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Trade Winds bimonthly update volume 24

Steel shortages continue!  South Africa’s steel woes continue with a bleak output on the horizon, capacity is at an all-time low with manufacturers and stockists battling to deliver and the continuous steel increases further damaging the sector.

The Steel Giants have put out notice of restructuring at its Newcastle facility expected to result in significant job losses of around 2,500 workers.

On a positive note, furnaces at Mittal’s two plants in South Africa are on schedule to be fired up early 2021.

Joining the band wagon, South Africa is imposing export taxes to either collect more revenue or modify the flow of goods across borders.

The Customs and Excise Duty Act has been amended to allow the minister of finance to impose an export duty whenever he sees it beneficial in the public interest. The amendment is expected to be effective March next year.

South Africa will also be introducing an export tax on scrap metal. There’s been talk about a 30% export tax on chrome and further export duties on iron ore as well as leather and maize. No implementation dates have been announced.

The export tax on Chrome has come as a shock and many of the domestic producers have frowned upon this and fear that this will backfire on the country.

Border updates, Beitbridge border post is now business as usual, little to no delays are being experienced currently.

Congestion at the crucial Chirundu Border Post between Zimbabwe and Zambia has been cleared following the bottlenecking of trucks on the northbound journey into the Copperbelt. The intermittent spike in volumes crossing the Zambezi at Chirundu was due to increased cargo coming through from the Port of Beira in Mozambique.

It was noted that the commodity coming from Mozambique was fuel. This was a result of the Zambian government deciding to issue a statutory instrument which ordered that 50% of freight in Zambia be reserved for local transporters, the country had found itself running short of essential cargo like fuel.

The Zambian government then set aside a three-week period that would allow other transporters to deliver fuel as the Petroleum Transporters Association of Zambia couldn’t keep up with volume requirements which in turn triggered a spike in cargo from the landlocked nation’s closest neighbouring port, Beira.

As cross-border road hauliers wait to hear from Zambia’s and Botswana’s transport authorities about when the completed Kazaungula bridge across the Zambezi will open, another truck has slipped off the pontoon into the mighty river’s depths.

It’s the second rig that has rolled off a ferry at the important crossing which is still served by three pontoons while the bridge, already finished in September, sits unused in the background.

It remains anyone’s guess as to why there’s such a holdup to open the bridge.

Trucker violence surges! on the night of 20th November 2020, 10 trucks were attacked and torched on the N3 in South Africa, this attack marks the single biggest attack on the country’s main supply route between Gauteng and the Port of Durban. Just a few days later another truck was attacked and earlier this week a truck driver was shot and burnt to death in his cabin, throughout the week there has been various attacks on trucks with the latest one coming just last night where a driver was shot at from both sides of his vehicle but luckily managed to flea just in time before his truck was torched.

The attacks are allegedly backed by the All Truck Driver Foundation (ATDF), a vigilante group opposed to foreign national truck drivers working in South Africa’s transport sector. ATDF has said that the attacks on transporters stem from employers in the sector allegedly favouring foreign nationals because they are paid less and are exploitable because many don’t hold valid work permits.

Earlier in the year ATDF threatened to embark on a strike that would cut off the Durban to Beitbridge corridor, however there was a court interdict and the protest never took place.

The Cross-Border Road Transport Agency (CBRTA) has added its voice to pleas that transporters consider not working at night, thereby hopefully diminishing the life-threatening situation in which truck drivers find themselves as the violence targeting South Africa’s freight industry drags into its sixth day.

Ducking and diving, Deputy Gauteng Police Commissioner, Major General Daniel Mthombeni, circumvented the issue as industry stakeholders demanded concrete action to address the growing insurrection in the road freight industry.

He told attendees at a meeting held in Alberton yesterday that arrests had been made earlier this week and called for the establishment of a forum. Members of the industry however made it clear that a few arrests were not enough.

Transport and security companies said that they were aware of the ‘hot spots’ and asked why police visibility in these high-risk areas was still so poor and why there weren’t any functioning cameras on major highways.

A security company representative said on many occasions he would call the police to ask if certain routes were safe but even the police were unsure most of time.

Great Dyke making progress, Great Dyke Investments who has been pinned as Zimbabwe’s next platinum giant is ahead of schedule in boosting Zimbabwe’s platinum exports by 2022. According to the mine’s chief operations officer, Mr. Munashe Shava, extraction which commenced earlier this year will tally with the company’s projections of exports by 2022.

The Great Dyke Investments mine in Darwendale which follows Zimplats and Unki mines and is one of the new investments is expected to help the country reach a US$12 billion mining industry by 2023.

GDI is 50 percent owned by Russia’s Vi Holding, and 50 percent owned by Zimbabwe’s Landela Mining Venture. The project has an excess of 180 million tonnes of ore containing 17 million ounces of platinum group metals and gold, with an average grade of 2,93 grammes per tonne.

The mine expects to start contributing to the country’s gross domestic product by 2022 although it has already contributed to the country’s fight against the Covid-19 where it supplied local health institutions with machinery and PPE.

DRC to formalise Artisanal Mining? EGC and Trafigura signed an offtake agreement in a bid to formalise artisanal and small-scale cobalt mining in the Democratic Republic of Congo.

The trading agreement includes the provision of finance by Trafigura to fund the creation of strict, controlled artisanal mining zones, installation of ore purchasing stations as well as the costs related to the transparent and traceable delivery of cobalt hydroxide to Trafigura on an export cleared basis.

Under the supply terms, EGC will ensure that the ore marketed by Trafigura complies with OECD Due Diligence Guidance.

Earlier in the year Glencore made a U-Turn and also decided to back artisanal mining of cobalt. The group aims to end child labour in the cobalt mining sector and to improve the working conditions in Congo.

Almost three quarters of the world’s cobalt comes from Congo where Glencore owns two of the largest mines. Demand in cobalt is expected to surge in the coming years as the sales of electric-vehicles are said to take off.

Zambia’s copper output increases, Zambia who is Africa’s second-largest copper miner, produced 646,111 tonnes of the metal in the first nine months of 2020, up from 590,321 tonnes in the same period last year.

The Southern African nation now expects total production for the year to reach 820,000 tonnes, driven by rising copper prices.Bottom of Form

 

This comes as good news to Zambia, who is the first African country to default on a bond payment during the covid-19 pandemic by missing a $42.5 million interest payment on part of its international debt.

