Public Enterprises Minister Malusi Gigaba reported on Tuesday that initiatives would be announced in the coming months to add momentum to a “comprehensive industrialisation and transformation programme” linked to the multibillion-rand investment programmes of State-owned companies (SOCs) such as Eskom and Transnet.

He told lawmakers during his Budget Vote address that there was an “unyielding political will” to ensure that black industrialists, miners and professionals were developed and nurtured through the procurement policies and programmes of the various SOCs falling under his authority.

Besides Eskom and Transnet these entities included Alexkor, Aventura, Broadband Infraco, Denel, the Pebble Bed Modular Reactor Company, South African Airways (SAA), SA Express and Safcol – collectively they would invest R113-billion in 2013/14 alone.

A so-called Black Emerging Miners Strategy had already been launched, as Eskom geared up to spend over R200-billion on the sourcing of coal over the coming five years.

HALF ESKOM COAL FROM BLACK MINERS

“We intend to ensure that by 2018, Eskom procures over 50% of its coal from emerging black coal miners, which would be a significant act of transformation,” the Minister enthused.

Engagements had already been initiated with established miners, the Chamber of Mines, the South African Mining Development Association and emerging miners in a bid to increase black participation and ownership in the coal mining sector.

“A key element of the strategy is to establish a Mine Development Fund to provide finance for the development of mines, mainly at the early exploration stage,” Gigaba reported, adding that the fund should be operational by the end of the 2013/14 fiscal year.

Following the October 2012 ‘Transformation Dialogue’ the SOCs falling under the aegis of the Department of Public Enterprises (DPE) were establishing transformation frameworks and guidelines, which would also be launched during the course of 2013/14.

RAIL SUPPLY CHAIN

Gigaba saw particular industrialisation opportunities arising from Transnet Freight Rail’s procurement of 1 064 diesel and electric locomotives.

He said that preparation for the procurement process – the timing of which had been affected by disagreements over the black economic–empowerment and local content thresholds – was “now far advanced and shall be concluded in due time”.

Rail rolling stock, along with a number of other capital and consumer goods have been ‘designated’ by the Department of Trade and Industry for procurement from local industry by government departments and the SOCs.

“This historic procurement will result in the development of qualitatively new industrial capabilities and the comprehensive transformation of the locomotive supply chain,” Gigaba said.

Over the coming year, the DPE would be mobilising its entire SOC portfolio, along with their customers and suppliers, to give added “momentum to a comprehensive industrialisation and transformation programme in our economy”.

“As part of this we will be exploring set-asides and other mechanisms to radically accelerate the promotion of black industrialists and the entrance of youth- and women-owned businesses into the mainstream economy.”

Gigaba also reported that the DPE would work with SAA to ensure that the supplier development obligations associated with the SAA fleet renewal contribute to the expansion of Denel’s aerostructures, engineering and maintenance capabilities.

SAA would begin taking delivery of a fleet of 20 Airbus A320 aircraft, valued at R10-billion, in the coming quarter, and was also finalising its future long-haul re-fleeting plan.

Efforts would also be made to encourage large private sector customers and suppliers to partner with the SOCs in the localisation programmes. In addition, Gigaba said the DPE would seek to use its influence with SOC-related pension funds to provide additional leverage.

State companies would also seek to develop black professionals, with Transnet having already awarded the single largest audit appointment to Sizwe-Ntsaluba-Gobodo, as well as a R1.3-billion internal-audit contract to a group of three audit firms led by SekelaXabiso and also involving Nkonki and KPMG.

Gigaba described the SOCs as a unique instrument of the developmental State, that would systematically drive “investment, industrialisation and transformation amongst their customers, suppliers and in the broader economy”.