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Trade Winds bimonthly update volume 33

Biggest one yet!  ArcelorMittal SA has just recently given out notice of yet again another steel increase for the month of May, the increase sitting at a staggering R2,250.00 per ton is the biggest one yet.

This will now be the fifth consecutive increase this year with a possible positive outlook in the third quarter where prices are expected to drop.

Along with increased fuel, electricity and labour hikes this won’t be the end of the dark road within the steel sector.

With material being so scarce in South Africa and constant price increases, will SA still be an important game player within the steel sector? Only time will tell.

Border updates, there has been an increase in hijackings at the Beitbridge border post and with the latest developments, Ekhuruleni police officers have been implicated as accomplices.

The National Traffic Anti-Corruption Unit (Ntacu) has slammed the brakes on a traffic and police officers’ syndicate, which has allegedly been hijacking trucks on major Gauteng transportation routes.

The investigation is ongoing and more arrests can be expected. The suspects are expected to appear in court soon.

This seems to be the only burning issue of this nature across Southern Africa borders.

We would like to extend our deepest condolences to the family of the driver who tragically and unnecessarily lost his life in a robbery at Beitbridge recently.

Ever Given consequences being realised, not only has Egypt filed a multi-million pound compensation claim against the owner of the container ship but Suez Canal Authority has also estimated a $300 million bill for “loss of reputation” and an equal amount charged as a “salvage bonus”.

The responsibility for this massive mishap, that took at least 800 people and more than a dozen tugboats to correct, is now a ping pong between the Japanese vessel owner and the line operator Evergreen.

General Average (GA) was declared by the owner of the vessel which means that there is a potential of spreading the cost of significant expenses amongst shippers.

PowerChina hydro project delayed, work on the 2,400-megawatt facility had been scheduled to start in 2020, but yet another victim of the COVID-19 pandemic, this $4 billion hydropower plant has been suspended until towards the end of 2022.

This project awarded to General Electric Co. and Power Construction Corp. of China aims to ease electricity shortages to both Zambia and Zimbabwe will potentially be funded by domestic pension funds in Zambia and Zimbabwe.

Trade and Development Bank a Bujumbura which is a Burundi-based multilateral lender, has been appointed as the lead co-ordinator for financing the project.

A new coal player in Zim, Contango Holdings’ Lubu project in Zimbabwe, which comprises a substantial coking coal resource, ticks all the right boxes to deliver a financially lucrative business.

Lubu covers 19,236 hectares of the highly prospective Karroo Mid Zambezi coal basin which is located in the Hwange mining district in North Western Zimbabwe.

Historically, around US$20 million has been spent on advancing the project, including the completion of a pre-feasibility study, resourced modelling and mine planning with test work to confirm the presence of thermal and coking coal.

Contango started as a shell company looking to acquire a near-term production asset rather than an exploration asset, and this led to its interest in and purchase of Lubu.

Having reviewed multiple assets, it was determined that Lubu was a project that could bring into production quickly without the need for years of geological work to validate it. With extensive geological work completed, there was no exploration risk involved in the asset.

ZISCO seeking new investors, Zimbabwe’s state-controlled iron and steel company ZISCO has invited new investors to help revive operations at the company that has been the target of interest from Indian and Chinese investors in the past.

ZISCO acting chairman Martin Manuhwa said earlier this week that the firm was again looking for new investors interested in resuscitating the company.

The successful investor would be expected to contract out at least 35% of engineering, procurement and construction business to the local community.

ZISCO owns an iron ore mining unit with an installed capacity of 2.16 million tonnes of ore a year as well as a wire products company.

Interested investors should submit their expression of interest by April 30. Successful investors would then be invited to participate in the bidding process for the funding.

CATL to acquire stake in Kisanfu, Battery maker Contemporary Amperex Technology (CATL) will be acquiring a stake in the Kisanfu copper-cobalt mine in the Democratic Republic of Congo for $137.5m.

According to the agreement, CATL New Energy will acquire 25% in China Molybdenum (CMOC) unit KFM Holding, KFM Holding owns a 95% stake in Kisanfu mine while the remaining 5% stake is held by the DRC Government.

The deal is expected to provide CATL with access to what is claimed to be one of the world’s largest, highest-grade undeveloped cobalt and copper projects.

Hunger threat, Almost 1-million people face severe hunger in northern Mozambique, where hundreds of thousands have fled Islamist militant attacks, the UN food agency advised earlier this week.

Islamic State-linked insurgents in March attacked Palma, a town in Cabo Delgado province next to gas projects under development by companies including Total and Exxon. All work in the region has since come to halt as the threat levels are at its peak.

The World Food Programme has noted that 950,000 people are now hungry in Mozambique and has appealed to donors for $82m to confront the crisis.

It seems that that the world has finally opened its eyes as SADC leaders all met in Maputo to discuss a way forward and to determine the response required to fight off the insurgents.

Zimbabwean President Emmerson Mnangagwa said the meeting also agreed to revive a so-called SADC brigade to intervene in the conflict.

It is not confirmed that Mozambique has agreed that SADC forces would help the government fight the Islamic State-linked insurgency.

Under SADC rules, a member state must make an official request for the group to deploy the brigade.

SADC leaders are scheduled to meet again on April 29 to discuss the issue.