Zambia’s mining sector has been in the spotlight as the country’s financial situation deteriorated this year which prompted Glencore to shut its Mopani Copper Mines operation.

With that being said, the Zambian government has advised that negotiations with Glencore regarding increasing the government’s stake in Mopani were nearing a conclusion. No information has been given out about the size of the stake that state-owned ZCCM Investments Holdings is trying to acquire was given.

Tanzania to join in fighting terrorism!  Tanzania’s government says is teaming up with Mozambique to launch a joint operation against violent attacks by Islamist militants along their shared border.

Several recent attacks blamed on Islamist extremists have targeted the border village of Ktaya in Tanzania’s Mtwara region.

Police say more than 175 houses were set on fire and some people were killed by assailants, who, authorities say, fled into neighbouring Mozambique.

Tanzania has already increased security along the border and it is now joining forces with Mozambique to contain what it calls terrorists.

Some opposition parties and rights groups are raising concerns about how the Tanzanian government plans to tackle the threat.

Tanzania becomes the 4th country that has pledged their allegiance in fighting the terrorist scourge, Britain, Zimbabwe and South Africa have voiced their aid however we are not seeing any troops headed to Mozambique.

Some Zimbabwean citizens are concerned about soldiers going into Mozambique, fearing that, that would encourage terrorists to infiltrate their country.

 

 “For tomorrow belongs to the people who prepare for it today”

Trade Winds bimonthly update volume 23

Level 1 restrictions eased, on Wednesday night 11th November 2020, South Africa’s president, Cyril Ramaphosa announced the easing of South Africa’s level 1 lockdown, opening the borders up to international travellers as well as allowing alcohol to be sold within the pre-covid trading hours, this is yet another step in slowly opening up the economy and to allow more growth, although opposition parties and leaders have bemoaned the extension of the state of the disaster it seems the people of South Africa as a whole are feeling more positive.

Border updates, the Beitbridge saga continued since the last report, however as of yesterday it is noted that congestion has eased significantly, with compliments pouring in from the transport industry about the SA Revenue Service’s decision to discontinue issuing CN2 gate passes at Beitbridge, an intervention that now appears to have completely decongested northbound transits. There is however a slight delay on the Zimbabwean side as authorities were overwhelmed with trucks crossing from the SA side but they are dealing with each truck in good time.

This is a breath of fresh air since the 21st of October when the congestion began, reports of crime and violence emerged as well as a driver losing their life.

We hope the new system implemented can keep traffic at a free flow for some time to come.

A joint effort between DRC and Zambian officials have effectively decongested the Copperbelt crossing of Kasumbalesa, that in the past has been known as a notoriously problematic border.

Prior to the Covid-19 lockdown, Kasumbalesa’s fragile workability could result in cargo disruption at any given time. The impact was immediately felt when COVID-19 hit, leading to a northbound cargo queue stretching some 90 kilometres south-east through Chingola towards Kitwe.

Knowing that vast action was needed to clear the border and boost imports and exports into the region which is known for its copper mines, DRC and Zambian authorities got together to combat a troublesome border which resulted in the decongestion in under a week. This just proves once again that when people come together nothing is impossible.

Zimbabwe under pressure to end gold sales, Gold mining investors are pressuring Zimbabwe to change a law forcing producers to sell their output to the central bank, who then part pays them in local currency that is useless outside the country.

Whilst mining investment is key to rebooting Zimbabwe’s collapsing economy, the nation suffers from a shortage of dollars. As the rally in bullion generates more interest in the industry, the government is weighing its options on whether to grant investors gold-trading licenses.

Zimbabwe currently forces gold miners to sell their bullion to Fidelity Printers and Refiners Ltd. It pays them 70% in dollars and the remainder in local currency.

Bravura enters the frame; Nigerian owned Bravura Holdings has $1 billion available for the development of a platinum mine in Zimbabwe.

The 3,000-hectare concession where it plans to dig the mine is in Selous, 80 Kms south of Zimbabwe’s capital Harare which is close to existing platinum mines.

Bravura is one of a number of companies that have secured platinum concessions in Zimbabwe as the government seeks to kick start its stagnant economy. Still, established platinum miners haven’t announced plans to expand their operations.

While Zimbabwe has the world’s third-largest platinum group metal reserves, investors have been deterred by frequent changes to mining laws and currency policies.

Rare diamonds have been discovered in Matabeleland South and Masvingo provinces, the findings come after Alrosa, a Russian mining firm had done extensive exploration at the Malipati Diamond Project and say these findings have the potential to change the face of Zimbabwe’s gem industry.

In collaboration with state-owned diamond miners ZCDC, Alrosa has come to this discovery on finding this “Type II” diamond. Type ll diamonds have no nitrogen in their composition and come with a much higher price tag to them.

Rushinga District in Mashonaland Central province there is a potential new Chinese investor looking at the exploration of iron deposits.

The investor, who already has steel smelters in China’s city of Handani are under pressure to curb pollution, has already partnered local investors with plans underway to develop mines and build smelters, this is, however, subject to an in-depth exploration to confirm commercial quantities and quality of the resource. There is evidence of the existence of iron deposits in mountain ranges of Mavhuradonha, which stretches into Mozambique.

The project has been in the pipeline for the past 18 months, but was delayed due to global pandemic, supply chains disruptions and travel restrictions.

The investor had plans to commence production in 2023.

A special tasks force within the Ministry of Mines and Mining Development, has been formed to oversee the implementation of the project.

Zimbabwe Iron and Steel Company is Zimbabwe’s only integrated steel firm, however operations stopped in 2008 due to lack of capital and poor management. The company had capacity to produce up to one million tonnes annually, the company was among Zimbabwe’s major foreign currency earners.

Kakula tunnels successfully connected, Kakula mine in Kolwezi, DRC which is being developed in the eastern part of the Kakula deposit has reached a major milestone as the Northern and Southern tunnels have now been successfully connected.

Kakula is the first of many underground copper mines to be developed in the 400sq km region, the average grade of copper is said to exceed 8%.

The Kakula Mine is expected to have a mine life of approximately 21 years, whilst Kakula West which is Kamoa-Kakula’s third underground mine to be developed has a projected mine life of approximately 16 years.

The underground development on the south decline was performed by the mining crew of JMMC who are the DRC subsidiary of leading Chinese mining contractor JCHX, the northern decline was performed by Kamoa Copper’s mining crews.

