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Trade Winds bimonthly update volume 37
Dear valued customer,
There has been considerable negative publicity of late concerning a company with a name very similar to ours, Abeyla Trading Pty Limited, which has been exposed in a major corruption scandal with the South African power utility.
Please be assured we have no connection or affiliation in any way to this company.
Abeyla Exports is a privately owned, independent company. We pride ourselves on an exemplary trading record built on hard work, integrity and vision. Abeyla Exports does not trade within South Africa – we are exclusively export-orientated and believe we add value to our customers’ supply chains and will continue to be of service to our valued customers for many years to come.
Please do not hesitate to make contact with us should you have any further queries.
We thank you for your continued loyalty and support.
Load shedding rocks the nation, Eskom announced load shedding a little over two weeks ago with structured planning and little to no concern that it would continue into the weeks thereafter, however within this week load shedding has moved from stage 2 to stage 4 with the announcement that it is here to stay for the remainder of winter.
As expected, this has catastrophic effects on the economy as manufacturing and day to day life is dealt a major blow, this is unfortunate considering South Africa’s GDP has just grown slightly by 1.1% as well as the recent increase in manufacturing.
South African mining firms looking at a positive 2021, as most other sectors were negatively impacted by the pandemic last year, mining companies within South Africa managed to increase profits paving the way towards long term growth.
The 2021 annual review of the top mining companies found that net profits climbed above 15%, cash on hand increased 40% whilst market capitalisation rose by nearly two thirds to $1.46 trillion.
The mining sector has been boosted by higher commodity prices with major miners reporting growth in earnings, raising prospects for further investment into operations and diversification into base metal that support cleaner technologies, whose demand is expected to increase sixfold in the next two decades.
The question remains whether government can attract some of this capital through tax policy incentives as mining executives have raised concerns about tax regulations that have skyrocketed over the past 12 months.
Border updates, earlier last week there were delays reported at the Beitbridge border post, however since then no significant delays have been reported, this news is welcomed considering the major border crossing is currently under maintenance.
No concerns have been reported further north.
Major blow to South African steel fabricators, a major blow has been dealt to the South African steel fabrication industry following the decision by French oil company Total to declare force majeure on its Mozambique LNG project at the end of April due to an attack by Islamic State-linked militants the previous month.
Total acquired a stake as operator from the Anadarko Petroleum Corporation two years ago, which at the time was the latter’s largest foreign direct investment in Africa. Another significant LNG project affected is at Rovuma, with US oil company ExxonMobil delaying its final investment decision until 2023 due to the worsening security situation.
These two projects in northern Mozambique were expected to buy huge quantities of South African steel, as well as other goods and services. The total in-plant steel structure tonnage was estimated to be about 70 000 tonnes for Rovuma alone.
The LNG projects were also an important focus of the Steel Industry Master Plan unveiled by the South African government in October last year.
The first draft emphasised the need to improve on investment, expand and create jobs, promote local productive capacity via localisation and boost export-oriented manufacturing or import substitution industrialisation in line with the National Industrial Policy Framework.
Potential transport strike on the cards, this week a second round of wage negotiations for South Africa’s road freight industry, which hasn’t had a strike for nine years is now facing the prospect of labour action because of a set of tough demands made by organised labour.
According to Penwell Lunga, who chairs the Road Freight Association’s board and sits on the body’s Labour Relations Committee, labour has issued the industry with 30 demands as part of its wage negotiations.
Top of the list is a wage increase of 20% across the board for one year which could be applicable for three years provided that the industry agrees to a three-year retrenchment freeze.
In addition, Lunga told delegates that labour wanted minimal salary adjustments of R10 000, R12 000, R13 000, R18 000 and R20 000 respectively for general workers, for Code 8, 10 and 14 drivers, and for ultra-heavy drivers.
On top of that, labour demands housing allowances, a working week reduced to 40 hours without loss of pay, the scrapping of the industry’s incentive scheme system, and the removal of drive cams from cabins for monitoring purposes.
Lunga advised that the demands mentioned are well above the 20% increase and that the previously agreed 7.5% which remains until February next year had been initially reconsidered, but industry doesn’t like to go back on a binding agreement.
The negotiations are continuing this week.
Sea freight costs surge as backlog continues, cargo ships have been delivering their loads later than ever this year, adding to the supply-chain woes that are undercutting efforts by retailers and manufacturers to capitalize on resurgent economic demand.
The delays around the world, the result of a large-scale restocking by businesses as consumer demand improves, are tying up vessel capacity, adding to a shortage of sea containers needed to move goods and sending shipping costs soaring as container freight rates rise at a historic pace.
The cost of moving a 40-foot sea container from China to U.S. West Coast ports was quoted this week at $5,650, up 34.5% since the start of the year and 228% higher than the same period last year.
It is estimated that sea freight costs to South Africa have increased in the region of 40% – 55%.
There are also delays being experienced with cargo coming through to South African ports as shipping lines are now waiting until the vessels are loaded to 100% capacity before departure, these delays are being experienced with direct vessels and especially transhipments where delays of up to 4 weeks can be experienced.
Delays at US ports, congestion continues to weigh on Trans-Pacific ocean cargo, especially on the US west coast where demand has been outstripping port capacity for most of the year.
In the latest development German line Hapag-Lloyd has announced that it will not call at the Port of Oakland because of ongoing congestion and delays for the foreseeable future, the decision involves two services, with the omissions expected to last until August unless improvements are made at the port.
