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10 February 2008

Pretoria: South African Foreign Minister Dr Nkosazana Dlamini Zuma will later today, Sunday, 10 February 2008, depart for Moscow, Russia where she will hold discussions with Russian Minister of Natural Resources Yuri Trutnev as part of the SA-Russia inter–sessional Intergovernmental Trade and Economic Committee (ITEC) meeting scheduled from Tuesday, 12 February 2008 to Wednesday, 13 February 2008.

Ministers Dlamini Zuma and Trutnev will co-chair the ITEC Ministerial meeting within the context of South Africa's commitment to consolidate bilateral political, economic and trade relations with Russia. South Africa attaches great value to the deliberations of ITEC which has proven to be an important strategic vehicle through which South Africa's bilateral relations with Russia continues to be consolidated and further strengthened.

A Treaty of Friendship and Partnership to strengthen relations between the two countries was also signed in September 2006 during the visit of Russian President Vladimir Putin to South Africa. South Africa and Russia also co-operate in multilateral fora since South Africa is a non-permanent member of the United Nations Security Council.

This inter-sessional ITEC meeting will lay the basis for the fully-fledged ITEC to be hosted by Russia in May 2008. High-level and regular interaction between the two countries is promoted through the ITEC sub-committees:
* trade, investment and banking
* minerals and energy
* transport – aviation and maritime
* social sector – health and education
* agriculture
* water affairs and forestry
* science and technology.

Progress is especially notable in the areas of mining and strategic minerals, and most recently in the fields of astronomy and outer space research. In addition, the Russian Federation is well equipped in assisting South Africa with relevant information transfer and skills development. A number of joint projects between Russian companies and South Africa have been established. The successful involvement by Russia in the Kalahari through the Kalahari Manganese Project, between the Renova State Company and the South African company "Pitsa ya Seschaba," has created more interest in investments into South African's aluminium, metallurgy, solid mineral exploration and energy manufacturing sectors.

Minister Dlamini Zuma is scheduled to return to South Africa on Thursday, 14 February 2008, ahead of bilateral political, economic and trade relations with her Kuwaiti counterpart in Cape Town on Tuesday, 19 February 2008.

Bilateral Economic Relations

South Africa's trade with Russia does not reflect its potential and there is much room for expansion. The Joint South Africa-Russia Business Council provides an opportunity to achieve greater trade and economic co-operation between the business sectors of both countries.

2005
South African Imports: US$629 047 000
South African Exports: US$449 274 000
Total: US$1 078 321 000

2006
South African Imports: US$1 895 876
South African Exports: US$675 800 000
Total: US$677 695 876

2007
South African Imports: US$2 283 517
South African Exports: US$237 831
Total: US$240 114 517

The bulk of South African exports are made up of vehicle engines (18,8% of exports)' machines and mechanical appliances (14%), fresh grapes (13,8%); flat-rolled products or iron (10%), pears (6,8%) peaches (3,4%) amounting to almost 70% of SA exports to Russia. The major import from Russia, accounting for over 65% of SA imports, is made up of the nickel group of minerals.

SA multinationals Anglo American, Standard Bank, De Beers, JCI, Barlowworld, Capespan and Bateman have substantial interests in Russia. In addition, to their existing plant in the Kaluga region, South African Breweries/Miller has announced a new brewery which represented a US$100 million investment, and their product, Golden Barrel Beer, is highly successful in the local market. Standard Bank also has a growing presence in Russia as well as SAPPI, Protea Hotels and Sun International. Mondi has recently also announced its intention to invest in the Russian Federation.

South Africa black economic empowerment (BEE) entities held meetings with prominent Russian entities including Norilsk Nickel, Renova, Aton Capital, Colliers International, Rusimport, Transneft, MorPort, Sual, Lukoil, Interfinance Developments and Crystal Diamond Company. The meetings were constructive and fruitful and a number of projects of mutual interest were identified.

The joint venture company United Manganese of Kalahari (UMK) between BEE groups and the Russian Renova Group of companies, has been established in order to co-operate on the prospecting, mining and processing of manganese ore in the Kalahari basin. Russia's largest steel maker, Evraz, who held 24,9% of Highveld Steel and Vanadium, recently bought the remaining 29,2% owned by Anglo American which took its holding to 54,1%. Evraz still holds the option of buying the 24,9% held by Credit Suisse. With almost 80% of the business under Evraz's control, there are concerns that they would be too dominant in the vanadium market.

Enquiries:
Ronnie Mamoepa
Cell: 082 990 4853

Issued by: Department of Foreign Affairs
10 February 2008