Further developments are planned to commence mid next year where a set of connection drives is expected to hole by June 2021 which will open up an additional high-grade and medium-grade mining block and phase 1 copper concentrate production from the Kakula Mine is scheduled to begin in July 2021.

Earlier in the month Nanjing Hanrui Cobalt Co Ltd, advised that they expect to start their cobalt production line in the DRC Later this month, moving into December.

The 5,000-tonnes-per-year production line in Kolwezi, DRC, was expected to be running earlier this year but due to the COVID-19 pandemic all operations were placed on hold.

The firm was still discussing sales contracts with foreign traders and domestic users.

Terrorising of Mozambique continues!  More than 50 people were killed in a terrorist attack last Friday in northern Mozambique where insurgents attacked a village.

Up to 2,000 people have been killed and about 430,000 have been left homeless in the conflict in the mainly-Muslim province. The militants are linked to the Islamic State (IS) group, giving it a foothold in southern Africa.

The group exploits poverty-stricken areas and the unemployed and grows their numbers by recruiting the youth in their fight to establish Islamic rule in the area. Many locals complain that they have benefited little from the province’s ruby and gas industries.

Zimbabwe president Emmerson Mnangagwa has recent said that he will be sending troops over to help with the insurgents.

“If you climb up a tree, you must climb down the same tree”

Trade Winds bimonthly update volume 22

Prices on the rise as materials disappear, buckle in!!  Further steel price increases have been announced for November which will be the ninth consecutive increase this year exacerbated by low stocks countrywide.  South Africa is facing a steel shortage and explosive prices.

This trend has now moved over to the HDPE and Plastics sector and shortages of raw materials are being experienced by all the major manufacturers. Output as a general for HDPE polymers was 3,300 Tons per month which then dropped to 2,500 tons and as of the latest notice a further 15% drop is expected in production.

Various factors have been blamed both locally and internationally and Force Majure has been announced by many different industries who find themselves unable to perform to their pre-covid-19 service and production levels.

Output as a general for HDPE polymers was 3,300 Tons per month which then dropped to 2,500 tons and as of the latest notice a further 15% drop is expected in production.

Border updates, Chaos at Beitbridge over the past week, A motorist sadly passed away last week when a bakkie travelling south towards Musina from the Beitbridge border post between South Africa and Zimbabwe collided with a truck that had reportedly crossed into the oncoming lane to overtake gridlocked traffic heading north. The fatal collision once more demonstrates that traffic officials should be held culpable for allowing cars and trucks going north to drive three abreast on a single-lane highway.

Intervention seems to be on the cards after the build-up of traffic south of South Africa’s Beitbridge border with Zimbabwe has deteriorated to such an extent that some sources say it is the worst it has ever been this century.

This comes after northbound transporters stuck at the Limpopo crossing posted video footage on social media of the Transit Assistance Bureau clearly showing how trucks, cars and buses were milling around as if no traffic officials were present to establish order. The queue already stretched to the Baobab truck stop some six kilometres south of the border.

Suggestions were made to officials that the border should be opened up to clear the congestion and alleviate pressure on officials clearly incapable of coping with mounting volumes.

Since the suggestions were made, South Africa’s Beitbridge border into Zimbabwe has virtually transformed and a recorded 18km queue has been reduced down to less than 1km. The northbound queue has also has also been reduced to a single lane of traffic.

Last week at the Lebombo Border Crossing there was also a backlog as vehicles trying to cross into Mozambique from South Africa came to a standstill, chrome trucks, general cargo and the bakkie brigade loads jockeying for position whilst customs continue to take their time.

Call went out for the border to operate 24/7 and it seems that the cries were heard, transit times at the border have been substantially reduced with around 450 trucks cleared every 24 hours.

Meanwhile there is no certainty about what the border authorities have done but it’s obviously helping, bringing much-needed relief to private sector interests who often complain of extended standing time at the border.

The real test will come towards the end of the week as volume often picks up towards the weekend.

Finally, the opening of the Kazangula Bridge may happen before the end of the year, the bridge was initially supposed to be completed back in 2018 but due to various delays there is now a promising outlook that the opening will be soon, this comes after it was reported that ZRA had announced that it would be moving its regional office from Livingstone to the southern Zambian town from which the much-hyped linkage has taken its name.

Speaking to a Zambian news site, ZRA emphasised that the $70-billion bridge into Botswana would boost trade in Zambia’s southern province significantly, with tangible benefits for revenue collection.

Transporters will also not need much persuasion to divert traffic away from other north-south route border posts such as Beitbridge, considering the shambles it has been of late.

Zimbabwe mineral production increases, The Zimbabwe mining industry has managed to stay afloat with sustainable, profitable and balance production results whilst still fighting off the challenges faced within the mining sector.

Adding onto this, the mining sector has become quite optimistic about 2021 with the ever-improving commodity prices and a favourable local fiscal the sky is the limit for Zimbabwe in 2021.

90 percent of miner’s plan on upscaling production in the coming year with the other 10 percent expecting production to remain the same. Gold output is expected to increase around 30% in the coming year, followed by platinum and coal spurred by world commodity prices that continue to move upwards. 

Terrorism crossing the border!  The Islamist terrorist group operating in the Cabo Delgado region of Mozambique have made their away across the border to Tanzania, where it is reported 20 people were beheaded.

The attack was carried out against the village of Kitaya, in Mtwara province, near the border with the Cabo Delgado district of Palma.

According to military sources cited by the newsheet, the terrorists entered Tanzania by sea, going up the Rovuma river that forms the border between Mozambique and Tanzania.

The raiders burnt down houses, destroyed an armoured vehicle and stole money and military equipment. The terrorist network that calls itself “Islamic State” claimed responsibility for the attack, and reported three Tanzanian soldiers had been killed in the ensuing battle that followed.

“Rain does not fall on one roof alone”

 

 

Trade Winds bimonthly update volume 21

Border updates, Beitbridge is currently a mess as COVID screening and an influx of trucks plus the added construction happening in the truck yards has created a massive delay on the South and North side of Beitbridge, SARS and ZIMRA are both blaming each other for the delays in clearance, agents are fighting for drivers to complete their COVID screenings online which would speed up the process by a considerable amount. On the Zim side of the border congestion seems to be an unsolvable situation at the moment, with capacity and capability issues at the container depot (ConDep) and the Vehicle Inspection Department (VID) making matters worse.