Incidentally, volume to Oakland has been steadily increasing because of berthing diversions down south at the ports of Los Angeles and Long Beach where congestion has played havoc with throughput.
Among other things, it resulted in Oakland recording a cargo-handling record of 100 096 import TEUs in April.
It’s the first time that the port has exceeded the 100,000 mark of containers handled in one month.
Zimbabwe gold miners optimistic, gold production declined over the past two years but miners remain optimistic of the country’s potential to achieve its target of producing 100 tonnes yearly as challenges experienced by the sector can be overcome.
Zimbabwe’s gold production had dropped from 35 tonnes in 2018 to 20 tonnes last year because of erratic electricity supplies and inadequate foreign currency.
Another major problem was a lack of meaningful exploration over the years to recognize new deposits to allow the opening of new mines and expand existing ones, however new measures have been adopted by the government which could allow the opportunity to revive production and grow the sector.
These include the review of the foreign currency retention ration to 80:20 for all increases in production, the improved turnaround in payment and the ongoing processes to come up with a gold sector policy framework.
The country has in the past experienced slumps in production, back in 2008, production fell to just 3 tonnes. The Zimbabwe Mining Development Corporation expects to ramp up production at its Sabi and Jenna Mines to 1,680 tonnes annually by 2023.
FQM pays huge tax to Zambian government, Zambia’s largest taxpayer, First Quantum Minerals, paid more than US$850 million in taxes, royalties, duties and fees to the Zambian government.
To put it into perspective, the contribution paid to Zambia represents 78% of the entire contribution FQM paid globally, The company also has operations in Australia, Finland, Mauritania, Panama, Spain and Turkey, as well as exploration prospects in a number of other countries.
Despite the additional challenges faced in 2020, FQM achieved its highest ever annual copper production, which was reflected in the increased amount of its contributions to Zambia’s public finances.
FQM paid approximately US$209.5 million in mineral royalties and a further $202.8 million in company income tax in Zambia during 2020.
As part of the company’s voluntary disclosures, the report reveals that USD$6.5 million was spent on community projects, and infrastructure support during 2020.
In addition to its regular community programmes, the Company provided Covid-19 testing equipment, PPE and treatment and isolation facilities for the surrounding communities in North-Western Province, including a new ICU and high dependency care unit at Solwezi General Hospital.
Terrorism fight, top priority for Cabo Delgado, President Filipe Nyusi on Wednesday demanded that the newly appointed Secretary of State for the northern province of Cabo Delgado, Antonio Supeia, make further efforts in the fight against the terrorism that has plagued parts of the province since October 2017.
Nyusi insisted that the Secretary of State for the province must monitor the programmes to assist the displaced.
At the ceremony in Maputo where he swore Supeia into office, Nyusi also stressed the need to guarantee social welfare and health care for the hundreds of thousands of people displaced from their homes by the terrorist attacks.
On the back of this, The United Nations Children’s Fund has promised to increase its support for child victims of terrorism in Cabo Delgado from an estimated 51 to 90 million US dollars.
This promise was made by the UNICEF Regional Director for Southern and Eastern Africa, Mohamed Malick Fall, who is currently on a visit to Mozambique to learn about the impact of the terrorist attacks and the impact it has had on children.
Although the exact number of vulnerable children in Cabo Delgado was not yet known, Fall promised that UNICEF will increase its support as the current levels of aid are insufficient.
Upcoming Public Holidays:
16th June 2021 – Youth Day (South Africa)
“Not everyone who chased the Zebra caught it, but he who caught it, chased it”
Trade Winds bimonthly update volume 36
As expected, a big hit to the steel sector, following on from our previous publication, it was expected that there would be a steel increase for the month of June and unfortunately the news broke last week Friday as ArcelorMittal announced another increase with prices increasing across the board in the region of 8%-10% on base product.
This, once again, is another blow to the sector and downstream players with contracts and projects continuously being re-looked at as well as critical stock levels affecting delivery times.
Following extracted from an article published by CNN 19/05/2021
China and the United States are in a race for scarce commodities to rebuild their economies after the pandemic. That’s pushing prices through the roof — and is now threatening to throw Beijing’s recovery plans off course.
The cost of everything needed for China’s post-pandemic infrastructure boom, from steel and coal to glass and cement, is soaring. The price of rebar, a type of steel used to reinforce concrete, recently hit 6,200 yuan ($965) per metric ton in Shanghai, up 40% this year, and a new record high. Iron ore, which is used to make steel, has topped 1,240 yuan per metric ton ($194) on the Dalian Futures Exchange, a 25% increase since the start of the year.
Thermal coal, glass and aluminum are hitting all-time highs in China. The price of plasterboard is rising too. The situation with steel has become so acute that China’s leaders are warning of damage to the economy. And a popular idiom for defenseless — “without an inch of steel in hand” — is now being used much more literally on social media to describe desperate buyers.
China was the only major economy to dodge a recession last year when the pandemic hit, but it launched a $500 billion infrastructure-led plan to support its recovery from the slowest rate of growth in decades.
Construction is also part of the economic recovery in the United States and may accelerate soon. President Joe Biden proposed in March a roughly $2 trillion infrastructure plan aimed at helping the nation recover from the coronavirus pandemic, and reshaping the US economy to counter China’s rise.
“Small businesses are facing even tighter cash flows, because they have less negotiation power when prices increase in their upstream sector,” wrote Luo Zhiheng, chief macro analyst for Guangzhou-based Yuekai Securities. “They either have to accept higher production costs, or cut their production and sit on the sidelines.”
