Pow­er­ing eco­nomic ac­tiv­ity

Sleepy town Ermelo wak­ing up to the heat of coal

Finweek English Edition - - Openers - SIKONATHI MANTSHANTSHA

THE RE­TURN TO SER­VICE of the Cam­den coal-pow­ered elec­tric­ity-gen­er­at­ing sta­tion out­side the coun­try town of Ermelo in the Lowveld of Mpumalanga prov­ince has re­vived eco­nomic ac­tiv­ity in the town. Ermelo is now a hive of ac­tiv­ity, grow­ing rapidly thanks to the coal that has to be de­liv­ered to the power sta­tion 24 hours a day.

First com­mis­sioned in 1967, the power sta­tion is in the third year of its grad­ual re­turn to ser­vice af­ter be­ing moth­balled in two phases in 1987 and 1990. Of Cam­den’s eight gen­er­at­ing units, six are op­er­a­tional and the last two will be com­mis­sioned in 2008 to bring the 1 600MW sta­tion to full ca­pac­ity.

The surge in ac­tiv­ity at the sta­tion and the nearby Sudo coal mine has at­tracted a di­verse range of en­trepreneurs. Signs of new money can be seen ev­ery­where in the small min­ing town: busi­nesses are spring­ing up, from top-end restau­rants to tyre deal­ers and truck ser­vic­ing spe­cial­ists.

The shop­ping mall in which a Dros restau­rant is sit­u­ated is only three months old. Maxi’s, a few blocks away, is also less than a year old.

How­ever, Ermelo is also rapidly trans­form­ing it­self into a truck­ing town. New tyre sup­pli­ers are com­pet­ing for space, as are truck-ser­vic­ing cen­tres.

The nearby towns of Mid­del­burg and Nel­spruit are also re­ceiv­ing a piece of the ac­tion. Con­ti­nen­tal Tyres will soon open a deal­er­ship in Mid­del­burg as will MAN Truck & Bus with a ser­vic­ing cen­tre.

Mh­leli Sibany­oni and Abel Kganane were among the first en­trepreneurs to take ad­van­tage of the re­sump­tion of ac­tiv­i­ties at the Cam­den and the nearby Ma­juba power sta­tions. The duo are equal part­ners in three­year-old Sizo Lo­gis­tics, a coal trans­porta­tion com­pany that’s sub-con­tracted to Mziki Trans­port, which is con­tracted by Eskom to sup­ply coal to both power sta­tions.

The In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC) in Septem­ber 2005 pro­vided a R15m fund­ing fa­cil­ity to help Sizo buy 10 trucks and trail­ers. Sibany­oni, a char­tered ac­coun­tant, is CE of the com­pany. He says Sizo’s trucks op­er­ate 24 hours a day, each de­liv­er­ing 30t of coal to Cam­den – that’s 20 000t/month – equalling 10% of the coal the sta­tion burns.

For its trou­bles, Sizo re­ceives a healthy R1,2m/month.

Sizo em­ploys a to­tal of 20 driv­ers and 10 other staff mem­bers in his of­fice. How­ever, its con­tri­bu­tion to the econ­omy of Ermelo isn’t lim­ited to truck­ing. “Our busi­ness has pro­vided more job op­por­tu­ni­ties out­side min­ing and out­side trans­porta­tion,” says Sibany­oni.

“MAN is open­ing an­other ser­vice cen­tre in Mid­del­burg (100km away).” Right be­hind Sizo’s prop­erty there’s a MAN ser­vice cen­tre. Sibany­oni says tyres are his sec­ond big­gest ex­pense, af­ter fuel.

IDC trans­port, fi­nan­cial ser­vices and other strate­gic busi­ness unit head Ku­gan Thaver said the R15m loan to Sizo raised the cor­po­ra­tion’s ex­po­sure to trans­porta­tion to R160m out of a bud­get of R350m in its 2006/2007 fi­nan­cial year. The big­gest ap­proval – R285m early this year – from the IDC’s busi­ness unit funded Capitec Bank’s black em­pow­er­ment deal. Thaver says in its 2007/2008 year his unit will have in ex­cess of R420m to spend on de­vel­op­men­tal fi­nance.

“Our fo­cus this year will be on fi­nan­cial ser­vices, ship­ping and avi­a­tion,” says Thaver. “We’ve enough road freight al­ready.”

Pock­ets bulging with R420m. Mh­leli Sibany­oni (left) and Ku­gan Thaver

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