South African investments of 3 billion rand in hydrogen projects aim to develop the green economy

South Africa has invested 3 billion rand into the SA-H2 fund, which is designed to promote commercially viable hydrogen projects and stimulate the green economy.

Professor Samson Mamphela, head of the Department and Secretariat for Energy Innovation at Sanedi, noted that South Africa has the potential to develop large-scale hydrogen technologies due to holding 70% of the world's platinum group metal reserves.

The 3 billion rand funding was provided by leading South African financial institutions and several foreign development finance groups. The SA-H2 fund focuses on energy transition projects across the entire value chain of green hydrogen.

This chain includes the production of green hydrogen, as well as derivative products such as green ammonia and green methanol, as well as the decarbonization of hard-to-abate industries. Green hydrogen is produced through the electrolysis of water using renewable energy sources, such as solar or wind.

Energy

Mphokolo Makara, CEO of SA-H2 Fund Managers, stated that the presence of world-class renewable resources, a strong industrial base, and growing demand for low-carbon fuel allow the country to play a significant role in the green hydrogen economy.

He emphasized that through SA-H2, a portfolio of commercially viable projects is being developed that will help decarbonize industry, ensure long-term economic growth, and support a just energy transition.

Currently, the SA-H2 Fund has concluded development finance agreements with Green Efuels Producers, which is building a wastewater-to-green-methanol plant in Gauteng, and with Hive Hydrogen Coega Green Ammonia Project, which is the country's first large-scale green ammonia production facility.

The SA-H2 Fund operates as a blended finance mechanism, combining public and private capital to balance risks and secure institutional investment. It consists of a Development Tranche, which provides seed capital and technical assistance to prepare projects for final investment decisions, and Blended Equity Tranches, which facilitate the transition from financial close to project construction.

Commitments for the Development Tranche were secured from Invest International and the European Commission under its Global Gateway strategy, as well as from the Industrial Development Corporation of South Africa (IDC).

Meanwhile, commitments for the Equity Tranches came from the Public Investment Corporation (PIC) on behalf of the Government Employees Pension Fund (GEPF), Sanlam Life Insurance, Invest International, and the European Commission, with additional support from the Development Bank of Southern Africa (DBSA).

The fund's first closing reflects growing investor confidence in green hydrogen and its derivatives as a solution for decarbonizing hard-to-abate sectors, including steel, fertilizers, e-fuels, and chemicals. Andrew Johnston, CEO of Climate Fund Managers, stressed that industrial decarbonization requires solutions beyond electrification, and green hydrogen plays a critical role in this transition.

"With Climate Investor Three, we are developing and scaling projects that enable industrial consumers to switch to low-carbon alternatives. This first closing reflects confidence in our blended finance model and our experience in developing and scaling infrastructure projects in emerging markets to an institutional asset level," he said.

Jeroen Plag, Investment Director at Invest International, noted that the multi-tiered capital structure allows for more efficient capital allocation, reducing risks at early development stages and mobilizing institutional investment in large volumes. He added: "This supports investment-ready projects and creates long-term value in the energy transition."

iol.co.zaAugust 6, 13:06

Six commodities accounted for 3% of South Africa's GDP in the first six months of the year

In the first six months of the current year, exports of South Africa's major raw materials brought in over 261 billion rand for the country. The rise in prices for precious metals and coal helped support export revenues and the rand exchange rate, despite ongoing geopolitical tensions.

According to Investec chief economist Annabel Bishop, exports of gold, platinum, diamonds, jewelry, and other precious metals amounted to 213 billion rand in the first half of the year. An additional 48 billion rand was contributed by coal and related products.

According to World Bank data, South Africa's annual economy is estimated at approximately 8 trillion rand. Consequently, the 261 billion rand received from the export of just six main raw materials in the first half of the year is equivalent to more than 3% of the country's annual economic volume, highlighting the significance of the mining industry and raw material exports to the economy.

These figures are recorded against the backdrop of strengthening global commodity prices, even despite disruptions caused by the conflict in the Middle East.

Rise in Commodity Prices

Bishop noted that in July, overall commodity prices rose by 2.1%, bringing the annual increase to 14.1%. This growth was driven by an increase in metal and mineral prices by 21.3% year-on-year and a 6.9% rise in agricultural commodity prices.