Recovery efforts hit a snag
The spike in steel and iron ore prices comes down to a combination of factors. Along with construction, electric vehicle production is also fueling the rise, according to analysts at Fitch Ratings. Cars need high-strength steel that can reduce weight and improve performance, and production of electric, hybrid and fuel cell cars have been skyrocketing.
China’s efforts to reduce carbon emissions has also caused steel supply to tighten, the analysts wrote in a report this week. China produced more than half of the world’s output of steel last year, and Beijing has been pressuring the industry to reduce output in pursuit of its goal to become carbon neutral by 2060.
A bruising trade battle between China and Australia may also be inflating prices. Beijing has put up barriers to entry on several Australian exports over the last year, including coal. While one of Canberra’s most important exports, iron ore, has been spared, Beijing has been looking for ways to reduce its reliance on the country.
There are already some signs that the price hikes are hitting China’s construction sites and factories, according to Wang Jiechao, chief construction sector analyst for Pacific Securities. He wrote in a Monday report that many construction companies, foundries and small household appliance manufacturers have stopped taking orders because of production losses.
“The rapid increase in commodity prices has seriously eroded the profitability of downstream manufacturing companies,” Wang added.
A recent survey of 460 construction companies nationwide revealed that many firms are feeling the pinch. Some 56% of respondents to the survey — conducted by 100njz.com, a Chinese construction industry data provider — said that the price hikes have affected their work schedules to varying degrees. Among them, 30% said they have suspended construction to control costs, while the rest have slowed projects down.
Meanwhile, 44% of the respondents to that survey said that although they are still moving ahead with construction as planned, they have had to reduce their steel purchases, which could lead them to consider suspending work in the future.
It’s also bad news for employment, according to Luo of Yuekai Securities, who noted that small businesses are struggling with the price hikes and also account for 80% of the country’s urban jobs.
Luo pointed out that April’s unemployment rate for young people aged 16 to 24 remained high at nearly 14% and their working hours decreased, “possibly because small businesses were running below capacity under the pressure of rising costs.”
Prices are rising everywhere you look
China is still exporting a lot steel, but the government is starting to discourage that in a bid to shore up supply at home. Authorities announced in April that starting this month, they would end export tax rebates for most of the steel products. Customs officials have also cut import tariffs for some steel.
Local governments, meanwhile, have opted for harsh measures in a bid to keep prices down. Late last week, regulators in Shanghai and the steelmaking hub Tangshan summoned major steel mills and ordered them to fix their prices “at reasonable levels.” Mills could face “severe punishments” if they collude to drive up steel prices, according to government statements.
Major futures exchanges in Shanghai, Dalian, and Zhengzhou have also tightened trading rules for steel or coal contracts, and have raised trading fees to cool down the market. Three top coal index compilers even stopped publishing daily updates. The move was to “stabilize market prices,” the state-backed China Coal Transportation and Distribution Association, one of the index compilers, said last week.
Still, prices for the metals remain elevated. And some analysts have pointed out that it will be tough for China to reign in commodity prices without compromising elsewhere.
Certain areas within South Africa are again plunging into total darkness without any prior notice from Eskom as the embattled state power supplier continues to struggle to keep the lights on across the nation which in turn affects all industries within the country, adding further costs to production as producers look to other means of power supply.
South Africa’s manufacturing surges, by 3.4% month-on-month according to data received for March.
The above-average output lifted the volume index to 99.6, a level last seen in January 2020. Last year the index had dropped to 54 by April, the lowest level it had been on record.
In comparison, by March this year, the level of production was up by 4.6% year-on-year.
It is noted that the annual recovery was driven by the manufacturing of food and beverages, as well as motor vehicles and parts.
Border updates, and the recently opened One Stop Border Post at the Kazungula Bridge between Zambia and Botswana has already resulted in a significant reduction in the time it takes hauliers to use the once-treacherous Zambezi River crossing.
Delays, especially during last year’s coronavirus outbreak which caused mass disruptions on either side of the river, were further exacerbated by heavy rains earlier this year, with at least, on average one if not two of the three pontoons frequently being out of order, the rush to make up for lost time often resulted in trucks slipping off the ageing ferries.
However, this seems to be a thing of the past now as transit times have gone from an average 40 hours in April to 22 hours since the bridge opened on May 10, operations are going smoothly with minimal teething issues.
Transporters can now rejoice as one of the region’s most notorious border crossings has been wholly transformed.
No further delays or updates have been reported at Beitbridge or Kasumbalesa.
Protests claim a life, and the South African Police Service has confirmed that a driver burned to death in his cab last night on the outskirts of Harrismith after protesters threw stones at his truck on the N5 highway.
Protests over service delivery flared up earlier in the week along the N5 and N3 highways, major pass throughs between Durban and Johannesburg.
Whilst the police have been monitoring the stretch of road during the week, unfortunately the loss of life occurred.
Record copper price not all good for Zambian miners, and copper mining companies in Zambia are at odds with the record prices of copper, which have brought them significantly higher royalty bills than previously under the country’s current tax regime.
Zambia uses a sliding scale to determine its mining royalty rate for copper, linked to the international copper price. The scale is adjusted in that royalties are paid at higher levels as the commodity price climbs and is reduced as prices fall.
Starting at the minimum threshold of 5.5% when the copper price is less than $4,500/mt, rising to 10% when the copper price is $9,000/mt or higher. Which in turn means that copper mining companies are currently paying the maximum threshold for mining royalties.