 

 

“Sticks in a bundle are unbreakable”

Trade Winds bimonthly update volume 32

Another month another increase!  Last month the steel mills within South Africa sent out notice of price increase effective 1 April and unfortunately this is no April Fool’s joke.

With the prices going up in the region of 5% this time round and the expectancy of another increase for May, business is taking a hit in all areas as it’s becoming more and more difficult to secure consistent pricing with some prices only being valid for 1 day!

The oil base price has also increased which has affected the plastics sector and we are expecting further increases on a month to month basis if this continues.

Border updates, there has been an unfortunate event at Beitbridge border post where a driver was shot in the head.

The dangerous security situation that develops at South Africa’s land border with Zimbabwe whenever there’s congestion at Beitbridge has resulted in one fatality and a truck driver fighting for his life after he was shot in the head.

The shooting once again highlights the danger to which truck drivers are exposed when waiting in queues at Beitbridge, especially south of the border.

There is lack of solid information as to why the northbound queue through the notoriously blocked-up border is yet again an issue also contributes to the fear and uncertainty truckers have to put up with at Beitbridge.

Ever Given finally freed, news broke from Egypt this past Monday morning that Ever Given is a float. This came after dislodging efforts were ramped up over the weekend, with at least 15 tugboats working the stricken vessel while dredging was under way.

The 400 meter long juggernaut of a container ship had been grounded in the Suez Canal for six days prior to its release and in turn blocking over 300 hundred ships during this time.

This event is expected to have a major impact on the economy in the coming weeks and months.

Ivanhoe looking to advance expansions, Ivanhoe Mines are looking to advance the expansions at their Kamoa-Kakula plant in DRC which include accelerating the Phase 3 expansion at the Kamoa-Kakula copper mine beyond Phases 1 and 2.

The other is fast-tracking additional hydropower upgrades in the DRC to ensure abundant clean and renewable electricity for all subsequent expansions at Kamoa-Kakula. The management team is also evaluating a potential, state-of-the-art, direct-to-blister smelter that could bring numerous economic benefits and further reduce the project’s Scope 3 emissions.

Democratic Republic of Congo is blessed with some of the world’s greatest hydropower potential. Hydro-generated electricity which can also potentially be supplemented by solar power.

The company will now look to further increase production at the Kamoa-Kakula copper joint-venture and to accelerate the Phase 3 concentrator expansion from 7.6 million tonnes per annum to 11.4 million tonnes per annum.

Together with their partner Zijin Mining, Phase 2 has already been accelerated and they are hopeful to begin production in Q3 2022 which will bring copper production to approximately 400,000 tonnes per year and with phase 3 being brought in thereafter the annual copper production is expected to rise to 530,000 tonnes per year.

ZCDC on brink of collapse, Zimbabwe’s state-owned diamond miner is reportedly on the brink of collapse after president Mnangagwa allowed Chinese mining giant Anjin to resume operations whom the late former President Robert Mugabe forced the closure of seven mining companies, including Anjin in 2016, and went on to merge their assets into the ZCDC.

President Emmerson Mnangagwa reversed that move in a bid to restore productivity in the diamonds sector and develop the country’s ailing economy.

The Anjin Diamond Mining Company contributed about $200m to Zimbabwe’s economy before it was forced to halt operations.

ZCDC has reportedly stopped mining in four of its concessions and abandoned the exploration of three other sites as it currently faces challenges that are threatening its viability.

FQM spends big in 2020, Zambia’s largest mining company, First Quantum Mining is full steam ahead in its mission to incorporate more local people in its supply chain to strengthen Zambian-owned businesses and boost the local economy.

The mining giants procured US$1.65 billion of goods and services from companies registered in Zambia in 2020, which represents 85% of the total expenditure by its, Kansanshi Mine in Solwezi and Sentinel in Kalumbila.

More than 2,500 locally registered businesses benefited from mine contracts in 2020 alone.

It is noted that the goal of FQM’s pro-Zambian approach is to build and stimulate sustainable growth for local businesses in and around its Kansanshi Mine in Solwezi and Sentinel Mine in Kalumbila as well as the country at large.

ZCCM-IH now has complete ownership of Mopani, shareholders in Zambia’s ZCCM-IH have overwhelmingly supported its acquisition of a 90% stake in Mopani Copper Mines.

Glencore agreed the sale of its majority stake in Mopani to ZCCM-IH in a $1.5 billion deal earlier this year.

The general meeting vote on the resolution was the last steppingstone towards the completion of the transaction and ZCCM-IH now holds 100% ownership of Mopani, with the increased ownership, ZCCM-IH will now be an active participant in the global industry.

ZCCM-IH plans to boost the copper output from 34,000 tonnes to 150,000 tonnes and by accomplishing this they are looking to find a new investor for Mopani by the end of the year.

Catastrophic events as Islamic State attack near Total, dozens of people were attacked and killed in a raid by the Islamic State in Mozambique, the attack began on March 24 in the northern costal town of Palma close to Total’s Liquefield Natural Gas Project, a plant that the IS has been trying to get to.

Whilst hundreds of people were evacuated by boats to the provincial capital of Pemba, many people remain unaccounted for.

The attack came soon after Total announced the resumption of work at the plant, no work had been done this year due to lack of security in and around the area.

Total has now said that it would reduce the number of workers on site going forward but for now no work will be done.

The terror attacks have so far claimed over 2,000 lives and about 1.3 million people face security crisis. Nearly 670,000 people have been displaced.