With all the checks required on the Zim side, even within the port confines FESARTA are trying to get drivers and agents to have runners available at night.

It is known that the truck parks regularly fill to overflowing, despite Zimra working through the night.

With just days to go before Zambia introduces a new toll for foreign-registered vehicles whom already pay entry-and-exit tariffs which has been recorded to profit the country about $160 000 a day, transporters are desperate for intervention.

Effective 19th October 2020, all foreign-registered vehicles will have to cough up extra fees at tolls both at ports of entry and inland toll stations in accordance with Statutory Instrument No. 74 of 2020.

There is quite a bit of confusion especially with such short notice, transporters are asking the questions whether they will be paying double the toll fees in Zambia, other transporters are concerned that their vehicles will be stuck at these tolls as they will not have enough money with them to pay.

According to a transporter who travels in and out of the Copperbelt area spread across the north-eastern border of Zambia into the DRC, truck drivers will have to pay about 150 kwacha every time they pass through a toll gate.

In South African rand terms that’s more than R122 each time.

On the North-South Corridor stretching through Zambia into the DRC’s copper mining area, there are six toll gates transporters have to pass through from entering the country south at Chirundu heading towards the DRC border at Kasumbalesa via Ndola.

Transist recently said that in addition to the $160 000 Zambia already raised through entry-and-exit tariffs payable by foreign-registered trucks, the new tolls would raise an additional $94 000 a day, Transist has since advised that they are working on having this overturned before implementation.

Zimbabwe misses out on gold rush, gold might have hit an all time high in the recent months but Zimbabwe failed to capitalise on this due to mishaps in their deliveries and subdued performance by the big suppliers as well as the increase in illegal smuggling. Small scale miners produced the bulk of the metal.

Whilst the value of gold delivered to Fidelity Printers, Zimbabwe’s sole gold buyer, was in the region of US$1.3billion, a significant amount of gold was sold through the black market, affecting the countries much needed forex.

Gold mining and deliveries in Zimbabwe have also taken a hit due to concerns amongst the miners who cite it as the motivation to smuggle because of the 55 percent forex retention threshold.

However, there is a slight positive outlook, in its latest report, the World Gold Council believes global dynamics seeded over the past few years will generally be supportive for gold this year.

Caledonia Mining Corporation is considering listing itself on Zimbabwe’s new stock exchange knowns as VFEX which is based in the town of Victoria Falls and will be trading in US Dollars only in a move to allure new international investors and bring in much needed forex to the country.

VFEX is also offering incentives such as including a waiver on capital gains tax. There are also plans to provide political-risk cover. While the Reserve Bank of Zimbabwe will initially provide settlement for trades, Finance Minister Mthuli Ncube wants this task handed to a global lender, and talks are underway with firms in Africa, Asia and Europe.

Zambia government to issue statement on KCM liquidation, the Zambian Government has said that it will issue a comprehensive statement in Parliament regarding the liquidation of Konkola Copper Mines (KCM) after the court process.

Mines and Minerals Development Minister Hon. Richard Musukwa said that the next step will be dependent on the outcome of the court process.

Hon. Musukwa said that the current liquidator is working within the law adding that he is managing the affairs well by paying old and new debtors.

Hon. Musukwa said that Government has a strong case against Vedanta and will consider all legal options and that President Edgar Chagwa Lungu’s priority is to safeguard the plight of workers.

Musukwa also said that there are many investors that are interested in running the mine as soon as the due process of law is completed, adding that the action taken by Government was the only option at that time as it was in the best interest of the people of Zambia.

Threat of terrorism in the region, a growing concern!  Following on from the last update, The European Union last week Friday confirmed that it is ready to support Mozambique in its fight against the Islamist insurgents who have been terrorising several districts in the northern province of Cabo Delgado.

The EU’s promise is in response to the request made by the Mozambican government last month, asking for humanitarian aid and logistical support as well as specialist training for the Mozambican defence and security forces.

The conformation came from the EU ambassador to Mozambique, Antonio Sánchez-Benedito Gaspar, who presented a letter from Josep Borrell, the EU’s High Representative for Foreign Affairs and Security Policy, which he delivered to Mozambican Foreign Minister Veronica Macamo.

This past Saturday, The Mozambican defence and security forces announced the arrest of a man accused of recruiting new members for the Islamist terrorist groups operating in the province of Cabo Delgado.

State of disaster extended! South Africa, again has decided to extended the state of disaster by another month which has left a lot of economists and majority of the public quite perplexed, South Africa currently sits at Level 1 of the Lockdown Phase with no word as to when the struggling economy will finally be opened up 100%.

There has been pressure from opposition parties on the ANC to open up the economy and drop the state of disaster but the demands were fruitless, word is that the lockdown could be lifted by December if the current COVID infections remain the same or drop as South Africa currently has a steady 90% recovery rate.

Steel prices continue to rise, major mills within the South African steel industry have again sent out notices over the past two weeks, informing the sector that there will be steel increases for the month of November, this is now the 9th consecutive steel increase in South Africa this year, the Plastics and Rubber industries have also recently increased their prices due to the increase of raw materials as well as increased labour costs

Please note Further information regarding these increases is available on our web site.

“If you want to go quickly, go alone. If you want to go far, go together”

 

 

HDPE Price Increase Notice

Dear Valued Customer,

Please click on the following link for the latest HDPE Price Increase Notice.

Kind Regards,

Ropa Mhlanga
Operations Director – Southern African Region

Trade Winds bimonthly update volume 20

Border updates, Cross-border transporters and the NGO striving to protect the sub-Saharan interests of long-distance drivers, Transit Assistance Bureau (Transist), are taking a strong stance against an announcement yesterday forcing South African drivers to abide by an SADC Covid-19 protocol.

According to the protocol, decided upon by SADC at the end of July, drivers will have to present laboratory certificates proving they have been tested for the coronavirus.

The certificates, which may not be older than 72 hours and are valid for 14 days, have sparked a fair amount of opposition from private sector logistics concerns, with many transporters complaining of not being consulted by either the SADC or any country officials representing health and transport officials.

When the protocol’s 1 September date arrived, Zambia was the only SADC partner to implement the determination, causing hauliers to ridicule the coronavirus-curbing measure as yet another case of the SADC talking about border harmonisation while practising the opposite.

