New Navy platforms will be the bulk of shipbuilding activity for blue economy initiative

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The SA Navy’s need for additional hulls is currently the only driver of the shipbuilding component of the blue economy initiative that is part of Operation Phakisa.

The Portfolio Committee on Trade and Industry was this week informed by the Department of Trade and Industry’s director general Lionel October the 60% local content requirement for both Project Hotel and Project Biro would see a projected spend in the region of R6.6 billion over the next three to four years. The local content requirement will guarantee that at least the hulls are built in South Africa.

Project Hotel will see the Navy’s ageing hydrographic vessel replaced by a new, state-of-the-art one fitted with the latest in high technology instrumentation and equipment to perform vital surveys of the oceans around South Africa. This is part of the country’s commitment as a member of the International Hydrographic Organisation (IHO).

Tenders for this project have closed and are being evaluated by Armscor. The government’s defence and security acquisition agency has indicated it could take up to a year to evaluate the tenders because of the complexity. In addition to the vessel, the tender also calls for ancillaries including boats and work at Silvermine.

Project Biro will see the maritime arm of the SA National Defence Force acquire a further six hulls – three each in the on- and offshore patrol vessel class.

These vessels will considerably boost the patrolling ability of the Navy, currently supplied by the four Valour Class frigates and three former strikecraft, converted to offshore patrol vessels (OPVs). Once commissioned they will patrol to safeguard maritime assets including fish stocks as well as hunt down smugglers and be available to assist in maritime search and rescue operations. The Navy has requested delivery of one vessel every eight months as it wouldn’t be able to take delivery of all vessels at once, according to a source in industry.

The date tenders close for Project Biro has been extended to 30 September this year while Project Hotel tender bids closed on 30 June.

Briefing the Parliamentary committee October said “opportunities” for the local shipbuilding industry “have developed from Armscor tenders for projects Hotel and Biro”.

In response to a question October said: “Any vessel required by the SANDF or Navy will now be built in South Africa.

Operation Phakisa was launched in July 2014 with a focus on Marine Transport and Manufacturing led by the Department of Transport; Offshore Oil and Gas, led by the Department of Mineral Resources; Aquaculture, led by the Department of Agriculture, Forestry and Fisheries; and Marine Protection Services and Ocean Governance, led by the Department of Environmental Affairs.

A study conducted recently by the Nelson Mandela Metropolitan University quantified the value of South Africa’s. Analysis undertaken in 2013 found that nine sectors of South Africa’s ocean economy could generate an estimated GDP contribution of R129 billion to R177 billion by 2033, and 600 000 jobs.

President Jacob Zuma recently pointed out that of the 30 000 vessels that dock in local ports every year, South Africa only does maintenance on 5% of the vessels. In addition, of the 80 rigs in the Western Cape, only 4 are serviced per year. “300 million tonnes of cargo on foreign owned vessels are shipped and 1.2 million tonnes of liquid fuel passes along our coast annually. In this regard, significant investment is required in new port infrastructure including rig repairs,” he said.

The President said the rehabilitation, upgrade and redevelopment of some small harbours, as well as the identification and proclamation of new harbours and their integration with national coastal projects, has begun in order to unlock the economic potential of coastline.



The President said some projects have already commenced, and said a total of R9.2 billion is to be spent to develop Saldanha Bay as an oil and gas hub. He said the phased gas pipeline routes have also been defined.
“Environmental authorisation has been approved for the Burgan Fuel Storage facility in the port of Cape Town. This is an investment of approximately R660 million and construction will commence by the end of August 2015,” he said.