The world is starting to take a closer look, but no real aid has taken place, Mozambique clearly needs help and it’s time that its surrounding allies intervene with help from abroad.

 

 

We would like to take this time to wish our customer’s a Happy and peaceful Easter, and to enjoy their time with their families and most importantly to stay safe.

 

 

“The laughter of a child lights up the house”

Trade Winds bimonthly update volume 31

Steel price increases return!  Earlier this week various mills sent out steel price increase notices in the region of 5% to the sector, again adding further pressure to downstream industries. Constant challenges are being faced as prices continue to rise and the supply of steel is almost non-existent. It seems that the hope of the industry normalizing mid-year has a grey cloud over its head now.

A shock fuel price hike is also in place for the new month adding higher costs to logistics which in turn has negative effects down the line.

Another industry that is facing constant challenges is the plastic sector, Force Majeures implemented by Sasol in South Africa and other producers in America and Europe has resulted in massive increases in the range of 15% month on month is having a damaging effect, affecting prices on mining hose, PVC & HDPE pipes as well as rubber products.

The fuel price hike will also affect the plastic base price.

Border updates, Officials in Zambia stay silent as the Kazangula bridge lays dormant, rumours and guesswork that’s what fills the void of government sector officials who are not forthcoming with trustworthy information about the new bridge at the Kazungula border post between Zambia and Botswana.

Cross border operators carrying freight across the region are forced to use the pontoons which can only handle around 50 – 60 trucks a day whilst the beautiful Kazangula bridge is expected to handle at least 150 trucks a day. However, in all its glory, the bridge remains closed in the backdrop.

Rumour has it amongst transporters that the only reason the bridge remains closed is because money is still owed to the contractors by the Zambian government.

China’s Tsingshan to build mine and steel plant, China’s Tsingshan Holding Group is set to start developing an iron ore mine and a carbon steel plant in Zimbabwe from May, three years after the firm first announced the investment deal.

Tsingshan signed a $1-billion outline agreement with Zimbabwe in June 2018 to build a two-million-tonne-a-year steel plant and has been carrying out exploration and seeking more mineral concessions.

The Chinese company, through its Zimbabwean subsidiary Afrochine, already produces ferrochrome, which will also be used in the production of steel.

China has over the past few years emerged as a major foreign investor in Zimbabwe, with its firms mostly involved in mining of gold, chrome and diamonds and building power stations.

Zimbabwe has previously announced that it has a drive to increase mining revenue to $12Billion by 2023, last year, minerals earned the country $2.4-billion in exports.

Chimona mining invests in Bubi, Midlands based Chimona Mining Company has spread its wings to Bubi District in Matabeleland North where it has acquired new gold mining rights and will be setting up a processing centre under a US$500 000 investment.

The venture is expected to create more job opportunities in Matabeleland North and promote the formalisation of artisanal mining activities in Bubi, which is one of the richest gold districts in the country.

ZCCM on lookout for investors, Zambia’s state mining company is on the lookout for further deals as it prepares to complete its acquisition of a majority stake in Glencore’s struggling copper business in the country.

ZCCM Investment Holdings is considering any opportunities to increase the minority shareholdings that it owns in Zambia based companies.

ZCCM became an investment company in 2000 when Lusaka privatised the country’s mining industry, selling off controlling stakes in its prized copper mines to large mining groups. That process created Mopani Copper Mines, the business ZCCM is buying from Glencore, and Konkola Copper Mines (KCM), which is owned by Vedanta Resources.

Last year, ZCCM announced a change in strategy and said it would focus on mining and energy with the ambition of operating assets rather than just being a minority shareholder.

Ivanhoe completes phase one at Kakula, Ivanhoe Mines has completed 80% of phase one work at the Kakula copper mine in the Democratic Republic of Congo with first production targeted for July.

Ivanhoe is commissioning the concentrator plant at the Kamoa-Kakula operation, and has stockpiles already totalling over 2.16 million tonnes which contains an estimated 95,000 tonnes of copper.

The second phase expansion is set to begin during the third quarter of 2022. This phase is expected to double the mill throughput to 7.6 million tonnes a year. Phases 1 and 2 combined are forecast to produce up to 400,000 tonnes of copper a year.

Other engineering and construction activities underway at Kamoa-Kakula include the completion of upgrades at the Mwadingusha hydro-electric power plant and associated 220-kilovolt infrastructure to supply the mine with clean, renewable hydropower. The Mwadingusha hydropower plant is expected to deliver approximately 78 megawatts of power to the national electrical grid ahead of the start-up of the Kakula concentrator.

US to train Moz fighters, American military personnel will be spending two months in Mozambique, training the local soldiers in an aid to fight the jihadist insurgents.

The ISS has been in the gas rich Cabo Delgado province since 2017 and over the years have been growing in numbers and becoming more brazen with their attacks.

Earlier this week, the insurgents attacked children as young as 11 years old, beheading them with their violent attack. The violent attacks to date have claimed more than 2600 lives and has displaced over 670,000 people.

Few countries such as the UK, US, Tanzania, Zimbabwe and South Africa have voiced their concern and support for Mozambique but unfortunately it seems that its all just talk as the country continues to be battered by the Islamist group.