Since 2019, when the new Zambian mining tax regime came into effect, mineral royalty payments have not been treated as a deductible expense when calculating corporate income tax. Income is taxed at the rate of 30% a year for base and industrial minerals miners. The effect of this is that mining companies are paying “double tax” as the companies are taxed on income that has already been paid over as a royalty.
Zambia is highly dependent on mining as its major productive industry, with the sector contributing 10% to the country’s GDP in 2019. Zambia’s mining sector accounted for 28% of the government’s revenues and 77% of export earnings, with copper accounting for over 90% of the sector’s exports.
In 2020, large scale copper mining companies recorded an increase in total copper production of 9.7% year on year.
Kamoa-Kakula starts production ahead of schedule, the joint venture between Ivanhoe Mines and Zijin Mining has achieved production several months ahead of schedule.
Whilst the company has described this feat as a “historic achievement” President of DRC, Felix Tshisekedi has said that the country is open for business and investment.
Although this exploration journey started well over two decades ago, it is also noteworthy that the Kakula deposit itself was discovered just over five years ago, which is remarkable progress by the mining industry.
In April, the Kakula mine mined 357,000 tonnes of ore grading 5.70% copper including 121,000 tonnes grading 8.40% copper from the mine’s high-grade centre.
Kakula is anticipated to be the highest-grade major copper mine in the world with an initial mining rate of 3.8-million tonnes a year, with an expected climb to 7.6-million tonnes a year in the third quarter of 2022.
Phase 1 is expected to produce 200,000 tonnes a year of copper and phases 1 and 2 combined are forecast to produce 400,000 tonnes a year. The current copper price also allows Ivanhoe and Zijin to mull over the acceleration of the Kamoa-Kakula Phase 3 concentrator.
France, the latest nation to aid Mozambique, after meeting with the French president, President Filipe Nyusi of Mozambique has advised that France has shown “complete willingness” to provide whatever is necessary for Mozambique’s fight against terrorism in the northern province of Cabo Delgado.
France has shown support but has left sovereignty in the hands of Mozambicans.
This appears to mean that any French assistance in the fight against Islamist terrorism will take into account the lines of intervention laid down by the Mozambican government.
The two countries must advance quickly to sign the agreements which will define the type of support granted by France.
As reported in the previous publication, the Portuguese government has also stressed its readiness to assist Mozambique in the fight against terrorism.
Some Portuguese troops are already in Mozambique providing the Mozambican defence and security forces with technical assistance and training.
The aim that the Mozambican government is to build up the capacity of the country’s own military than to rather have foreign intervention.
“Rain beats the leopard’s skin but it does not wash out the spots”
Trade Winds bimonthly update volume 35
Another increase looming! Two of the major mills within South Africa have notified that there is a potential increase in the range or R1500.00/Ton for the month of June.
The country waits in anticipation for notice from the biggest mill within the country, ArcelorMittal, if there will be another increase on the back of the previous staggering R2500.00/Ton
To add to the industry’s wounds, the Rubber and PVC sector experienced a 17% immediate effect increase, the first of its kind. The increase has caused a serious impact on current projects and contracts.
South Africa mining output soars, The March reading was the first positive one since February last year, after the February 2021 number was revised into negative territory.
The 21.3% leap was partly attributable to base effects. In March last year, mining output declined 14.9% year on year as mines cut production and sent workers home ahead of the start of the hard lockdown later that month.
This was the biggest bounce since March 2015, when a rise of 21.8% was recorded, the biggest record was noted in October 2013 at 23.2%.
The latest number is clearly a positive sign for the sector and the overall economy.
The April number will almost certainly be a new record, in part because of base effects after mining output declined 51.7% in that month last year. Stay tuned for that number, it’s bound to be a whopper.
Border updates, on the 2nd of May the Zimbabwe Revenue Authority announced that there will be upgrades taking place at the Beitbridge border post which is going to cause significant delays for up to six weeks.
The upside for cargo going north is that the long awaited Kazangula bridge has finally been opened, as of 10 May 2021 the bridge is now fully operational.
Kazungula was meant to be completed by 2018, but the government in Lusaka’s consistent failure to meet financial commitments, as agreed with Daewoo, regularly delayed work on the bridge.
Speaking at Monday’s opening of the Kazungula multimodal bridge across Zambia’s Zambezi River border with Botswana, Zambia’s President Edgar Lungu recommitted his country to building another bridge that will possibly change the face of bulk-haul logistics in the sub-Saharan region.
Temporarily called the Kasomena-Mwenda toll road bridge and border post, the project entails an upgrade of the N5 from the copper-mining nerve centre of Lubumbashi north-east to the Luapula River between the Democratic Republic of the Congo and Zambia.
The crossing will most likely be immediately south of Kasenga from where it will proceed in an easterly direction before heading north-west to Zambia’s Nakonde border post with Tanzania.
Copper price hits new high, shortages of copper and declining inventories could drive prices to levels beyond current record highs unless scrap supplies increase.
Scrap accounts for about a third of the roughly 30 million tonnes of annual global copper supplies, as copper prices rise, the flow of scrap accelerates as the market attempts to cover the gap between demand and supply.
Copper for delivery in July was up 0.9% earlier this week, with futures trading at $4.7620 per pound ($10,476 a tonne) on the Comex market.
Bank of America expects a deficit of 186,000 tonnes this year and a shortfall of 369,000 tonnes in 2022, followed by surpluses in the two years after.
China’s massive purchases of refined copper have been the primary driver of the post-pandemic price rebound, but the Chinese push may be fading.