Botswana indicated earlier that they would still be testing all drivers on entry to their territory, whether they could provide a negative lab certificate or not.

In a shock announcement yesterday, which takes effect as of today, the tax authority said truck drivers would be required to present Covid-19 negative results upon departure from RSA and on arrival.

The statement by a SARS added that all positive truck drivers were to be handled as per the Department of Health Guidelines.

“All other health control measures are also applicable to truck drivers.”

More to come…

Positive news coming from Zimbabwe, there is some positivity in the mining and construction sector within Zimbabwe, this is noted after recent developments came to light.

Zimbabwe is one of the major lithium producers that may draw great benefits from the firm global prices and high demands for the precious mineral due to expected supply deficit projected to start in two years.

Zimbabwe holds extensive deposits of the in-demand mineral which is widely used in the automotive and glass industries, currently Zimbabwe has a single active lithium mine in the country with a number of projects in the pipeline.

The Government classified the commodity as on of the strategic minerals towards achieving its vision of transforming mining into a US$12 billion industry by 2023.

Prospect Resources Plc, an Australian listed company,  are the developers of the new Lithium project and expect the mine to enter production by second half 2021.

Following from this, RioZim has signed an agreement for phase two of the Sengwa Coal Plant in Ghokwe North. This plan entails the expansion of the plant capacity to 2800MW increased in 700MW phases.

Lafarge Cement Zimbabwe (Lafarge) is set to complete the installation of a US$2.2 million Dry Mortar Mix (DMX) plant during second half of this year as the cement-maker targets increasing its production capacity.

The project is part of Lafarge Holcim Group’s US$ 25 million recapitalization program.

Zambia mining royalties throws spanner in the works, copper miners in Zambia have halted $2 billion of planned investments because a royalty tax introduced last year makes the projects unviable, according to an industry lobby group.

A plan by First Quantum Minerals Ltd. and Lubambe to invest significant amounts in expansion and new mining operations has come to a grinding halt until this matter is resolved.

Zambia’s uneasy relationship with mining investors has deteriorated over the past 12 months, with the government clashing with Glencore Plc over the company’s plan to mothball Mopani Copper Mines’ operations.  KCM’s future also remains unclear.

Threat of terrorism in the region, a growing concern!  over the past few months, namely in Mozambique, there has been an influx of insurgents mainly in Cabo Delgado, the result of this has led to more than 50,000 people fleeing their homes from the once most promising district in the country which holds mass amounts of natural gasses and gemstones.

The threat has become such a reality now that neighbouring countries have been mulling the idea of sending aid to help deal with the terrorist organisation, known as Ahlu Sunnah Wa-Jamaa or otherwise locally known as al-Shabaab.

However, its not just the threat of al-Shabaab that has seen the Cabo Delgado province underperforming for decades, locals have said the government has forcibly removed communities from state-owned land after ruby, mining and gas exploration was handed to private companies.

In recent weeks the militants took Mocímboa de Praia, an important border post for travel to and from Tanzania. Government has since battled to regain control the port, SADC has considered sending aid, ranging from intelligence gathering to military support. There is currently an operation led by Mozambican forces accompanied by mercenary groups, however there are accusations being made that this is only intensifying tension within the region.

“When a needle falls into a deep well, many people will look into the well, but few will be ready to go down after it”

Trade Winds bimonthly update volume 19

Level 1, last night, President Cyril Ramaphosa announced that as of Monday 21 September South Africa would enter Level 1 of the lockdown, further unlocking the country’s economy and society whilst we await the final decision on the construction and mining sectors possibly returning to 100%; international travel has been allowed to and from countries that are not high risk areas and only a few land borders remain open at this stage although strict criteria will need to be followed.

Border updates, not much has changed at Beitbridge with operating times at 50% of the usual, curfew is still in place however there is speculation that by end of the week big changes will be implemented. Last week news broke that Beitbridge was to go ahead with the COVID-19 testing on every person entering the country as of Monday this week however, there doesn’t seem to be any system in place currently and drivers are not being tested.

Reports are emerging that the Chirundu border post has now implemented the testing of every driver that is entering the country despite no official confirmation of this.   Massive delays for trucks going north into Zambia and DRC are however being experienced.

Botswana throws more fuel to the fire, call has gone out for greater regional adherence to guidelines and regulations after it emerged earlier this week that Botswana would still be doing its own testing for the coronavirus, despite the Southern African Development Community (SADC) making it compulsory for truck drivers to cross borders with “Covid-19 certificates” in hand.

Although only laboratories can issue the relevant documents declaring whether or not bearers have tested positive or negative for the virus – a curbing measure that came into effect on Monday morning – a freight representative said Botswana would not take the certificates as legit and would still do its own testing.

For the first time in weeks Kasumbalesa has been running smooth with no problems reported.

Zimbabwe cancels mining concession in national parks, Zimbabwe’s government has announced that mining on areas held by national parks is banned with immediate effect.

In a statement issued last week Tuesday evening after a cabinet meeting, an announcement by Minister of Information Monica Mutsvangwa said “Mining on areas held by National Parks is banned with immediate effect, steps are being undertaken to immediately cancel all mining titles held in National Parks.”

This comes after a public outcry and the threat of a court battle after President Emmerson Mnangagwa’s government granted exploratory rights for coal to two Chinese companies in one of the country’s most iconic reserves, Hwange National Park.

The decision has been welcomed by various conservation groups and The Zimbabwe Environmental Law Association.

FQM to expand, Canadian company First Quantum Minerals (FQM) has announced its plans to expand operations at the Kansanshi mine in Zambia.

The Kansanshi Mine is one of the largest copper mines in the world, with two open pits.

The mine began operations in 2005 and has undergone several expansions since then. In a technical report, the Canadian firm said that it plans to expand the sulphide ore processing facility at the Kansanshi mine by 25 million tonnes per annum (Mtpa).

This is expected to boost the mine’s annual throughput to 52Mtpa.

First Quantum expects to spend approximately $650m for the expansion in about two years, starting in the H2-2023.

“Whether You Think You Can Or Think You can’t, You’re Right”

Trade Winds bimonthly update volume 18

Steel industry facing the gallows, after the recent steel price increases in South Africa the storm continues to batter the already struggling sector, as of 25 August Arcelormittal South Africa declared FORCE MAJEURE at its Newcastle furnace when a blast occurred on the 20th of August, this has resulted in a halt in production and now the steel giants are battling to meet demands, on the back of this their Vanderbijlpark mill is not producing at 100% due to COVID restrictions and there is now concern that the country could soon run out of steel whilst the smaller mills try to accommodate this problem there is an impending steel increase coming first of next month in the region of R1000/Ton.

