Local Economic Development
Lephalale is defined by the Limpopo Growth and Development Strategy as a coal mining and petrochemical cluster. The area is currently experiencing growth driven by mining expansion and the construction of the Medupi power station. The coal to liquid project that is currently being investigated by Sasol, could broaden the opportunities for cluster formation. The local economy is dominated by the coal mine and the power station. Three clusters that are most relevant to Lephalale are firstly Coal & Petrochemical, secondly red meat and thirdly Tourism. Lephalale is currently in the first stages of considerable public sector investment, estimated at R80 billion over six years, for the construction of the Medupi power station. Due to its vast coal reserve the municipality is being considered for a third power station and coal to liquid manufacturing plant.
The construction of a third power station at Lephalale after the commissioning of Medupi is under consideration by Eskom. The construction of this future power station will require the further expansion of the Grootegeluk Coal Mine or alternatively the establishment of a new mine. The obvious growth of Lephalale that will stem from all these possible developments will necessitate significant expansion of the existing infrastructure that serves the town. One of government’s key priorities is to increase economic growth and to promote social inclusion.
MINING and ENERGY GENERATION
The Waterberg Coal Field in Lephalale is the biggest coal field in South Africa in terms of in situ reserves. Exxaro Grootegeluk Mine, together with its beneficiation plants, which produces coking coal, metallurgical coal, power station coal as well as PCI coal, is the biggest of its kind in the world.
The local Matimba Power Station is the biggest direct dry-cooled power station in the world, with an installed capacity of 3990 MW. Matimba produces approximately 24 000 Gwh per annum.
Construction of the new Medupi Eskom Power Station near Lehalale started June 2007. The Oaks Diamond Mine of the De Beers Group, situated near Swartwater, produces approximately 68 000 carats of diamond per annum.
A Phosphate mine namely Glenover Mine, is situated near Steenbokpan. Anglo Coal is investigating the economic potential of Coal Bed Methane (CBM) extraction from the Waterberg Coal Field in Lephalale.
Lephalale is also an important agricultural area, both in terms of animal and crop production. The main products produced are: Cattle, Game, Vegetables, Table Grapes, Citrus, Cotton, Tobacco, Watermelon and Paprika.
The Local Economic Development (LED) Strategy of Lephalale Municipality’s Vision for 2025 is to:
• Increase Power stations from one to five.
• Increase Coal Production from 16 million tons to more than 100 million tons per annum.
• Petro chemical industry established for 160 000 bpd.
• Diversified Local Economy.
• Population to double from 120 000 to 240 000.
LED Interventions recommended are to:
• Promote the coal and petrochemical cluster.
• Assist livestock farmers on communal land.
• Increase tourist services and expenditure.
• Support the informal economy.
• Improve service delivery by the municipality.
CURRENT LED PROJECTS
Lephalale Municipality, through LED Division is implementing the following projects for local economic development and sustainable development:
1. FEEDING CONTRACT FOR the MEDUPI POWER STATION
The contract is estimated at R450 million for three years and was awarded to Fedics and Mooncloud JV and a new company called Lephalale Site Services with fifty percent equity each. Fifty percent of the profit will therefore be retained in Lephalale, and approximately fifty percent (R225 million) of the value will be sub-contracted to B-BBEE compliant suppliers. Forty percent of the R225 million, that is R90 million, is to be spent on B-BBEE compliant suppliers, preferably in the Lephalale area before the Waterberg District and/or Limpopo Province. This will create sub-contracting opportunities for local businesses who are not part of the consortium. Approximately 21 000 meals will be served per day and 200 direct job opportunities created. One hundred and forty (140) personnel from Lephalale trained as Hygienists, Nutritionists, Dieticians, etc. Agriculture, meat and general retail industry will also benefit directly from this contract and Skills transfer, enterprise development and CSI/SED will be automatic spin-offs.
Multiplier (knock-on) Effects of the Feeding Contract
• Chicken broiler and abattoir – consortium owned Black women and an established company (Abattoir for red meat to be opened in Lephalale).
• Bakery – SASKO and a consortium owned by Black women.
• Fruit abd vegetables – Black small scale farmers and an established farmer.
• Supply of groceries – established suppliers formed a JV with a local consortium.
• Beverages – established supplier with Black consortium.
• Transportation – refrigerated trucks – wholly Black owned and managed.