In 2020, China imported 4.4 million tonnes, up 1.2 million tonnes from 2019.
Barrick on track to achieve 2021 production targets, the company reported preliminary Q1 sales of 1.09 million ounces of gold and 113 million pounds of copper, as well as preliminary Q1 production of 1.10 million ounces of gold and 93 million pounds of copper, in line with their plan.
The average market price for gold in Q1 was $1,794 per ounce, while the average market price for copper in Q1 was $3.86 per pound.
Preliminary Q1 2021 copper production was 22% lower than Q4 2020 as expected. Copper sales were 5% higher than the previous quarter as Lumwana sold a portion of its stockpiled concentrate.
Barrick expects copper production in the second half of 2021 to be stronger than the first half, mainly driven by higher grades from Lumwana.
Caledonia closes off first quarter, Caledonia Mining recorded gross revenues of $25.7-million for the quarter, with higher revenues year-on-year thanks to a higher gold price, offset by lower sales as a result of lower production.
Caledonia reported net cash from operating activities of $2-million for the quarter. Cash from operations was adversely affected by increased working capital, in particular higher amounts due for gold sales.
The responsibility for making payments for gold deliveries from the Blanket gold mine, in Zimbabwe, has moved from the Reserve Bank of Zimbabwe to its gold refining subsidiary Fidelity Printers and Refiners.
The company believes this move will streamline and improve receiving payments for the gold it produces and says this new system is operating well.
Caledonia paid dividends in the quarter of $0.11 a piece which is a 46.7% increase year-on-year and the quarterly dividend increased by 9% to $0.12 a piece in April.
Zambia denies shutting KCM, reports emerged that KCM’s mining operations had been stopped at Konkola Deep underground pit and other KCM plants because of a lack of funds to develop new mining areas.
It is noted that at no point has operations been halted or even stopped and that production has been continuous throughout.
Zambia handed control of KCM to a provisional liquidator in May 2019, triggering an ongoing legal dispute with Vedanta.
Konkola Copper Mines is currently operating and there are no plans to put it on care and maintenance.
Zambia’s economy is heavily reliant on mining, making the sector highly politicised especially as the country heads into a general election in three months’ time.
With copper prices at a ten-year high Africa’s second-largest copper producer which defaulted on part of its sovereign debt in November stands to gain from ramping up production at key mines.
DRC President visits KCC in recognition of investment, DRC President Felix Tshisekedi visited Glencore’s Kamoto Copper Company (KCC) in Kolwezi, yesterday, in recognition of the miner’s near $8-billion investment in the country.
KCC is a joint venture between Glencore and DRC commodity trading and mining company Gécamines, which conforms to the Responsible Minerals Assurance Process standard for cobalt as defined by the Responsible Minerals Initiative.
KCC represents a key part of Glencore’s investment in the DRC, with its modern infrastructure and a significant copper cobalt orebody, which the company states makes the operation a key component to achieving the global energy and mobility transitions.
Following its successful ramp-up in 2020, KCC is on track to achieve nameplate capacity of 300 000 t/y of copper and 30 000 t/y of cobalt production.
Portugal to send more troops to Moz, Portugal will send 60 more soldiers to Mozambique as part of a new cooperation agreement aimed at helping the southern African country to fight insurgency.
Sixty members of the Portuguese special forces are already training soldiers in Mozambique, following the deadly attack in March in the village of Palma, Cabo Delgado, in the northern part of the country.
The agreement, which is in place until 2026, allows Portugal to train Mozambican soldiers on fighting insurgency, sharing intelligence and helping the country using drones to track insurgents’ movement.
The US has also helped Mozambique with training of defence personnel to fight terrorism with the European Union preparing to send soldiers to Mozambique to help fighting insurgency.
Upcoming Public Holidays:
17th May 2021 – National Day of the Revolution and the FARDC (DRC)
25th May 2021 – Africa Day (Zambia and Zimbabwe)
“Some people feel the rain, Other just get wet”
Trade Winds bimonthly update volume 34
Steel price increase reminder! As of 1st May 2021 steel prices on flat product in South Africa will be increasing by R2,250 ton as announced by ArcelorMittal earlier this month, the biggest single increase the country has seen, taking the grand total of increases this year to R6000,00 ton.
Thankfully there has been no increase notices from the other steel mills within South Africa.
Introducing Thungela Resources, Anglo American PLC will be separating its South African coal mines into a new business this year.
Anglo American has been mulling an exit from thermal coal for over a year now and constantly reiterated that separating its South African business was the most likely outcome.
The new business, known as Thungela Resources Ltd is expected to be listed in Johannesburg and London in June. Investors will receive one Thungela share for every ten Anglo American shares.
The world’s biggest miners have been looking to exit thermal coal mining as investors say they don’t want exposure to the fuel and pollution. Anglo American PLC has already dramatically reduced its production in recent years, cutting output by more than half.
Implats Q3 production rises, South Africa’s Impala Platinum’s third quarter group output rose by 4% to 5.59 million tonnes at managed operations, with higher volumes reported at Impala Rustenburg, Impala Canada and Marula.
High prices for metals mined by Implats such as platinum, palladium and rhodium gave the mining company a lifeline despite the impact of the COVID-19 pandemic.
The platinum miner said group production in the nine months to March 31 rose by 11% to 17.38 million tonnes, the miner also noted the benefits from the inclusion of Impala Canada, which was bought in 2019, for the full reporting period.
Border updates, last week, transporters working the North-South Corridor into the Copperbelt and back were advised that there were holdups being experienced at Chirundu Border Post between Zambia and Zimbabwe.