 

“A single stick may smoke, but it will not burn”

Trade Winds bimonthly update volume 30

South African steel industry on its knees, with the latest closure from ArcelorMittal, the South African steel industry has taken another knock, this puts further pressure on an already struggling sector where material availability is so scarce, raw material prices are constantly climbing and labour costs are rising, thankfully there was no steel increase at the beginning of the month however production costs have risen adding higher costs to finished products.

The sector is still very optimistic that by mid-year, steel levels will be rising and not just in South Africa but across the world.

Border updates, reports that a broken scanner was responsible for the backlog at the Chirundu Border Post between Zimbabwe and Zambia have been disproved, however the actual reason is that the backlog was because of truck congestion at the Port of Beira in Mozambique due to the new in-transit cargo sealing system creating major teething issues at the port, with transporters claiming earlier this week that up to 2000 trucks were stuck at the port.

Enhanced efforts at the port to clear congestion had resulted in spurts of trucks coming through on the Beira Corridor into Zimbabwe and queueing at Chirundu.

Collaborative efforts to clear Chirundu, however, are already paying off, with waiting time at the crossing being reduced from 48 to 24 hours.

The queue was estimated to be around six kilometres at one stage, it was down to about one kilometre yesterday.

Cross-border carriers within the SADC region received good news over last weekend when notice came from Zambia announcing that its recent decision to ban the transportation of heavy-load cargo at its Livingstone border with Zimbabwe had been temporarily withdrawn.

Had the announcement not been made, heavy-haul trucks travelling north or south would have been prevented from crossing the Vic Falls bridge as of the 1st of March.

Concerns were that it would force shipments heading towards the Copperbelt and the DRC to either make use of the Chirundu border which is further east or that north-south cargo would have to go via Botswana which truckers would then have to make use of the notorious Kazungula ferry crossing which has made the news over the past few months due to broken-down pontoons, subsequent back-ups at the border where in theory roughly 150 trucks should be ferried daily but only about 50 make it across.

With all this being said it is still questioned as to why the newly built Kazangula bridge is not operational.

Potential investors for Zisco, two Chinese steel companies as well as state-owned Tisco are in premilitary talks about the revival of Zimbabwe Iron and Steel Company.

Zisco (Zimbabwe Iron and Steel Company) was once Africa’s largest steel works, Zisco stopped all operations in 2008 due to lack of funding and mismanagement.

Zisco is currently owned by the Chinese government.

It is also noted that there are another four companies looking at investing in Zisco.

Blanket mine a true survivor, more than a century later, Blanket is still going strong with +1 Moz having been produced over its life from both fresh ore and tailings.

Over the past several years Blanket mine has steadily upped production from around 42 000 oz in 2015 to approximately 54 000 oz in 2019 and have now set their sights on producing around 80 000 ozpa from 2022 onwards.

In order to secure Blanket’s long-term future and to allow the mine to reach the 80 000 ozpa target, Caledonia is currently busy with its Central Shaft project, which is effectively creating a new mine below the current workings. Work on the four-compartment shaft, which extends from surface to 1 200 m underground, started in 2015 and the shaft sinking phase was completed in July 2019.

Work on equipping the shaft started in early January 2020 with the installation of pipes from surface to shaft bottom. The equipping has continued to progress steadily since then but due to travel restrictions caused by COVID-19, the project’s completion originally scheduled for late 2020 could be delayed further.

Remarkably, given that shaft sinking is a highly specialised discipline, Caledonia has carried out much of the work on the Central Shaft project in house moreover, it has funded the shaft itself which has so far cost over US$60 million by relying entirely from internal cash flows.

Caledonia has also raised the required funds to invest in the construction of a solar power plant to supply electricity to the Blanket Mine.

Zambia achieves record copper production, Zambia produced 882,061 tonnes of copper in 2020, up 10.8% from 796,430 tonnes produced in 2019.

Africa’s second largest copper producer aims to produce more than 900,000 tonnes of copper in 2021, and has a long-term goal of exceeding one-million tonnes in annual production.

A worldwide shift to electric cars, which use much more copper than cars using traditional combustion engines, is expected to boost production of the metal.

However, Zambia’s cobalt production fell 21.8% in 2020, to 287 tonnes from the 367 tonnes produced in the previous year. The drop has been blamed on the reduced cobalt mineralisation and operational challenges at Konkola Copper Mine.

Gold production also fell to 3,579 kg in 2020 from 3,913 kg in 2019 as ore grades at the Kansanshi mine declined.

Nickel production more than doubled to 5,712 tonnes in 2020 from 2,500 tonnes in 2019, thanks to the restructuring and streamlining of nickel operations which helped drive production up.

Kamoa-Kakula sets production record, Ivanhoe mines achieved a production record in February at the Kamoa-Kakula Copper Project in the DRC.

The 339,000 tonnes mined and stockpiled in February had an average ore grading of 5.5%, this included 47,300 tonnes grading 4.62% copper from the Kansoko Mine, establishing a new monthly production record at Kansoko.

The overall tonnage also included 107,000 tonnes grading 9.01% copper from the high-grade centre of the Kakula Mine.

Kamoa-Kakula is on track to have more than three million tonnes of high-grade and medium-grade ore stockpiled on surface, holding more than 125,000 tonnes of contained copper, prior to the planned start of processing in July 2021.

Ivanhoe believe the potential for sustained higher copper prices further improves the outstanding economics of the project.

ISS Terrorists strike again, Islamist terrorists have murdered four people in the Quionga administrative post, in Palma district, in the northern Mozambican province of Cabo Delgado.

