBM Iron & Steel Manufacturers (Pty) Ltd.