The queue was roughly around 7kms long with around a 2-3 day waiting period for when trucks could move, there was no real confirmation as to why the border had a hold up, as it stands, its business as usual at the Chirundu border.
Staying in Zambia, there is some good news looming, with the leaking of the anticipated Kazangula bridge being opened. An inside source has told the Transit Assistance Bureau that a date has been proposed for the long-awaited opening of the Kazungula Bridge being May 10.
Although it seems too close to be true, being less than two weeks away, transporters are becoming quite excited by the announcement made by Transist.
The long-delayed structure, which was completed last September may finally be opened after being closed to traffic while public sector concerns were delaying the process and Zambia’s perennial cash flow issues impeded its ability to pay its share of fees to the contractors.
As of today, transporters entering Botswana via Pioneer Border Post from South Africa have been advised that health authorities in Gaborone have reinstated the PCR test.
The testing measures at the border has been tightened because drivers have been diverting their journeys to Pioneer because of not having to furnish PCR results.
The news has had an immediate effect in cross-border transport circles, with hauliers saying PCR costs which are roughly $46 and regular transits in and out of landlocked Botswana are going to hit them hard.
The pandemic has affected all forms of transport over the past year whether it be road, sea, air or rail transport and it seems that the struggle will continue for some time as ocean freight costs as well as air freight has surged with no positive outlook at the moment, in some countries such as America, it is noted that cargo can sit up to a month before it can be moved to the ports for transport.
Iron ore demand drives global steel prices, steel prices are spiking from Asia to North America, and iron ore’s relentless march towards a record is accelerating, as bets on a global economic recovery fuel frenzied demand.
The outside world is finally catching up with the Asian markets as a global rebound drives a powerful wave of buying that cannot be matched by production.
The manufacturing and construction sectors are ramping up production as governments have pledged to splurge on infrastructure as they set their eyes on post covid growth.
Prices for hot-rolled coil are up three times the “normal” price in North America and they continue to soar in Europe. In China, steel is at its most expensive since 2008.
It is expected that worldwide steel demand will grow 5.8% this year to exceed pre-pandemic levels, China’s consumption which contributes to about half of the global total will keep growing from record levels, whilst the rest of the world rebounds strongly. It is noted that demand outside of China in April has been higher than that of previous years.
Iron ore is enjoying a near record level as spot prices are less than $1 away from their peak of $194/tonne. China’s steelmakers keep output rates at more than a billion tonnes a year to supply consumption to the ever-demanding economy, Beijing has set a goal of reducing steel production this year however that could prove difficult with consumption as strong as it currently is.
Top miners are enjoying their takings as Iron ore prices have bolstered their earnings even though they continue to struggle to supply enough of the raw material.
On the Stainless Steel front, the Chinese government has cancelled all tax refunds for Stainless Steel sheet, plate, pipe and fittings thus increasing production cost by roughly 13%.
Zimbabwe gold output down, Zimbabwe’s gold production fell 30% to 3.98 tonnes in the first quarter of this year, while export earnings from the yellow metal also declined.
The Reserve Bank of Zimbabwe did not give a reason for the decline, but small-scale miners who produce half of the mineral blamed the abnormal rainfall during this period which in turn resulted in shafts being flooded.
The Reserve Bank said the nation, which faces constant shortages of foreign currency earned $200 million from gold exports in the first quarter which is down from $226 million during the same period last year.
Total gold output tumbled nearly a third to 19 tonnes last year after small-scale producers diverted the metal to illegal private dealers who pay more than the central bank.
Zambia assures investors of better policies, Zambia’s president Edgar Lungu assured mining investors, in a speech this past Thursday, that his country will develop a more simplified tax administration system to facilitate them.
Zambia’s mining tax regime has been a thorny issue since the privatization of mines in the early 1990s. He said the he expects the mining investors to take advantage of the improved copper price of close to $9,000 a ton to up production and create jobs which in turn should fulfil the investors social responsibilities to benefit the locals.
Zambia is Africa’s second highest copper producer and is hoping to increase its production from the current 800,000 tons per annum to a million tons per annum.
The key to achieve this goal will be through a continued working relationship with investors such as First Quantum Minerals, which runs the country’s biggest mining operation at Kalumbila, northwest of the country.
Jubilee’s Project Roan delivers its first copper concentrate, the successful delivery of copper concentrate from Project Roan to the fully operational Sable Refinery is the first major step in the company’s commitment to achieve the targeted production of 25,000 tons per annum of copper within the next four years and taking a leading role in the processing of surface tailings in Zambia.
Project Roan is the first of three copper processing facilities that Jubilee target to implement to achieve this goal. Completion of Phase 1 on schedule demonstrates the team’s ability to deliver on their goals in a new jurisdiction.
The targeted significant ramp up of copper operations in Zambia is expected to further improve on Jubilee’s recently published record interim results for the six-month period to 31 December 2020, generating long term, quality earnings.
The company is confident that the completion of Phase 2 of Project Roan will be on time during Q3 2021, which will further increase the copper concentrate being delivered to the Sable Refinery.
Kamoa Copper launches corporate identity, Kamoa Copper will operate the Joint Ventures mines in the high-grade Kolwezi copper district of Lualaba, in the Democratic Republic of Congo.
Ivanhoe Mines and Zijin Mining each own 39.6% of Kamoa Copper, while the DRC government owns the balance.
The Kamoa-Kakula project which is operated by Kamoa Copper, is expected to begin producing copper in July and through its phased expansions, will become one of the world’s largest copper producers.
