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Arcelor Mittal South Africa

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”

Trade Winds bimonthly update volume 9

Collapse of mining, COVID-19’s impact on the mining industry locally and abroad has been devastating, Zambia has recorded a drop of 30% in mining revenue between February and April 2020 whilst South Africa suffered a plunge of 50% in mining revenue due to the Hard-Lockdown during April.

One of Zimbabwe’s top gold mines has halted operations blaming the country’s foreign currency policies, which requires the mine to surrender 30% of its forex earnings at a rate of 25 to 1 USD while suppliers are selling at 80 to 1 USD. The mine believes that they are achieving less than 80% of their gold sales compared to the international market.

“The impact of this situation on the Company’s operations has been that the Company is no longer able to meet its operational expenditure requirements considering that the company is required to pay for electricity and fuel in USD along with almost all of its consumables and spares also being denominated in USD,”

“The company has therefore been forced to stop production of bullion due to its inability to buy essential consumables and spares and is actively considering placing all its gold mines under care and maintenance until a viable solution is found.” the mine has said.

Steel Giants Fined, ArcelorMittal Limited South Africa (AMSA) which is Africa’s largest steel producer has been fined R3.6million for exceeding the minimum hydrogen sulphide emission standards. AMSA’s steelworks which is located in the Vaal Triangle, an Airshed Priority Area that was declared a priority area in terms of the National Environmental Management, whom has concerns about the elevated pollution in these areas.

According to departments minister Barbara Creecy, the money received from the fine would be used to install air quality monitoring instruments.

AMSA is currently producing over 5million tonnes of steel per year, supplying South Africa with over 61% of its steel as well as exports to Southern Africa and further north.

Lubumbashi Lockdown, this is due to a spate of coronavirus infections, however the lockdown is not expected to have any effects on Kasumbalesa itself, transporters should expect delays although word is that this lockdown is only affecting private transport.

“To see what is right and not do it, is a lack of courage.”