The attack occurred on Friday night 19 February. In addition to the murders, the raiders looted foodstuffs and burnt down houses, including the residence of the head of the administrative post.

Sources say the same group tried to return the following night but they were driven back because by that time the Mozambican defence and security forces had sent units to Quionga.

 

“Those who accomplish great things pay attention to the little ones”

Trade Winds bimonthly update volume 27

Steel increase! as of last week Friday ArcelorMittal and other major mills in South Africa announced a further price hike in the region of 5% for February with further impending increases as the year goes on. This is putting an unbelievable amount of pressure on the steel sector in South Africa, coupled with the latest indefinite load shedding schedule, manufacturing, distribution and logistics have become a nightmare for all involved.

South Africa’s economy faces challenges, the decline in manufacturing production growth in November last year is a clear indication that South Africa’s economy is in for a rough ride to recovery, especially under the current adjusted level 3 Covid-19 pandemic restrictions.

It is noted that production declined by -3.5% year on year in November 2020, and at the same time also declined -1.3% month on month from October 2020, down from a growth of 3.2% from September 2020 to October 2020.

“The manufacturing sector remains key to the growth and development of South Africa due to its spill-over effect into other sectors of the economy such as the construction sector, especially through the Metals and Engineering (M&E) sector, which remains the major supplier of crucial inputs such as steel,” said Seifsa chief economist Chifipa Mhango. “The data released suggest a worsening trend following a slower decline in the previous months,” he added.

Record gold production achieved! Gold producers Caledonia Mining Corporation produced a record 57 899 oz of gold from the Blanket Mine in Zimbabwe during 2020 with an approximate of 15 012 oz of gold produced during the fourth quarter of 2020.

2020 is a record year for Caledonia who are also on track for the commissioning of Central Shaft to be completed in the first quarter of 2021.

In December Caledonia also announced that they had entered into option agreements on two properties in Zimbabwe, delivering on their strategy of organic growth whilst increasing the dividend for a fourth time at the start of January to 11 cents a share

It seems that the sky is the limit for Caledonia at the moment and their plans are paying of whilst also creating genuine value and returns for their shareholders

Zambian government claims Glencore stake, Zambia’s state mining investment arm ZCCM-IH has agreed to buy Glencore’s majority stake in Mopani Copper Mines in a $1.5 billion deal funded by debt and will seek a new investor, the government said earlier this week.

The sale follows Glencore’s attempt to suspend operations at the mine last year due to the low copper prices and COVID-19 disruptions which then prompted a government threat to revoke the company’s mining licences.

The takeover coincides with Zambia’s preparations for elections in August, with President Edgar Lungu courting voters in the copper belt. More than 15,000 workers would have lost their jobs if the mine was closed.

Glencore will continue to control buying rights for Mopani’s copper output until the transaction debt has been repaid which will be paid by giving Glencore creditors 3% of Mopani’s gross revenue from 2021-2023 and 10-17.5% of Mopani’s gross revenue from then on.

The country will have to attract new investors, it is said that companies from Britain, Canada, China, South Africa, Turkey and Qatar have expressed interest.

Political violence stops cargo movement, Cross-border movement in both directions through the Copperbelt crossing of Kasumbalesa between Zambia and the Democratic Republic of the Congo has ground to a halt because of political unrest.

Protest flared up in the town of Kasumbalesa north of the border which unfortunately effected the flow of freight through the border.

A crucial transit on the North-South Line into the DRC’s copper mining areas in Haut-Katanga province, Kasumbalesa has been quiet and free-flowing over the last few months.

Challenges in the past have regularly caused congestion at the border however the events earlier this week represent the first time in months that Kasumbalesa, rather than other NSL crossings like Chirundu and Beitbridge, has led to cargo on the NSL coming to a halt.

Port of Beira shuts shop as storm Eloise approaches, The Port of Beira is taking no chances as storm Eloise spins in a south-easterly direction towards the coastline of Mozambique, although the eye of the storm was expected to pass south of the port and make landfall today in the vicinity of Vilankulos which is roughly 500 kilometres south of Beira, the latest update is showing that the storm is going to hit the port directly.

The last time the city of Beira had to contend with a severe weather event was in March 2019 when Idai cut a path across the old city, these days the focal point of intensified reinvestment as Mozambique positions its ports for ramped-up logistics.

The SA Weather Service has warned that the cyclone, much like Idai, will increase in intensity as it makes its way across the channel’s warmer water with an anticipated speed of 166-213 kilometres an hour by the time it hits the coast.

From there it’s expected to make its way across Mozambique’s provinces of Inhambane, Gaza and Maputo further inland.

Authorities in South Africa’s provinces of Limpopo and Mpumalanga have been on high alert, with rain and extreme wind predicted despite Eloise expectedly losing force the further it moves into the interior. 

Calls for the US and France to assist, African Energy Chamber chief executive NJ Ayuk is appealing to the United States and France to intervene in the insurrectionist violence currently threatening resource exploration in Mozambique.

Such a move is crucial not only to protect the liquid natural gas interests of ExxonMobil, the US multinational petroleum company involved in Cabo Delgado province, but also to secure the continent’s energy prospects.

There has also been appeals to France to do the same on behalf of Total, the other major multinational that has invested billions in Mozambique’s LNG fields south of its Rovuma Basin border with Tanzania.