To add insult to injury on the 13th of August Eskom announced that stage 2 load shedding would come into effect for a short period of time however since then the country has been on an almost constant load shedding schedule and as of this week stage 4 has been introduced which is wrecking further havoc across all industries within the country. 

Border updates, operating times at Beitbridge on the Zimbabwean side are still at a 50% capacity and anyone entering any offices at the border are to produce a valid negative COVID-19 test whilst at Groblersbrug and other borders around Botswana, anyone entering into the country is to undergo a COVID test, testing stations have now been setup at the borders with a 24-48 hour turnaround time.

The Trans-Kalahari Corridor Secretariat (TKCS) has announced that it will hold a “Virtual Stakeholder Engagement” this coming Friday in a bid to address the “devastating consequences on the national and regional economies of the Covid-19 pandemic”.

According to the TKCS, the competitive advantage of the region has been seriously compromised, with exports and imports having been seriously affected.

The Secretariat supports its view by quoting from the World Bank’s biannual Pulse Report which states that as a result of the pandemic, economic growth in sub-Saharan Africa will decline from 2.4% in 2019 to between -2.1% and -5.1% in 2020.

Going north, last week, notice came out that anyone crossing into Zambia from the Chirundu border is to produce a valid COVID test from the country they are entering from, this was supposed to go live on the 2nd of September, however after much confusion and debate it seems to have been called off for now.

Also last week the notoriously problematic border crossing of Kasumbalesa between Zambia’s Copperbelt Province and the province of Haut-Katanga in the south-western Democratic Republic of the Congo was shut down again.

This was reported by Transit Assistance Bureau “Transist”.

A message sent to Transist said: “Demonstrations at Kasumbalesa so no movement of trucks.”

It’s not clear what has sparked the demonstrations but the area has been politically volatile for some time, with violent flare-ups experienced all the way north-east of Kasumbalesa into copper mining areas around Lubumbashi and Kolwezi.

Earlier last month Kasumbalesa was turned into a flashpoint after members of the Union for Democracy and Social Progress (UDSP) went on the rampage following the alleged killing of a colleague.

It is not known whether the UDSP is also responsible for last weeks’ closure.

Airfreight slowly taking off, the easing of the lockdown has gradually seen an increase in the airfreight sector, initially it was seen that the air cargo sector had not returned to levels pre-dating the Covid-19 pandemic, despite the relaxation of lockdown regulations across the globe.

And yet yields dropped by a global average of no more than 2.4% from the last week of June through the first weeks of July (from Asia Pacific and Middle East South Asia by 4% and 3% respectively, World Air Cargo Data (ACD) has found.

However, in its most recent market data assessment the airfreight aggregator also found that weekly volumes were lower by mid-July than two weeks before.

The gradual route to recovery to pre-Covid market conditions continued for the global air cargo industry in August for a fourth-consecutive month, according to fresh volume and yield data from industry analysts CLIVE Data Services and TAC

Zimplats doing well, Platinum giants Zimplats have recorded a net profit of US$261.8 million for the financial year ended June 30 2020, which is an increase of 81% compared to the same period previous year.

The profitability was on the back of an increase in mineral prices, particularly rhodium, palladium, gold and nickel that saw revenues going up from US$631 million to US$868.9 million.

“The groups operations were not affected by the COVID-19 pandemic as all the mines and processing plants continued operating throughout the year with no confirmed cases within the workforce” the company said.

The miner opted not to declare dividend for the period to preserve cash and maintain liquidity in light of the economic uncertainties posed by the COVID-19 pandemic.

Following on from Zimplats’ current success, another major talking point is the revival at Rio Zim, Zimbabwe’s second largest diamond miner, after having to halt their sales in March and the diamond industry coming to a stop over the past 6 months due to COVID-19, the mine has seen a turnaround, after deciding to cut the price of diamonds last week an immediate bounce back can be seen and the demand for the precious gems has come back with a vengeance.

It seems that Zimbabwe as a whole possesses great resilience and bullish like behaviour when things get tough and hopefully this is the beginning of the revitalisation of the great country once known as the “bread-basket” of Africa.

Implats posts record earnings, revenue was 44% higher at R69.9-billion on higher dollar metal prices and a weaker rand, partially offset by lower PGM sales volumes.  The higher revenue resulted in the group generating a gross profit of R23.3-billion for the year, a 240% increase on the R6.8-billion of its 2019 financial year.

Future uncertain, the future of Mopani mine in Zambia remains uncertain as majority stake holder, Glencore, who owns 78% of the mine has put the sale of Mopani Copper Mine on the table, after placing the mine into care and maintenance in April earlier this year. 

Stay tuned …

“We Generate Fears While We Sit. We Overcome Them By Action”

Trade Winds bimonthly update volume 17

Steel Prices on the rise, steel prices in South Africa continue to increase, after back to back increases in July and August, the industry is bracing itself for a further whopping increase of around 10% in September. The continued load shedding is also a massive contributor to the demise of the South African steel industry. Continuous load shedding is creating constant interruptions in the manufacturing process and bringing the steel industry to its knees.

The steel industry continues to fight off cheap imports, the lack of local scrap metal and no backing from the government is not helping either.

Dark days ahead, As of 13th August Eskom once again implemented stage 2 load shedding in South Africa, however research institutes are warning that this could be the worst year yet.

Researchers at the Council for Scientific and Industrial Research have said that 2020 is shaping up to be worse than 2019 in terms of load shedding, unless key decisions are made to stem the country’s ongoing energy crisis.

This is despite initial hopes that the early phase of the country’s Covid-19 lockdown might grant the beleaguered state-owned power utility a reprieve – and despite Eskom CEO Andre de Ruyter expressing a hope, in January, that load shedding might be limited to just three days over the winter period.

Wright, a power and energy specialist, said SA had experienced its worst year of load shedding on record in 2019, with 1352 GW/h of cuts over 530 hours.

He said load shedding for 2020 was projected to reach 1383 GW hours. The lion’s share of the rolling blackouts will likely to be implemented at stage 2.

