The Coega Development Corporation (CDC) reports that it has signed a deal with the Beijing Automobile International Corporation (BAIC) for a new automotive investment worth R11-billion into the Eastern Cape industrial development zone (IDZ).

The Chinese State-owned company plans to build a completely knocked down, or CKD, automotive manufacturing plant in the 50 000-ha zone, which is associated with the Ngqura deepwater harbour, located not far from Port Elizabeth.

The project has been the subject of a feasibility study for some time and is expected to proceed with support from South Africa’s State-owned Industrial Development Corporation, whose annual results presentation on August 30 has been scheduled to coincide with the official sod turning at the Coega IDZ.

Trade and Industry Minister Dr Rob Davies said the investment would deepen South Africa’s economic relationship with China and was a demonstration of the Asian giant’s confidence in South Africa as an investment destination.

It emerged as an outcome of the Forum on China-Africa Cooperation, held in Johannesburg in December 2015, where South Africa’s President Jacob Zuma and Chinese Prime Minister Xi Jinping signed 26 bilateral agreements, which are reportedly valued at around R100-billion.

Economic Development Minister Ebrahim Patel has indicated previously that the plant could have an initial capacity to produce about 50 000 cars, trucks and sports utility vehicles.

BAIC is a State-owned entity and the holding company for several brands, including Beijing Automobile Works.

The project consolidates the Eastern Cape as an automotive hub, with companies such as Volkswagen, Mercedes-Benz and General Motors already major investors in the province.

More recently, FAW Trucks, also of China, invested R600-million into commercial vehicle plant, also at the Coega IDZ. The plant, which assembles vehicles using semi-knockdown packs imported from China began operations in 2014.

Davies argued that the new plant, which would be the largest greenfield automotive plant to be set up in South Africa in 40 years, had the potential to deepen the component supply chain, and job creation in the region.

The CDC welcomed the BAIC investment, reporting that, over the past four years, it had signed 54 new investors with a combined investment value of R31.93-billion.