According to a progress update issued by Ivanhoe in April, Kamoa Copper shattered all previous records in March, mining 400,000 tons of ore grading 5.36% copper, including 100,000 tons of ore grading 8.7% copper from the centre of the Kakula mine.
The company’s first phase of its 3.8-million-tonne-a-year mining and milling operation is 92% complete and the commissioning of its concentrator plant is under way.
Troika summit in Mozambique postponed, The Southern African Development Community has postponed an Extraordinary Troika Summit of the Organ on Politics, Defence and Security due to the unavailability of heads of states.
The leaders of SADC agreed to the postponement as SADC Organ chairperson, Botswana president Dr Mokgweetsi Masisi is currently in quarantine and incoming chairperson South Africa president Cyril Ramaphosa has been testifying at the Zondo Commission on South Africa.
The meeting, which was expected to take place this past Thursday in Maputo, is now expected to take place at a later date.
When the heads of state met on April 8, they, among other things, mulled over measures to address terrorism in Mozambique after the continued attacks by the Islamist insurgents in Cabo Delgado where dozens of civilians were killed and many others displaced.
SADC leaders directed an immediate fact-finding mission to assess and investigate the situation on the ground in Mozambique before and form of response is actioned.
“Seeing is different than being told”
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 29
No steel increase for now… A breather at last for the steel sector in South Africa as so far there are no confirmed increases for the 1st of March, however there is another issue as Eskom, South Africa’s sole electricity producer has just announced a tariff hike in excess of 15%. This is going to shoot labour costs through the roof and in turn have a ripple effect of increases down the line.
The country continues to battle with a steel shortage with no silver lining yet, there has been positive reports over the past few weeks that levels are expected to increase mid-year however currently the country is battling to cope with the local and export demand.
Mid this week there was an explosion at Arcelormittal’s Vanderbijlpark mill where unfortunately three workers lost their lives as part of a stack of coke batteries reaching 90 meters collapsed and fell on the workers.
Notice has come out this morning that due to this incident, production will be affected on thinner gauge material, namely coil from 1.60mm – 4.0mm which in turn effects the production of tube, pipe, sheets, roof sheets and lipped channels. It is also noted that the current steel shortage is most likely to continue until mid-2021 with consecutive steel increases on the books.
Word from our suppliers in China who have returned from their New Year festivities this week, is that Hot Rolled prices continue to increase which will impact on prices around the world. Some mills have delayed re-opening whilst new prices are prepared, whilst others are insisting on confirming orders first and then agreeing on a price! There are indeed very uncertain times ahead.
SA opens Beitbridge but Zim lockdown still in place, South Africa may have reopened its biggest land borders on Monday 15 January, but Zimbabwe’s decision to extend its lockdown for another two weeks prohibits travel between the neighbouring countries through the Beitbridge border post.
Beitbridge is a major border post which connects South Africa and Zimbabwe and processes thousands of commuters every single day. It’s normally the busiest land port in Southern Africa, but for more than a month, it’s only serviced cargo and nationals with government-endorsed travel exemptions.
Amid growing concerns of a second wave of Covid-19 infections, Zimbabwe returned to hard lockdown at the start of 2021. This included the closure of all non-essential businesses, a strict curfew and the closure of all land borders with exemptions for returning residents and commercial freight. South Africa, suffering from its own second wave closed off all land borders on 11 January where only returning residents, departing foreign nationals, and commercial cargo could pass through Beitbridge during this period.
On Monday 15 January 2021, South Africa reopened 20 border points of entry for travel, after implementing new regulations to curb congestion.
THE Reserve Bank of Zimbabwe (RBZ) has hiked its bank policy rate, from 35 to 40 percent, as part of new policy measures announced yesterday to buttress the prevailing economic stability.
This comes as the bank said the economy was poised for strong growth in the short to medium term, amid stable exchange rate and low inflation.
Apart from raising the bank policy rate to 40 percent per annum, the central bank also hiked the medium-term lending rate for productive sectors from 25 to 30 percent per annum.
The Central bank also increased cash withdrawal limits to 2 000 Zimbabwe dollars for individuals and maintained the current limits on mobile banking transactions at 5 000 Zimbabwe dollars per transaction, which has been aggregated to 35 000 Zimbabwe dollars per week.
The apex bank also increased statutory reserves from 2,5 percent to 5 percent for demand and/or call deposits and maintained the rate at 2,5 percent for time deposits. The variation of statutory reserves by maturity is expected to incentivise banks to hold long-term liabilities or time deposits for long-term lending in the medium-term.
“The reserve money target of 22,5 percent is consistent with the targeted end of year inflation of below 10 percent and projected 7,4 percent economic growth rate of the economy,” the governor said.
The African continent on Tuesday carved its own piece of history when Nigeria’s Ngozi Okonjo-Iweala was elected to lead the World Trade Organisation, as its director-general.
She becomes the first woman and the first African to lead this 164-member organisation in the 73 years of the General Agreement on Tariffs and Trade (GATT), which later transformed to the World Trade Organisation.
A former Nigerian finance minister and World Bank veteran, Okonjo-Iweala shrugged off stiff competition from seven other candidates to lead the global trade body, which had gone for seven months without a leader.
Sibanye-Stillwater’s profits soar, the free cash flow of precious metals company Sibanye-Stillwater rocketed to within a hair’s breadth of R20-billion in the second half of last year.
