Deputy President Mlambo-Ngcuka to Host Russian Counterpart

Pretoria - South African Deputy President Phumzile Mlambo-Ngcuka will host her Russian counterpart Prime Minister Mikhail Fradkov on an official visit to South Africa from Saturday - Monday, 17-19 March 2007. In this regard, Prime Minister Fradkov will visit Cape Town and Pretoria.

Deputy President Mlambo-Ngcuka will host Prime Minister Fradkov within the context of expanding South Africa's strategic partnership with the Russian Federation as a member of the Group of 8 (G-8) and United Nations Security Council.

South Africa - Russia relations were significantly consolidated by the State visit in to South Africa by President Putin in September 2006 during which Presidents Thabo Mbeki and Putin signed the Treaty of Friendship and Partnership between the Republic of South Africa and the Russian Federation.

Accordingly, Prime Minister Fradkov's visit comes as a follow up from the Presidential visit of President Putin to South Africa and presents an opportunity for South Africa and Russia to consolidate the implementation of the Friendship Treaty.

Issues on the agenda of discussions between Deputy President Mlambo-Ngcuka and Prime Minister Fradkov on Monday 19 March 2007 are expected to include, among others:
· The status of bilateral political and economic relations between both countries including endeavors to promote economic relations through the Intergovernmental Trade and Economic Committee (ITEC);
· Bilateral relations based on the Treaty of Friendship and Partnership
· Promotion of the African agenda, regional developments in SADC, conflict resolution and peacekeeping in Sudan and Côte d'Ivoire and post-election progress in the Democratic Republic of Congo.;
· The non-proliferation and peaceful use of nuclear energy with respect to the situation in Iran; and
· Multilateral cooperation with particular reference to co-operation by South Africa and Russia in the United Nations Security Council.

It is expected that an Agreement between South Africa and the Russian Federation on Co-operation in the Sphere of Water Resources and Forestry will be signed on conclusion of discussions between Deputy President Mlambo-Ngcuka and Prime Minister Fradkov by the Minister of Water Affairs and Forestry, Lindiwe Hendricks and the Minister of Natural Resources of the Russian Federation, Yury Trutnev.

Great progress had been made in strengthening bilateral relations between the two countries under the auspice of ITEC. The sixth session of which was of held in Tshwane on 21 and 22 February 2007. The outcomes of the committee which is co-chaired by Minister Dlamini Zuma and the Minister of Natural Resources of the Russian Federation, Yuri Trutnev, indicated that implementation of agreements through the committee is an area which would be focused on, as the framework for co-operation has already been established.

The Joint Business Council between the two countries was also established during the State Visit of President Putin. The first interactive meeting between members of the Joint Business Council is scheduled to take place during the visit of Prime Minister Fradkov to South Africa.

Prime Minister Fradkov will be accompanied by the Minister of Natural Resources of the Russian Federation, who is also the co-chairperson of ITEC, Yury Trutnev and a business delegation.

While in South Africa Prime Minister Fradkov is also expected to pay a courtesy call to President Thabo Mbeki.

Economic Bilateral Relations

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

Trade Relations between both countries

The bulk of SA exports are made up of vehicle engines (18.8% of exports); machines & 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.

The Russian Federation adopted a Decree in March 2003, following South Africa's recognition of Russia as a market economy in support of WTO membership, to include South Africa in a list of developing countries that would enjoy preferential trade tariffs and duties with regard to exports to Russia. Bilateral relations also expanded significantly under the umbrella of the Intergovernmental Trade and Economic Committee (ITEC) between South Africa and the Russian Federation. Strategic direction and a structured and disciplined policy framework have resulted in substantive action taken by the respective governments in the strategic minerals and energy sectors through inter alia the establishment of a joint Task Force on Minerals in support of BEE objectives. Solid progress in the field of Science and Technology relations, especially in terms of the Presidential policy objective of establishing South Africa as a key player in international astronomy and deep space research, also characterise the relationship.

Russian tourists at the high end of the market visiting South Africa grew by 42%in 2006.The number of Russian tourists is comparable to those from Greece and Argentina. The number of South Africans visiting Russia is growing steadily.

The South African fruit exporting company, Capespan now ranks Russia as its single largest fruit export market surpassing the UK for the first time last year. In 2004 Capespan exported fruit produce worth $20 million to Russia out of a total trade of $56 million and presenting a 30% share of the export market to Russia. Apple and pear exports have registered an increase in their share of the South African deliveries to Russia. Demand for grapes has been booming in Russia, but South African producers have had to fight off competition from South America and even Namibia.

South African Investments in Russia
The SA multinationals Anglo American, Standard Bank, De Beers, JCI, Barlowworld, Capespan and Bateman have substantial interests in Russia. In addition, SAB/Miller has established a brewery in the Kaluga Region, 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. Recently also the MIHGroup which includes DSTV, and M-Net also has investments in the Russian Federation.

South Africa BEE entities also 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 BEE companies also instituted reciprocal invitations for follow-up meetings in South Africa to their Russian counterparts. The Director of Renova recently visited South Africa and it can be expected that increased interaction between the respective entities would lead to more substantial trade, economic and investment links between South Africa and the Russian Federation.

The joint venture company, United Manganese of Kalahari (UMK), between Black Economic Empowerment 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, recently said that it would decide within less than a year whether to buy a bigger stake in Highveld Steel&Vanadium. Evraz currently has a 24,9% share in Highveld. It is possible that Evraz could buy Anglo America's Highveld share of 29,2 % in order to introduce black investors to Highveld.

Media Programme for Official Visit to South Africa by Russian Prime Minister Mikhail Fradkov, Saturday 17 - Monday 19 March 2007

Issued by Ronnie Mamoepa on 082 990 4853

Department of Foreign Affairs
Private Bag X152
Pretoria
0001
15 March 2007