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China Makes Biggest South Africa Car Plant Investment in 40 Years

About 60% of the output will be earmarked for export

A Chinese state-owned car manufacturing company plans to build a new auto plant in South Africa with capacity to produce 100,000 units a year, an investment it will use to distribute vehicles both domestically and to the rest of the continent.

The Beijing Automotive International Corp. will start construction on the facility in the southern coast city of Port Elizabeth in December and aims to complete the building by the first quarter of 2018, the company said on Tuesday in a joint statement with the Industrial Development Corp., its local state-owned partner. The size of the investment is 11 billion rand (US$764 million), the Department of Trade and Industry said earlier this month.

“South Africa’s automotive industry has received a major shot in the arm with the announcement of the biggest greenfield investment in 40 years,” the companies said. About 60% of the output will be earmarked for export and the project will create more than 2,500 jobs, they said.

The announcement comes as a boost for South Africa’s car-manufacturing industry, which has been among the bright spots of an economy expanding at the slowest pace since a recession in 2009. The government’s auto-incentive program has attracted companies including Toyota Motor Corp., Ford Motor Co. and BMW AG to set up and invest in factories. The industry has the potential to boost production by almost 50% to more than 900,000 vehicles a year by 2020, the local producers’ group said in May.

BAIC is China’s fourth-largest automaker by sales, and manufactures models including FOTON and BBAC, it said in the statement. The company also has partnerships with Mercedes-Benz AG and Hyundai Motor Co. in its home market.

The South African plant will be constructed in two phases, with capacity of 50,000 units a year after the initial development, the companies said. That will double during the second stage.

By Liezel Hill

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