CAPITAL EXPENDITURE PROJECT LISTING 1 January 1993 to 31 December 2016 NEDBANK GROUP ECONOMIC UNIT 07 February 2017 NOTES: Definition: The schedule is a listing of capital projects announced in the Republic of South Africa. It includes: Only projects valued at R20 million or more. Projects of an expansionary nature, i.e. capex which allows for an increase in the level of output, rather than pure replacement investment which involves the replacement of worn-out or outdated capital goods necessary for the continued operation and the maintenance of current output levels. The exceptions are: investment in equipment or machinery which reduces the harmful effects of pollution, and technological upgrading of equipment and machinery. Projects funded by both the private and public sectors. Projects reflecting direct foreign involvement. The listing is compiled on a sectoral basis, conforming to the Standard Industrial Classification. Limitations: Any analysis of the data needs to take account of the limitations outlined below: The schedule highlights significant areas of investment expenditure and not the absolute total value of all capital investment undertaken in the country. It serves as a rough guide to the general direction in which investment is moving and as an indication of the level of confidence in the economy. The full extent of replacement capital expenditure is not captured as mainly expansionary capital expenditure are published and recorded. In certain sectors a reliable indication of investment activity is not possible as typical investments are not large enough to be included in the schedule, even though the total capital expenditure in the sector may be substantial. For example, in the construction and finance sectors typical investments are generally in vehicles, machinery, computer and other technical equipment which individually fall below the R20 million minimum. The value of each project refers to the total original announced value at current prices. It is not always possible to allocate projects to the appropriate sector due to their diverse nature. Projects are generally allocated to specific sectors according to the core business of the company or institution undertaking the investment. However, in cases where the company is unknown the nature of investment serves as a guide for classification. This principal is also applied to diverse projects where no rand value can be related to a specific economic activity within the project. For example, a waterfront development is typically undertaken by a property company or developer. Although it consists of retail and office developments, hotels, restaurants and other entertainment and recreational facilities, it is classified under "real estate activities with own or leased property". In cases where a government entity undertakes an investment of a diverse nature which involves, for example, infrastructure development, site preparation, low-cost housing as well as water, electricity and sanitation such a project will be classified under "central government or regional services council or local authorities". However, if a local authority, for example, undertakes a specific project such as developing community sport facilities it will be allocated to "sporting and other recreational activities". i Sources: Although a wide range of publications are used to compile the listing, we would specifically like to thank Engineering News for their on-going contribution to this publication. While every care is taken to ensure that the information in this document is as correct and up-to-date as possible, there are more than likely some exclusions and inaccuracies. In the interest of providing a faithful indication of capital expenditure undertaken, it would be greatly appreciated if you would contact us should you come across any exclusions or inaccuracies. Johannes Khosa (011) 294 1835 – email [email protected] Nicky Weimar (011) 295-6840 – email [email protected] Busisiwe Radebe (011) 295 9878 – email [email protected] ii Comment: The value of projects in the broad finance, real‐estate and business services sector fell to R13,7 billion, The South African economy continued to struggle in 2016, as both global and local demand remained lowest for the sector since 2012, ‐ while the number of new projects announced dropped to 11 from 22 in lacklustre. Business confidence remained weak due to subdued economic activity, the noisy political 2015. Most of the projects involved the development of shopping centres. During the second half of the environment and persistent policy uncertainty, which caused firms to be more reluctant to commit to year ‐ three new projects worth a total of R1,4 billion were recorded. These include the R270 million large‐capacity expansion programmes. Nedbank's Capital Expenditure Project Listing shows a expansion of Fourways Mall, the construction of a new regional mall in Springs worth R950 million as well decrease in both the number and value of new projects announced in 2016 with a drop to 56 