Government leaders will need to reach out to militant groups and begin a confidence- and trust-building process that will hopefully lead up to a mutual ceasefire agreement.

In this respect, US and French diplomatic involvement could prove fundamentally important in defusing the powder keg situation in Cabo Delgado.

2021 will be “the decisive year” for defeating terrorism in the northern Mozambican province of Cabo Delgado, according to the newly elected Maj-Gen Eugenio Mussa.

He called on Mozambican troops to act rigorously, to wipe out definitively the armed groups that have been terrorising several Cabo Delgado districts since October 2017.

French owned Tota has ordered a temporary evacuation of some of its workers from the Afungi Peninsula, an area which has experienced one of the most recent attacks by the insurgents.

 

 

“Don’t set sail on someone else’s star”

Trade Winds bimonthly update volume 26

Border updates, chaos had once again returned to the Beitbridge border post over the festive period, from what seemed to be been a victory leading up to the December month turned south very fast as queues of up to 35kms were experienced at a stage, the lifting of COVID testing for drivers going north and the failure of system implementations all added to this, on the flipside, drivers coming south into South Africa also faced problems when the South African Department of Health demanded that all inbound travellers were to be tested for COVID which lead to around 2000 trucks being detained at Beitbridge, this also created fears of health risks to travellers and residents within the Beitbridge area.

This past week there has been concern for possible super spreader events as thousands of people have been stuck on the Zim side waiting to enter South Africa, most not wearing masks and not adhering to social distancing measures, this issue arose when authorities in Harare announced that only Zimbabweans with South African permits would be allowed to cross the Limpopo heading south.

Delays continue further to the east at the Ressano Garcia border between Mozambique and South Africa which has resulted in trucks and other vehicles queueing three lanes abreast for at least 10 kilometres. The delays are starting to become so bad that Mozambique yesterday requested clearing agents and customs authorities at Lebombo Border Post not to let anyone through.

It seems that South African truck drivers have been denied access into Angola, however the Angolan government is denying this.

This emerged after a high-ranking official from Namibia’s hinterland logistics sector confirmed that at least three senior officials from the Trans-Cunene Corridor had told him that trucks entering Angola must be driven by Namibian drivers. According to an Angolan official, this is untrue and the only request that they have is that drivers must present the RT-PCR test of the country of origin, however the TCC emphasised that if this coronavirus testing measure was negative, all truck drivers were allowed to proceed to their destinations as per international transit protocol.

Level 4, Zimbabwe entered level 4 lockdown on Tuesday for a period of 30 days which restricts the country’s movement to almost a standstill, inter city travel is prohibited unless you are an essential worker and only the mining, agriculture and manufacturing sectors are currently allowed to operate. It is also noted that only Zimbabwean citizens are allowed to enter the country.

The South African government is also currently in council where rumours are rising that South Africa itself will be entering a harder lockdown, this comes after the country entered level 3 on the 30th of December last year which was expected to only last two weeks, however there has been an emergency meeting called and the citizens now await the verdict, roadblocks have been setup on provincial borders this week adding to the rumours that a harder lockdown will be put in place.

Caledonia to enter further exploration, Caledonia can gain exclusive rights to explore and subsequently, if exploration is successful and at its sole discretion, acquire the mining claims over an area known as Connemara North, a property which, like Glen Hume, is situated in the Gweru mining district in the Zimbabwe Midlands that has historically produced significant quantities of gold.

Connemara North is approximately 30 km from Glen Hume with good road access between them offering the potential of operating in synergy should Caledonia decide to develop both areas.

It has not been commercially mined since 2001 before being placed on care and maintenance. Connemara mine produced approximately 20 000 ounces of gold per annum from an open pit heap leach operation. Originally in 2001 First Quantum indicated that they had plans to expand the existing open pit operations at Connemara mine but this never materialised.

The option gives Caledonia the right to explore the area for a period of up to 18 months.

Kuvimba seeks $1 billion for acquisitions, Kuvimba Mining House Ltd., in which the Zimbabwean government is the majority stake holder at 65%, will invest an incredible amount of the cash raised on the Darwendale platinum project, which belongs to its Great Dyke Investments unit. Kuvimba is held by government pension funds and Zimbabwe’s sovereign wealth fund.

It is believed that around $100 million will be set aside for acquisitions and capital expenditure over the next 12 months.

The group, whose portfolio includes gold, nickel and platinum, will raise part of the money internally through its operations, it will also issue debt. Kuvimba has three working gold mines producing about 300 kg of the metal each month and owns a nickel mine with monthly output of 550 tonnes.

The company is finalizing negotiations to acquire Metallon Gold Zimbabwe Ltd.’s Mazwoe mine. It is looking at other assets such as lithium, nickel and copper and further exploration into Africa.

Zambian court orders liquidator to stay, A Zambian court has ruled the state-appointed liquidator of Vedanta’s Konkola Copper Mines will not be discharged despite a November ruling ordering a halt to proceedings to allow Vedanta and minority KCM shareholder ZCCM-IH to pursue arbitration.

The government accused Vedanta of failing to honour licence conditions, including promised investment. The liquidator has since said he intends to split the company, with possible asset sales to follow.

In a statement after the ruling, KCM provisional liquidator Milingo Lungu said his powers were valid. He said he would split KCM into two companies effective Jan. 31, and that asset disposal was likely KCM’s only remaining option.

