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South Africa Table of Contents

South Africa

Electric Power

The country's first electric power plants were developed to support the turn-of-the-century mining industry. Most mines used on-site electrical generators until 1909, when the Victoria Falls Power Company was established. In 1923 the electricity parastatal, Eskom, began providing electricity for the country's railroads and nonmining industries. Eskom bought out the Victoria Falls Power Company in 1948 and has been the country's major power producer since then. Eskom's sales increased faster than GDP growth after World War II, and the utility expanded steadily. From 1950 to 1982, sales grew at an average rate of 8 percent per year.

Despite Eskom's strong sales record, officials became increasingly concerned over the government's capital investments in Eskom's expansion efforts, which were estimated at R27 billion between 1983 and 1987. Eskom was one of the enterprises hit hardest by the cutoff in foreign loans in 1985. After that, it scaled down plans for further expansion. Eskom supplied more than 97 percent of the electricity used nationwide in the early 1990s, but a few mines and industries had power generators of their own. Only about 40 percent of the population had electricity in their homes, but the new government in 1994 placed a high priority on supplying power to rural areas.

Eskom derives nearly 90 percent of its power from coal-fired electric power stations, 8 percent from nuclear power plants, and the remainder from hydroelectric plants. Some energy analysts predict that the country's coal reserves (estimated to be between 60 billion and 100 billion tons) will begin to run out by the middle of the twenty-first century. Eskom officials estimate that the last coal-fired station will be commissioned before the year 2045. With about 14 percent of the world's uranium reserves in South Africa, Eskom then plans to switch to the use of nuclear power to produce electricity.

The Koeberg nuclear power station, commissioned in 1976 but subsequently damaged through sabotage, began operations using uranium as an energy source in 1984. In the mid-1990s, it is the only nuclear power plant in operation, but sites have been selected for at least two additional plants to be built early in the twenty-first century.

South Africa imported electricity from the Cahora Bassa hydroelectric facility in Mozambique during the early 1980s, but that source was cut off in 1983 as a result of sabotage by Mozambican rebels. South Africa, Mozambique, and Portugal agreed on reconstruction plans, begun in 1995, that were expected to reestablish power to South Africa by 1997.

Heavy Industry

Iron and steel production dominates South Africa's heavy industry, providing material for manufacturing structural goods, transport equipment, and machinery, and for the engineering industry. Large-scale production of iron and steel was begun in 1934 by the state-owned South African Iron and Steel Corporation (Iscor). Iscor began selling shares to the public in 1989. It operate plants at Pretoria, Vanderbijlpark (Gauteng), and Newcastle (KwaZulu-Natal) and owns numerous coal, iron ore, and other mines throughout the country. Most major companies in this sector, including Union Steel (Usco), African Metals (Amcor), and Vanderbijl Engineering (Vecor), were established with help from Iscor or are operated as subsidiaries of Iscor. Highveld Steel and Vanadium is owned by the Anglo American Corporation.

South Africa produced about 9 million tons of steel, on average, each year in the early 1990s, only about 1 percent of world production. This output was more than enough to meet domestic demand and to provide some steel for export. The industry plans to increase production in the late 1990s to meet domestic construction needs and to increase steel exports.

The first vehicle assembly plant was established by Ford in Port Elizabeth, and in 1960 the government began to promote the increased use of local parts in vehicle assembly. Phase One through Phase Five of the local-content encouragement program were based on the weight rather than the value of local components and tended to make South African vehicles relatively heavy and expensive. In 1989 the government introduced Phase Six, which shifted the determination of content to value rather than weight. The result was a reduction in the cost of vehicles as manufacturers turned to low-cost imported parts in order to increase the percentage of value represented by local products. The lowered cost of assembly was evidenced in June 1991 when the South African Motor Corporation (Samcor) announced that it had started exporting locally assembled Mazdas to Britain.

Vehicles are manufactured primarily in the industrial area around Johannesburg, in Mpumalanga, and in the Eastern and Western Cape provinces, using parts manufactured locally at more than 150 plants and some imported parts. In 1994 South African automakers assembled more than 225,000 passenger cars and more than 97,000 commercial vehicles, employing more than 91,000 workers. At that time, almost 6 million vehicles, including more than 3.5 million passenger cars, were licensed to operate in South Africa.

South Africa also has a significant heavy-engineering industry that meets many of the country's industrial and construction requirements. Many of the firms connected to Iscor produce structural steel, for use in construction, as well as machinery and mining equipment. Most advanced machinery, such as Eskom's generators or SASOL's plant, was still being imported in the 1990s. Nevertheless, when the production of all categories of heavy industry is combined--including steel and metal products, machinery, and vehicles--this subsector accounts for about one-fourth of manufacturing output by value.

Data as of May 1996

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