projects as a new BMW and Ford vehicles showroom and service facility in Braamfontein worth R170 million. The worth R88,6 billion from 92 projects worth R163,1 billion in 2015. Most of the projects (about 77% of biggest project recorded in this sector in 2016 was the Leratong City integrated nodal development the total number and 94% of the value) announced in 2016 were recorded during the first half of the project worth R4,2 billion. Other big projects included, the Masingita City regional mall in Protea Glen year. The slowdown in investment commitment was noticeable mainly in the private sector, where worth R3 billion, the expansion of Irene Village Mall in Centurion for R1,5 billion and the Boardwalk Mall in both the number and the value of projects fell sharply. Public corporations and general government Port Elizabeth for R1,3 billion. performed slightly better in value terms, compared with the previous year, but the number of projects declined. There was also a decline in the number and value of projects for all the three sectors, The electricity, gas and water sector announced 14 new projects, up from 10 in 2015. However, the value following some improvement in 2015. dropped to R8,9 billion from R54,7 billion. The majority of the projects recorded in 2016 involve bulk water infrastructure programmes by the Department of Water and Sanitation, which are aimed at Nedbank schedule: R billion (constant 2012 prices) Actual growth in capital formation % 1050 20 improving water distribution facilities across the country. Public sector Private sector Actual growth gross fixed capital formation The community, social and personal services sector recorded three new projects worth R398 million, its 900 15 lowest since 2010 and down from nine projects worth R12,1 billion in 2015. The projects captured in this 750 sector in 2016 were relatively small in size, with the biggest project being the OR Tambo district schools 10 refurbishment project in the Eastern Cape worth R300 million. Nedbank 600 forecast 5 The value of new projects announced by the mining sector was steady at R18,7 billion, as the sector 450 continued to be hurt by lacklustre global demand and lower commodity prices. The value was almost 0 entirely driven by the R17,7 billion Ivanplats Platreef phase 1 project, which involves mining of platinum 300 group metals, copper, nickel and gold on the northern limb of the Bushveld Igneous Complex in Limpopo. 150 -5 In total only three new major projects were recorded in this sector in 2016. 0 -10 The wholesale, retail and motor trade, hotels and accommodation sector also remained weak, with only 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 three projects worth R2,2 billion announced during the year. The biggest project involves the expansion and refurbishment of the Sun City hotel for R1,1 billion. The breakdown shows that the transport, storage and communication sector recorded the largest value of projects at R27,1 billion, which accounted for 27% of the total value, and increased from The agriculture, forestry and fishing and the construction sectors announced no new projects. R22,3 billion in 2015. All the major projects in this category were reported during the first half of the year and include MTN's capital investment programme worth R12 billion, the Moloto Road upgrade The outlook for 2017 is slightly better, with real GDP growth forecast to improve to 1,1% from an project worth R3,7 billion, and the Gautrain rolling stock procurement programme worth R3,5 billion estimated 0,4% in 2016. The production side of the economy will be supported by the receding effects of as well as the Clairwood Logistics Park and Distribution Centre, also worth R3,5 billion. the drought, some recovery in commodity prices, steadier conditions in China’s manufacturing sector, reductions in excess capacity in many commodities, as well as the general anticipation that the new US The manufacturing sector reported projects worth R17,7 billion or 18% of the total. However, the president will boost the country’s growth through aggressive infrastructure spending, lower taxes and less value does not include the massive R40 billion Musina‐Makhado special economic zone (SEZ) project regulation. The consumption side is likely to benefit from increased consumer spending as inflation and as the breakdown thereof has not been published as yet. The SEZ is an energy and metallurgical interest rates are expected to fall. These will underpin business confidence and probably persuade firms industrial park designed to boost the country’s industrial and manufacturing capacity. The SEZ project, to increase capital investment. Government infrastructure programmes will also continue as government which will be led partly by the Hong Kong Mining Exchange, will include power, coking coal, implements its Industrial Policy Action Plan and attempts to address some of the social and infrastructure ferrochrome, ferromanganese, ferrosilicon, pig iron metallurgy, lime, steel and stainless steel plants.