Given the impasse between stake holders and government  it is unclear whether any keen consumers might be discovered.

International Legal opinion maintains that there would be no way a provisional liquidator could commence with disposing of KCM assets because anybody buying them would effectively be acquiring tainted property and would therefore be party to an unlawful act.

Copper growth in Africa expected to grow!  Demand in China is remaining especially strong as it moves out of the crises towards full normalization of all economic activities.  Prices have rallied and surged in part attributed to the various disruptions from top producer Chile.

Long term outlook remains positive and demand set to increase with investments in electric vehicles and renewal energy as well as infrastructure projects particularly being driven in China.  Prices are also being pushed up by grade decline, rising input costs, water constraints and high-quality development opportunities becoming scarce.  These factors will continue to push prices up as well as motivate miners to improve their margins by introducing better efficiencies.

New SA trade agreements!  Friday marked the start of trade for South African firms under two new trade agreements, the Trade and Industry and Competition Department said. These agreements are with countries ready to trade under the African Continental Free Trade Agreement (AfCFTA) and with the United Kingdom following Brexit.

South Africa had put in place the legal and administrative processes for the start of trade under the AfCFTA on January 1, 2021 following a decision to start trading under the AfCFTA by the 13th extraordinary session of the assembly on the AfCFTA on December 5, 2020.

The AfCFTA agreement which was signed by 54 of the 55 African Union member states consisting of 34 countries had already given their approval to the AU Commission and became state parties, the parties include Angola, Burkina Faso, Cameroon, Central African Republic, Chad, Côte d’Ivoire, Congo, Djibouti, Egypt, Eswatini, Ethiopia, Equatorial Guinea, Gabon, The Gambia, Ghana, Guinea, Kenya, Lesotho, Mali, Mauritania, Mauritius, Namibia, Niger, Nigeria, Rwanda, Saharawi Arab Democratic Republic, Sao Tome and Principe, Senegal, Sierra Leone, South Africa, Togo, Tunisia, Uganda, and Zimbabwe.

In addition, trade for local firms with the UK commenced on Friday under the new economic partnership agreement between six southern African countries which include South Africa, Lesotho, Eswatini, Namibia, Botswana and Mozambique replacing the European Union partnership terms for the UK market that was in place until December 31, 2020.

The UK agreement effectively retained the terms of trade in the existing EU agreement and would govern the bilateral trading relationship between each of the Southern African countries

SADC must tackle Mozambique’s terrorism!! Up to now, Mozambique has only requested SADC to provide military supplies, as Maputo resists any kind of external support that may lead to multilateral foreign intervention.

This is not a crisis that one country can solve alone; the Institute of Security Studies noted.

President Nyusi announced his intention to eradicate the violent extremists but his government has been unable to do so for the past three years and each passing day strengthens the extremist resilience and complicates the liberation of Cabo Delgado and the millions of Mozambicans at risk.

Although Mozambique had enlisted Russian and South African mercenaries to help fight the insurgency, no single SADC state has the military strength or financial capacity to intervene in Mozambique said the ISS.

United Nations has pledged to raise $254 million to assist terrorism-affected people in Mozambique. The plan will be deployed in 2021 and is expected to benefit 1.1 million people in the Cabo Delgado province and surrounding areas.

According to humanitarian bodies, the resources will be used to establish new camps for refugees and internally displaced persons.

In the meantime, Total SE has asked some staff to vacate its $20bn Mozambique liquefied natural gas (LNG) project with fighting reported to be less than 5km away from the plant.

The situation is grave and set to worsen with the terrorists taking control of transport links, terrorizing villagers and depopulating towns.  Urgent intervention is needed.

 

 

“The Earth is a beehive, we all enter by the same door”

Trade Winds bimonthly update volume 25

Steel price increase!  With the current steel woes South Africa is facing, there is a steel increase on the cards for January 2021, so far two major mills have announced an increase across the board of around 3-6% on all products whilst the industry anxiously awaits an announcement from ArcelorMittal.

So far the steel shortage situation remains the same as we eagerly await Mittal’s furnaces to fire back up early next year.

There are also concerns coming from the Manufacturing and Engineering sector that the possible 10% electricity hike for next year could be detrimental to the revival of the sector.

Border updates, there has been a complete U-turn at Beitbridge, following for the previous positive update, Beitbridge is once again bottlenecked.

The southbound queue of loaded and backhaul trucks heading out of Zimbabwe to South Africa is again being snagged by bottlenecking at the Beitbridge Border Post. Zimra has said that they are doing everything in their power to relieve the congestion. So far the northbound queue is clear.

South Africa’s Skilpadshek Border Post which is on the Trans-Kalahari Corridor (TKC) through Botswana continued to be affected by slow coronavirus testing procedures this morning. According to the Transit Assistance Bureau, the building backlog at the border stems from Botswana’s inability to cope with the testing of truck drivers for Covid-19.

A decision taken last month to not test drivers coming from South Africa who are in possession of a polymerise chain reaction (PCR) negative test result which is not older than 72 hours has not had the impact they thought it would have on easing congestion.

The notion that Botswana seems incapable of coping with capacity requirements for testing drivers not in possession of PCR results only serves to support criticism that the country’s inflexible Covid-19 testing regimes are impeding its strategic logistics position in the sub-Saharan region.

In the meantime, transporters using the TKC to get to Namibia are increasingly avoiding the corridor, preferring instead to bypass Botswana altogether which in turn has bottlenecked the Nakop Border post in Namibia.

