DURBAN ECONOMIC UPDATE - ISSUE 1

C O N F I D E N T I A L SECTION 01 OF 02 DURBAN 000062

SIPDIS

SIPDIS

STATE FOR AF/S - RMARBURG; AF/EPS
COMMERCE FOR 4510/ITA/MAC/AME/OA/DIEMOND

E.O. 12958: DECL: 10/23/2017
TAGS: ECON EAIR EWWT PGOV SENV SF
SUBJECT: DURBAN ECONOMIC UPDATE - ISSUE 1


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CLASSIFIED BY: Eugene S. Young, Consul General.
REASON: 1.4 (b),(d)

1. (C) IN THIS ISSUE:
- Plans for New Durban Airport Approved
- Plans for Current Durban Airport Still Under Debate
- Succession Debate Hindering Public Service Delivery in Durban
- Construction of New Durban Stadium on Target
- Environmentalists Accuse eThekwini Health Department of
Cover-up

PLANS FOR NEW DURBAN AIRPORT APPROVED


2. (U) On August 23, the Department of Environmental Affairs and
Tourism gave the Airports Company of South Africa (ACSA)
permission to proceed with construction of the new King Shaka
International Airport and Dube Tradeport in La Mercy, north of
Durban. The approval comes nine years after KwaZulu-Natal (KZN)
authorities revived plans for a new airport to increase
capacity. The new airport will have an initial capacity of 7.5
million passengers per year. The approval came with the caveat
that 80 environmental conditions must still be addressed before
full construction can begin.


3. (U) While the provincial and municipal governments have
celebrated the approval, the construction contractor Ilembe
consortium, led by Group Five and WBHO, has been less
enthusiastic. Mike Upton, Group Five's CEO, noted on August 24
that the "implications of the conditions still have to be
assessed on the program and design." Since the approval, eight
appeals have been filed in a challenge against the final
environmental impact assessment. Earthlife Africa, one of the
appellants, objected on the grounds that there "had been no risk
assessment conducted on the aviation fuel storage tanks" and
that this led to a "risk of explosions, similar to the recent
explosion in Durban harbor." (NOTE: See below for background on
Durban harbor explosion. END NOTE) Zweli Mkhize, KZN MEC for
Finance and Economic Development, said that in spite of the
appeals, "we will certainly now be able to finish in time" for
the 2010 World Cup.

PLANS FOR CURRENT DURBAN AIRPORT STILL UNDER DEBATE


4. (C) Plans for the land occupied by the current Durban
International Airport remains a hotly contested subject amongst
eThekwini Municipality (Durban) officials. On September 25,
Pol/EconOff discussed with city officials various proposals for
use of the land. Durban Deputy Mayor Logie Naidoo noted that
the three main proposals are the creation of a dug-out port to
extend the Port of Durban's container capacity, the purchase of
the land by Toyota, and the purchase of the land by a
petrochemical consortium.


5. (C) KZN Growth Coalition CEO John Barton stated that his
group's preference is to extend the port. He noted that the
growth of the port is "essential" for the growth of South
Africa's economy. Durban Chamber of Commerce CEO Bonke Dumisa
emphasized that the only "logical option" is the extension of
the port if "politics doesn't get involved." Deputy Mayor
Naidoo was more circumspect, hinting that not all concerned
parties in the municipality have come to an agreement, and noted
that the national government would play a large role in the
final decision.


6. (C) On October 2, Pol/EconOff met with Eric Apelgren,
Durban's International and Governance Relations Officer.
Apelgren stated that the debate surrounding the proposals for
the use of the current airport's land remains contentious. He
affirmed that the purchase of the land by Toyota or the
petrochemical coalition remained viable options, as Durban would
only be able to afford the construction of a dug-out port with
financial support from the national government. He noted that
the concerned parties would likely avoid further discussion of
the petrochemical option, due to opposition of local
environmental groups, heightened by the ongoing saga surrounding
the explosion at Durban's Island View storage terminal (see
below). Apelgren also commented that the national government
had the authority to make the final decision, given that the
implication of the various options on economic growth were vital
to national security.


7. (C) COMMENT: The Transnet National Ports Authority, South
Africa's parastatal ports authority, has also been studying ways
to expand capacity at the port of Durban. Transnet does haveQr options besides digging out the site of the current
airport to expand port capacity in Durban. Two viable options
are to dig out the southern side of the port at Bayhead or to
convert Salisbury Island into a container terminal. Transnet is
also discussing the conversion of Richards Bay's container unit

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into a full-scale container terminal. If Transnet determines
that these options are better than a dug-out expansion using the
current airport's land, then Toyota may indeed have a chance at
purchasing the land. It is likely, however, that final plans
for the land will not be announced until it is certain that the
new King Shaka International Airport will be ready by 2010. END
COMMENT.

SUCCESSION DEBATE HINDERING PUBLIC SERVICE DELIVERY IN DURBAN


8. (C) On September 27 and October 2, Pol/EconOff also discussed
the impact of the ANC presidential succession debate on public
service delivery with Apelgren. Apelgren stated that
approximately 80 percent of department heads within the
eThekwini Municipality (Durban) are ANC political appointees.
He then noted with frustration that department heads' support in
the succession race is divided between President Mbeki and ANC
Deputy President Jacob Zuma. He said he "couldn't wait for
December to be over" so that eThekwini departments can "focus on
their jobs, instead of politics." Apelgren said that the
tension between certain department heads was becoming
"unpalatable," to the extent that some will no longer converse.
He also confirmed that the heads know that their time is limited
should they support the wrong candidate before December.

CONSTRUCTION OF NEW DURBAN STADIUM ON TARGET


9. (C) On October 3, Julie-May Ellingson, Head of Strategic
Projects for eThekwini Municipality (Durban),took Pol/EconOff
on a tour of the new Moses Mabhida Stadium complex being
constructed for the 2010 Soccer World Cup. Ellingson said that
the stadium was on target for a June 2009 completion. Ellingson
said that she hoped to plan an official inauguration ceremony
for October 2009, allowing a few months for any delays that may
occur. Ellingson stated, however, that while the stadium plans
are on track, that plans to increase public transport capacity
to the stadium by 2010 are lagging. Further, Ellingson said
that while security for the World Cup has been thoroughly
addressed, that the overall crime situation in Durban has yet to
improve.

ENVIRONMENTALISTS ACCUSE ETHEKWINI HEALTH DEPARTMENT OF COVER-UP


10. (U) On September 18, an explosion occurred at Durban's
Island View storage terminal, located within the Port of Durban.
The cause of the explosion is still under investigation.
Residents of area neighborhoods were evacuated following the
explosion, but told only hours later that it was safe to return
home after the eThekwini Municipal Health Department had
concluded that the toxins released in the air did not pose a
threat. Area residents have now accused the Health Department
of a cover-up, after an independent test showed that residents
were in danger. Two air samples were taken by the South Durban
Community Environmental Alliance on the night of the explosion,
and sent to the US for testing. The results of the Alliance's
tests reportedly showed that residents were exposed to
bromomethane, tetrachloroethylene, and benzene at levels above
the World Health Organization's annual limit for exposure. The
Health Department has denied the cover-up charges, but
acknowledged that the Department has "engaged the services of a
specialist engineer to carry out further investigations."
YOUNG