“In terms of intensity, 2020 is now the most intensive load shedding year,” Wright said.

Wright notes the 2019 Integrated Resource Plan indicated a shortage of energy supply until planned new-build capacity comes online.  

By 2022, the energy shortfall is expected to reach 4500 GW/h, at a cost of R60 billion to R120 billion to the economy.

Wright warned that load shedding is expected to continue for two or three more years, depending on whether key decisions were made to address the country’s ongoing energy troubles. 

Level 2 arrives, there was some rejoice and positivity in South Africa over the weekend as President Cyril Ramaphosa announced Level 2 of the Risk Strategy Assessment would come into effect as of Midnight Monday 17 August. The tobacco and alcohol industry is now allowed to operate which will slowly boost the economy to some point, however it may be a little too late for the alcohol industry.

Addressing an economic fallout webinar prior to the second booze ban, SAB entrepreneurship manager Barbara Copelovici said the two-month-long ban “had a massive impact on our supply chain.

“We tried to get a lot of smaller suppliers to work with us but unfortunately it created some sort of dependency.”

The ban, she stressed, had totally scrapped if not halved the income of SAB’s rural value chain distribution network.

“The destructive snowball effect on the entire ecosystem,” Copelovici spoke of back then, is now anticipated to be far worse once SAB has taken stock of the negative externalities of the Covid-19 lockdown.

Hard facts of what could’ve been prevented had the second ban not been foisted on the liquor trade by an inflexible government acting on public health service advice that increasingly seems ill advised, were recently revealed when it emerged that the first six weeks of the lockdown alone had resulted in a tax loss of R15.4 billion.

A further R13 billion was recently mentioned as being lost to the fiscus, 118,000 jobs are also at stake.

Truck shortages, there is currently a shortage of trucks in and around Southern Africa, the cause of this is possibly being linked to the impact of slow clearance at the various border posts within the Southern and Central African districts. Last week there were little to no trucks available for going north, however this week it seems to be the opposite as all the South Bound trucks are stuck whilst northbound is flowing.

Curfew prevents clearing, as long as Zimbabwe’s Covid-19 dawn-to-dusk curfew is in place the Beitbridge border it seems will remain a headache for hauliers, especially for transporters and truck drivers going north.

The 6pm-6am infection-containment strategy instituted by Zimbabwe has had a major impact on human resource efficiencies at the border and has left industry bodies like the Fesarta hard pressed to find solutions for the notoriously congested crossing.

Weeks have passed and the border is still a choke point for cargo moving from South Africa to is northly neighbouring countries resulting in massive queues south of the border which have been recorded up to 60kms at a stage.

This past long weekend again proved the importance of having personnel who fulfil certain functions working 24/7 when delays occurred due to the lack of a stamping officer on the Zimbabwean side.

Its been said that in Africa, the “stamp” rules.

Also, last week there was an announcement now that all personnel entering offices at the Beitbridge border post will have to present a valid negative COVID test, this included clearing agents, runners and officials has put a lot of stress on clearing agents and an increase in operating costs. 

On a positive note, it seems that the corrupt officials have disappeared from the area and drivers are no longer being extorted for bribes in order to proceed to the border ahead of their fellow truckers.

This is welcoming news as last week things almost flared up over night when honest truckers decided to block the pathways of queue-jumpers.

Following up from last weeks’ update, Kasumbalesa in DRC and the Trans-Kalahari Corridor in Botswana seem to be running as smooth as possible as well Chirundu in Zambia.

Cape Town Port back to business, Mpumi Dweba-Kwetana who is the manager for the Port of Cape Town, has informed the freight industry that operations at the port have returned to normal following an extended period of backlogs created by personnel disruption caused by Covid-19.

A statement released by Transnet National Ports Authority (TNPA) yesterday said the port had reduced vessel waiting time at anchorage and berthing delays, clearing the serious backlog of queued vessels and terminal congestion that had been experienced due to the lockdown, Covid-19, and operational challenges.

However, recovery at the Multi-purpose Terminal is lagging behind the Cape Town Container Terminal where vessel delays are a day at the most. The MPT is expected to announce its recovery plan at the stakeholder sessions in due course.

Ups and downs of the mines, Botswana’s diamond sales have been greatly affected by the COVID-19 pandemic that has seen sales volumes drop by two thirds, this, according to a publication, was caused by low demand which was also exacerbated by travel restrictions which grounded many operations.

Stats show a worrying trend as Botswana’s borders remain closed since March 2020 as a COVID-19 containment measures. It is reported that exports of diamonds from Debswana, a joint venture between Botswana and De Beers stood at US$293 million in the second quarter of 2020 from US$916 million in the previous quarter.

No exports were recorded in the month of May with only US$20 million recorded in June.

Further south, South African gold miners, Harmony Gold Mining Company managed to achieve up to 75% of planned production during the last quarter of its financial year to June 30.

However, year-on-year, total gold production was 15% lower at 1.2-million ounces, mainly as a result of the impact of the Covid-19 national lockdown and phased recovery in South Africa.

Year-on-year, the average underground recovered grade of Harmony’s South African assets was 2.5% lower at 5.45 g/t, compared with 5.59 g/t in the 2019 financial year. This was mainly a result of the impact of ongoing remedial actions to address geological challenges and seismicity at Kusasalethu.

Harmony notes that gold prices have rallied to an all-time high following the global economic fallout from Covid-19 and ongoing geopolitical uncertainty supporting its safe haven status with investors.

The average gold price received for the year under review was 25% higher, at R735 569/kg, compared with R586 653/kg in the prior financial year.

The Gold Miners estimate that the operating free cash flow margin for the year under review may double, from 7% in the 2019 financial year, to about 13% to 15%.

“Do What You Can With All You Have, Wherever You Are”

Trade Winds bimonthly update volume 16

Border Mayhem, despite efforts being made at Beitbridge border post to reduce heavy congestion, things are just not going their way especially since the curfew that was recently placed in Zimbabwe only allows the once 24hour operation to operate on a 12-hour shift. It has been almost two weeks now since the curfew was placed and cargo continues to build up both north and south of the border.

“One of the issues we’re experiencing at the moment is the runners that can’t cross the border,”

“Before the six-to-six night curfew was implemented, runners from Zim would cross the border and collect all the necessary monies for road tolls required to carry on north. These include things like coupons to get through Chirundu.

