BAT's R1bn expansion is a 'vote of confidence' in SA

The project‚ which started in 2011‚ has seen significant infrastructure investment across SA along with the creation of about 800 new jobs in Gauteng‚ KwaZulu-Natal and the Western Cape.

The investment was made by BAT SA despite the tobacco industry facing an increasing number of challenges in the country‚ including rising levels of tobacco trafficking‚ and an increasingly uncertain regulatory environment.

In 2012‚ law-enforcement authorities seized more than 1bn illicit cigarettes‚ destroyed about 80m of these and made more than 1‚300 arrests.

Kingsley Wheaton‚ group corporate and regulatory affairs director for BAT‚ who is visiting SA‚ said that the investment "is a clear illustration of our confidence in SA and our commitment to this important market".

"SA already houses one of our strategic factories in Heidelberg‚ Gauteng and this investment project will complement that by adding new trade marketing and distribution capabilities‚" he said.

"While we are excited about our South African operations‚ we are equally concerned at the alarmingly high incidence of tobacco trafficking in the country‚" Wheaton said.

"Unless it is addressed‚ the illegal tobacco trade has the potential to undermine‚ not only the infrastructure and human resource investments made by legitimate companies such as ours‚ but the South African government's own agenda to regulate tobacco‚ given tobacco traffickers rarely comply with the laws of the land," he added.

Globally the illegal tobacco sales account for between 6% and 12% of consumption. However‚ according to independent research‚ the illegal tobacco problem in SA‚ which is predominantly where duty has not been paid‚ has more than doubled in the last four years to about 30% of total cigarette consumption in the country.