Container rates soar, exports from South-East Asia have recovered fast from the COVID-19 pandemic however the shipping costs have climbed drastically.

This is due to a high demand and no supply as trade routes have been interrupted by the pandemic. Shipping lines are also taking advantage of this by using the peak season surcharge as a reason.

The cost of putting one container on a ship can cost in the region of $5,000.00 up from an average of $1,300.00 earlier this year.

It is expected that the current rates will continue into early to mid-next year.

Rio Completes Copper Project, Rio Tinto has completed the initial work on the Midnight Sun Mining’s Solwezi Licenses in Zambia.

After incurring project expenditures in excess of $3 million during the initial work phase, Rio will now proceed to the next stage of the agreement.Top of Form

This would allow the company to earn a 51% interest in the Solwezi licenses by spending a further $16 million on the project within four years, as well as by making cash payments to Midnight Sun.

The project is situated on the Zambia-Congo copper belt and is immediately adjacent to Africa’s largest copper mining complex, First Quantum’s Kansanshi mine.

Zambia in negotiations with IMF, Zambia has just begun negotiations for financial support from the International Monetary Fund. The IMF announced this in an official statement

This announcement comes at a time when the Zambian economy has been declining due to several years of crisis. Drought, difficulties in the mining sector, and rising debt had pushed the country to adopt austerity measures in recent years to cope with the situation. However, the covid-19 pandemic that has plagued global economic activity has contributed to the accelerated decline of the Southern African country’s economy.

Great Dyke Sells Stake, Great Dyke Investments who is planning to build Zimbabwe’s biggest platinum mine, has sold a 4.4% stake to Fossil Mines as Covid-19-disrupted fundraising for the venture.

Fossil, which is Zimbabwean owned, will invest $30m in the Darwendale project, through a combination of cash and services, including engineering, procurement and construction. That leaves Vi Holding and Zimbabwe’s Landela Mining Venture each with a 47.8% stake. The sale values Great Dyke Investments at $680m.

The covid-19 pandemic has delayed fundraising for the project, which was originally due to be completed in 2020. Financing of $665m is now expected to be finalised in the first quarter of 2021.

The Darwendale project has the potential to become one of the world’s biggest platinum mines and its development is central to the Zimbabwean government’s plans to reboot a collapsing economy.

Zimbabwe has the world’s third-largest platinum group metal reserves after SA and Russia.

Millions lost to illicit mining, Zimbabwe continues to lose millions of revenue in illicit gold mining, In Mazowe, 40 km outside the capital Harare, artisanal miners have broadened their search for gold ore as they continue digging the soil underground in some cases to over 50 metres deep. Some artisanal miners are receiving up to $40 per gram of gold.

According to government statistics, the bulk of the gold is extracted by artisanal and small-scale miners who are responsible for 63% of the recorded production. In most cases, the artisanal miners operate illegally and do not sell the mineral to the state-owned buyer.

Trucker violence on the down, following from the last report, it seems police and other law agencies have managed to clamp down on the truck attacks. Currently there has been no news of any attacks over the past week. Hopefully this will remain.

Kamoa-Kakula stockpile building up, Ivanhoe Mines has announced that underground development at the Kamoa-Kakula copper project, in the Democratic Republic of Congo, produced a combined 250 000 t of ore, grading 4.85% copper, in November.

The tonnage from the Kakula and Kansoko mines is 29% higher than the volumes achieved in the previous month whilst the grade of copper also increased month-on-month from 4.01% to 4.85%.

The project’s surface stockpiles now contain about 1.25-million tonnes of high-grade and medium-grade ore, which has an estimated grade of 3.75% copper and is on track to have around three million tonnes of high and medium grade ore stockpiled prior to the planned start of production in July 2021.

The Kamoa-Kakula’s first phase involves mining and milling 3.8 million tonnes of ore a year, whilst a concentrator that is expected to handle the same amount of volume is currently being built.

US Support counter-terrorism, The United States is not considering sending troops to Mozambique to combat the terrorist threat in the northern province of Cabo Delgado, but are willing to aid civilian counter-terrorism capabilities.

The United States wants to be Mozambique’s security partner of choice in strengthening border security and in strengthening its capacity to counter terrorist activity.

Terrorists in the northern Mozambican province of Cabo Delgado are apparently dying daily as the Mozambican police have managed to cut out their supply system. It is also noted that the defence force managed to block out an insurgent attack on Maputo as well as neighbouring cities.

There is also concern that the terrorists are using a port or aerodrome in Cabo Delgado to move drugs and guns into the country. However the Cabo Delgado coast and offshore islands are under the control of the Mozambican authorities

Earlier this week Islamist militants attacked and occupied a northern Mozambican village in their closest raid yet to a giant gas project. The assault came late Monday night on the village of Mute, some 20 kilometres from the Afungi peninsula which is the centre of a multi-billion-dollar scheme to build a liquefied natural gas plant in Cabo Delgado province.

The attackers targeted government soldiers in the village and torched homes.

The attack has raised concerns about security at the Afungi peninsula, where the French energy major Total and the United States’ Exxon Mobil are among the investors.

Air force reinforcements from Dyck Advisory Group have been deployed from Pemba to bolster up government troops seeking to retake Mute.

 

 

“However long the night may last, there will be a morning”

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 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”