Metals formed the basis of eight out of the ten largest raw material export positions in South Africa in the first half of the year, underscoring the importance of this sector for the country's currency and export earnings. Although some commodity prices fell after the start of the Middle East conflict, they remain significantly higher than a year ago. Platinum prices rose by 34.6% compared to the previous year, gold by 23.7%, and coal by 15.3% over the same period.

However, compared to pre-conflict levels, gold prices fell by 19.5%, platinum by 22%, iron ore by 5.5%, and manganese by 8.9%. Investec data shows that coal demonstrated resilience, increasing by 13.3% due to steady demand from Asia.

Agricultural commodity prices also rose sharply; Bishop attributes much of this increase to the rising cost of fertilizers and agricultural chemicals, linked to the increased price of oil raw materials following the conflict.

Support for the Rand Exchange Rate

Bishop stated that higher commodity prices helped support the currencies of commodity-exporting countries, including the rand, even with a relatively stable US dollar exchange rate. She noted that oil prices were particularly volatile, briefly exceeding $101 per barrel at the end of July before falling to approximately $79.40 amid reports of progress in behind-the-scenes peace talks between the US and Iran.

Bishop also reported that South African motorists benefited from the drop in oil prices this month, as the price of gasoline fell by 52 cents per liter. Despite easing price pressures, risks in global supply chains have not disappeared.

Referring to the latest S&P Global raw materials price and supply PMI index, Bishop pointed out that overall commodity price pressure eased in July, although shortages remained significantly above long-term averages.

Supply Chain Risks Persist

Oil recorded the highest registered supply shortage, while semiconductors, electrical components, stainless steel, and copper also experienced pressure. The report noted that a resumption of military action in the Middle East could once again test the resilience of global commodity markets and production supply chains.

Meanwhile, the latest S&P Global South African Purchasing Managers' Index showed a moderate improvement in private sector conditions in July. This improvement was supported by easing inflationary pressure and a return to production growth after two months of decline.

Bishop predicts that commodity prices and currencies are likely to strengthen slightly by the end of the year, provided the war in the Middle East does not escalate again and continue to disrupt commodity prices and global supplies.

iol.co.zaAugust 4, 14:27

Finance Minister Godongwana stated that funding for the fight against gender-based violence will be considered within the MTBPS following the ANCWL memorandum

Finance Minister Enoch Godongwana announced that the government is considering options for allocating funds to combat gender-based violence and femicide (GBVF). These details are expected in the Medium-Term Budget Policy Statement (MTBPS) after the ANC Women's League (ANCWL) demanded dedicated resources.

ANCWL presented the Godongwana memorandum to the National Treasury in Pretoria on Tuesday. The League argued that the government has failed to provide resources to address the GBVF issue, despite President Cyril Ramaphosa classifying this crisis as a national catastrophe.

The League insisted that such a classification should lead to improved access to services for victims, emergency support, prevention programs, monitoring, reporting, and oversight. Godongwana responded to the memorandum by acknowledging the validity of ANCWL's concerns and noting that there was a legitimate expectation that the GBVF classification would lead to practical action.

Godongwana noted that 1956 marked a significant moment in South African history when women played a leading role in the country's struggle. He also emphasized that the terms 'classification' and 'declaration' should not be confused, as they have different meanings within the government.

He clarified that the government has established working groups to determine the practical meaning of the GBVF classification and ways to solve this crisis. Furthermore, the National Council on Gender-Based Violence and Femicide (NCGBVF) has been established—a statutory body responsible for strategic guidance and coordination of the implementation of the National Strategic Plan on GBVF across various departments.

Godongwana acknowledged that some ministries are already contributing to solving the GBVF problem through their current budgets, but he noted that coordinating and controlling these efforts remains a complex task. He agreed with the possibility of consolidating disparate efforts from different departments, as suggested by the Women's League.

ANCWL sought the creation of a dedicated fund to strengthen the country's response to GBVF, including support for victims and prevention programs. Godongwana stated that the possibility of creating such a dedicated fund would depend on government priorities, adding that some measures could be financed from existing departmental budget allocations, such as placing social workers in police stations.

The Minister reported that the government's work on GBVF funding will be reflected in the MTBPS, although he could not specify an exact amount. He also distanced himself from reports of a proposed R5 billion emergency response fund, stating that he had never mentioned this figure. He concluded that large funding requests must be considered in the context of the government's ability to effectively utilize resources, and the relevant working groups have not yet submitted a consolidated budget proposal.