Powering economic activity
Sleepy town Ermelo waking up to the heat of coal
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