Unfortunately, because of the curfew, the runners can’t come through anymore and money can only be collected once drivers are on the Zim-side.

Another issue that adds to this is that the Zimbabwe Revenue Authority’s Documents Processing Centre is closed during the curfew.

However, there is some relief as authorities south of the border have been checking trucks in the queue and directing the drivers with incomplete documentation to move their cargo into the various trucking yards thus allowing drivers with correct documentation to proceed to the border.

 It is also noted that trucks are being cleared faster on the Zim side as the officials are easing their expectations on how many trucks should be checked for smuggled goods.

Earlier in the week there were reported positive COVID cases and the border had to be closed for fumigation on Monday.

Following on from Beitbridge, a truck part at Zeerust on the Platinum Highway going onto the Trans-Kalahari Corridor in Botswana has been closed, originally it was said that this was due to a positive COVID case but upon further investigation the result of the closure came from municipal protest action being responsible for the issues that had an impact on the border.

Also, earlier this week, Kasumbalesa had closed its gates. This stems from political unrest in the DRC. Information received indicated that there was ongoing resistance to the political leadership of that province.

It is also noted that that solo journeys were discouraged because of the risk of armed assailants. In one case, assailants sporting assault rifles threatened a driver with his life and immobilised his truck by removing its batteries, which were thrown into roadside bushes.

Cape Town Port Gets the Nod, the middle of month deadline to clear the backlog seems to be well on course and the Western Cape Exporters’ Club (WCEC) had released information indicating that delays at the Cape Town Container Terminal (CTCT) are down to a day.

Based on a daily lockdown report issued by Transnet Port Terminals, the club said there were two vessels berthed at the CTCT – the MSC Shannon and the Santa Isabel with six teams of port staffers working the vessels.

It is recorded so far that 11,900 containers had been worked at the port last week although this number could have been higher if it wasn’t for a mechanical breakdown. Currently there is maintenance being done on the cranes.

The port has been battered over the past few weeks by heavy winds and massive swells but the waters are calm and the skies are clear which is great news.

More positive news coming from further north off the coast line, Durban Container Terminal took delivery of another 13 electric straddle carriers over the weekend.

According to a Transnet statement, the DCT Pier 2 now has a fleet of 15 new electric straddle carriers which are due to be commissioned and handed over to operations this month.

“The eighth-generation equipment arrived fully assembled with improved drive technology, starting reliability, maintainability, safety, usability, ergonomics as well as an ability for a computer application to read data from the control system via Ethernet – providing comprehensive detail on statistics, real-time performance data and operational reports,” according to Transnet.

Although there is a lot of positives in the industry so far there is however a dark cloud as the industry braces itself for massive additional charges after Transnet National Ports Authority (TNPA) asked for a whopping 19.74% tariff hike for the 2021/22 financial year.

This comes as the Ports Regulator of South Africa on Tuesday confirmed it had received the annual TNPA tariff application and that it had started a process of public consultation.

In its application for a nearly 20% tariff hike, TNPA stated that the South African economy had been challenged with slow economic growth, underinvestment, and increasing levels of unemployment for some time.

“The recent downgrades of South Africa’s sovereign credit rating to sub-investment grade by rating agencies has added to the woes of government burdened with rising debt levels, collapsing state-owned enterprises, and weak business confidence levels.

The Authority argued that it was viewed as a catalyst for economic growth and therefore more than ever needed to deliver on its mandate. To do so it required the 19.74% tariff hike.

Celebrating a milestone, August 24th calls for celebrations in Namibia as The Port of Walvis Bay will celebrate the opening of their new container terminal which was commissioned last year.

The NCT has recorded throughput of 115 146 s (TEU) in eight months of operation, and anticipates an upward growth trajectory despite the effects of Covid-19.

Another milestone for the port was its record-breaking 46 berth moves per hour on the Maersk Lunz earlier this year.

Gold Price Reaches New High, Gold advanced to a fresh record high on Wednesday – pushing towards the $2,050/oz mark after breaking through $2,000/oz on Tuesday on the back of a weakening dollar, falling US Treasury yields and expectations of more stimulus measures for the pandemic-ravaged global economy.

Bullion is up nearly 35% so far this year and is one of the best-performing assets in 2020. The precious metal is benefiting from heightened uncertainty around the long-term effects of the global health crisis, as more investors turn to safe-haven assets and an alternative store of value in a low-yield environment.

DRC suspends tax exemption, Democratic Republic of Congo is suspending the value-added tax (VAT) exemption on imports by mining companies in an effort to bolster state revenue, the budget minister said.

Jean-Baudouin Mayo told the finance minister to implement the government’s decision to suspend the exemption after cabinet agreed the move last week, according to a letter dated July 31.

Congo, Africa’s top copper producer, had exempted mining companies from paying VAT on imports since 2016 to help them during a commodity price downturn.

According to Louis Watum, president of Congo’s chamber of mines, mining firms had not been consulted before the government agreed to reimpose the tax, a move he said would hit cashflow.

“We want to make the government understand that if they begin to row back entirely on legal agreements, it will not help the business climate in our country,” he said.

Congo’s economy, which has been damaged by the coronavirus crisis that hammered the demand of copper and other forms commodities, is forecast to contract by 2.4% this year.

The International Monetary Fund has approved more than $731 million of disbursements in the past year to help the economy.

Congo’s foreign exchange reserves were just $836 million at the end of July, which is only enough to cover just over three weeks of imports, according to the central bank.

ArcelorMittal SA falls deeper, last week Africa’s steel giants released a statement advising that the company fell deeper into a half-year loss as demand for steel dropped due to COVID and output declined after operations were shut during lockdown.

ArcelorMittal SA said some parts of its business would remain idle until demand recovered which includes placing its melting operations at its Vereeniging works on care and maintenance from the third quarter. The company expects steel demand to be between 70% – 75% pre-lockdown levels for the foreseeable future.

Coming from a demanding 2019, the first half of 2020 proved to be a difficult time with the impact on business due to COVID. The steel producer which has long battled against cheap imports, rising costs and an embattled local economy, said last month it had begun talks to cut unspecified number of jobs as it tries to cut costs.

Job cuts are a sensitive topic in South Africa where unemployment currently stands at a record high of around 30%.

Now with the latest rumours of plate shortages looming due to lack of billets, the projected company losses will most likely take a bigger hit. 

“We May Encounter Many Defeats But We Must Not Be Defeated”