2. HAWKERS STALLS PROJECT
Consolidation and upgrade of Hawkers stalls. The project to be rolled out in phases:
Phase 1: Shoprite and Boxer Taxi Rank - Funding confirmed from Exxaro Foundation and Pistorius Group (R1.3 million). MoU signed between the Municipality and Pistorius Group for implementation of this phase. Construction of new stalls is expected to start early March 2011.
Phase 2: Pick n Pay Taxi Rank – Engagement made with Doornhoek Development (Menno Glass and Dries van der Walt) for implementation of phase 2 at Pick n Pay taxi rank near Lephalale Magistrate court. Doornhoek Development confirmed their interest to contribute financially and technically (project management) to this phase.
Phase 3: Marapong Taxi Rank – To engage various stakeholders for funding. Pistorius Group already expressed interest to become part of the stakeholders for implementation of this phase.
Phase 4: Border Post – To engage various stakeholders for funding.
3. TOURISM INFORMATION CENTRE
The Lephalale Tourism Office was officially opened on 19 August 2010. The Municipality has made available R84 000 for the rental of the office – 3A Jan Lee Street, Lephalale.
An item was presented to council on the establishment of a tourism information office and the following resolutions were made:
• Budget for tourism official 2010/2011.
• Facilitate the participation of PDI in Tourism Industry.
• Development Heritage Sites.
During the official opening of the Lephalale Tourism Information Office, Limpopo Tourism & Parks presented the Tourism Month Programme (September 27 as Tourism Day), and encouraged the promotion of local tourism by the Municipality.
Lephalale Municipality participated in the 2010 Getaway Show in Ranburg (10 – 12 September 2010) with the Waterberg District Municipality through the promotion of district wide tourism. Mr. Lowrance Kgonyane, Divisional Manager: Economic Development and International Relations attended the Getaway show as an exhibitor for Lephalale Tourism.
On 24 September 2010, Lephalale Municipality successfully hosted the Heritage Day Celebration at Marapong Sports Ground in conjunction with the Limpopo Department of Sports, Arts and Culture. Lephalale Municipality participated in the Tourism Day Celebration, which started on 26 September 2010 with a Galla Dinner at Protea Hotel. The Ranch in Polokwane, which was followed by the Tourism Day Celebration on 27 September 2010 hosted successfully by Limpopo Tourism & Parks (LTPs).
Methods / strategies to market tourism under the rural communities are still investigated from the Municipal Perspective. Proposals are encouraged from communities at large or any service provide for further exploration by the Municipality or Lephalale Development Forum.
4. LEPHALALE AGRICULTURAL CORRIDOR
In implementing cooperative agri-business development solutions, we will be promoting the local economic development linkages and initiating work that has a ‘public good’ character – in line with the CWP’s mandate – but that also has the potential to transition into becoming a sustainable and independent economic activity.
The propose of this innovation is to establish Phalala communities as the food supply source to both local and international markets as well as companies currently involved in the industrial development of Lephalale.
Commercial farmers and emerging farmers on communal land remain two distinct stakeholder groupings in the agricultural landscape. The interface between the two groupings is the land reform process. Capacity constraints within the Department of Land Affairs, both at the project conceptual design and at the project implementation level, have contributed to a drop in food production. This is happening against a backdrop of a deteriorating food security situation in the country.
An Agribusiness Development Initiative (the Godisa Project) has emerged from among concerned stakeholders in Lephalale, both from the commercial and the emerging ends of the institutional spectrum. This initiative’s vision is to facilitate the transformation of marginalised communities by implementing co-operative agribusiness development solutions that are based on sound agricultural development strategy, business development models and effective implementation methodologies. This initiative is capable of improving the impact of land reform in Lephalale at the strategic and operational level. It also has the objective to improve the utilisation of agricultural infrastructure and facilities among farmers in the Lephalale area. The Lephalale Agribusiness Development Initiative (Godisa) deserves to be recognised by the Municipality and the Provincial Departments of Agriculture and Land Affairs as an important partner in the local crop production development process, particularly among farmers on and from communal land.
A second important element of the crop production development process in the municipality, is to engage with the new Expanded Public Works Programme, which has a specific food production facility. The critical issue for the municipality is to ensure that every project has a sound business model before it is implemented. Without a sound business model, there is a risk that the Municipality can retain the responsibility of supporting a number of unsustainable community projects.
With regard to commercial farmers, the Municipality can make a useful contribution by facilitating access to research and development on water saving technologies on irrigation farms. The Watertec division of the CSIR is an important institution to approach in this regard. Mutually beneficial co-operation between commercial and emerging farmers should also be encouraged.