The Johannesburg and New York listed company reported a sky-high profit rise to R29.3-billion for the six months, up from R62-million in the previous year of 2019. Despite Covid-19, the group delivered a record financial performance and made notable progress towards delivery on many strategic targets.
The company is set to gain a R6.8 billion investment which is expected to create around 7,000 much needed jobs for South Africa.
Tanzania’s gold sector ready for giant leap, construction of gold refining machinery worth 8.9 billion in Mwanza with a capacity to process over 480 kilogrammes per day and can be extended to 960 Kgs per day is complete.
Mwanza Precious Metals Refinery Ltd., which is a joint venture of State Mining Corporation (STAMICO), Dubai-based Rozella Genera Trading LLC and ACME Consultant Engineers PTE Ltd. of Singapore, will be one of the best state-of-the-art gold refineries.
STAMICO Acting Managing Director Dr Venance Mwasse told Minister for Minerals Mr Dotto Biteko on Monday that the refinery plant, the first among three gold refineries currently under construction in the country, was set to be in operation the following month.
The plant ranks number 3 in Africa in terms of processing capacity.
The mineral will be processed there, meaning that no exportation of raw minerals. It will increase the country’s revenue and create over 120 direct employments to Tanzanians.
The project cost of US$58 million, which covered investment, running cost and purchase of gold for the initial ten-days when the refinery starts. Construction started in March 2020.
Vedanta warns off asset pickers, Vedanta Resources has warned potential buyers of assets held in its 85%-owned KCM that any corporate activity would be deemed inappropriate and that it would seek to protect its interests in Zambia and internationally. The Indian owned firm’s comments come as the provisional liquidator appointed by the Zambian government, progresses a plan to split the assets which consists of mining and processing facilities ahead of selling them to third parties.
The Zambian government has through its ZCCM-Investments Holdings company which holds a 15% stake in KCM, has forbidden Vedanta access to KCM’s assets arguing that the group failed to meet investment promises.
Vedanta has contested the matter in the Zambian and South African courts.
As gold prices soared, Barrick counted profits, Mining giants Barrick Gold reported a quarterly profit on Thursday that beat the analysts’ estimates, aided by the jump in gold prices due to coronavirus-induced economic uncertainty. The company’s US-listed shares were up 2.4%.
Gold prices touched record highs in 2020, as investors flocked to what is known as the safe-haven asset while the Covid-19 pandemic mauled the global economy.
In the fourth quarter, market prices averaged $1 875/oz, a staggering 26.4% higher than a year earlier. Barrick said its all-in sustaining costs for the reported quarter rose to $929/oz from $923/oz last year.
For 2021, the company expects the sustaining costs to be between $970/oz and $1 020/oz, compared with $967 in the previous year and they are anticipating full-year production to be between 4.4-million and 4.7-million ounces, compared with 4.8-million ounces produced in the previous year.
The miner also expects a jump copper production this year to be in the region of 410 to 460-million pounds this year as compared with production of 457-million pounds last year.
“A person with too much ambition cannot sleep in peace”
Trade Winds bimonthly update volume 28
Steel shortages continue! The steel shortage in South Africa continues with rumours spreading that by mid year the sector should start to see an increase in steel levels as Mittal’s furnaces start to reach full capacity.
There is yet another steel price increase looming for the month of March totalling 8 consecutive steel increases over the past year into 2021 excluding December 2020.
ArcelorMittal SA announced last week that it will ramp up the production at its Vereeniging operation from half to full capacity, which is a direct response to a sudden increase in demand within South Africa and African overland markets.
The billet produced at the Vereeniging mill will be used for specialty input material to its Gauteng operations and various other mills across the country. It is expected to reduce the production demand from the Newcastle operation, which in turn will ensure more steel can be supplied to its long steel customers.
There is a base tariff protection on flat and long steel imports into South Africa of 10% and certain flat products are also subject to safeguard duty of 8%, which results in overall protection of 18% on certain grades.
Now with the hospitals requiring oxygen for COVID patients, this has thrown a spanner into the works for the steel sector, oxygen is in such short supply in South Africa that some companies are paying 30 times the usual going rate to keep critical equipment going and projects on track.
Companies with critical equipment that require oxygen were stretching what they have and rationing where necessary, in one case paying R4,000 for a bottle, compared to a usual price of R140.
Both Afrox and Air Liquide issued for majeure notices to customers in the face of what they said was a clear ethical and moral duty to prioritise supplies.
Industrial users have accepted that need, but say they hope to talk to suppliers about future supply crunches.
Livingstone closure sparks outcry, there’s been an uproar from opposition ranks of cross-border transporters ever since Zambia’s Road Development Agency decided to prevent road hauliers from using the Livingstone-Vic Falls border with Zimbabwe from March 1, as decision that has been on the cards for some time.
The reason for this decision is that the Zambian government feels that due to the bridge being a single lane carriage-way it’s affecting tourism in a negative way as most of the vehicles crossing are for road freight, which has been on the increase.
Essentially it means logistic operators into the Copperbelt in Zambia and the Democratic Republic of the Congo will have to cross the Zambezi at Kazungula, a treacherous ferry transit which is sparking concern from transporters as there has been cases in the past where trucks have slipped off the ferry due to safety measures not being followed. The decision is also particularly bad for hauliers based in Zimbabwe sending shipments to the Copperbelt.
The secret of Kazangula, months after the much-hyped Kazungula Bridge across Zambia’s touch-point with Botswana, Zimbabwe and Namibia’s Caprivi Strip was finalised, transporters are nowhere near knowing when the bridge will be handed over to the respective road authorities for use.
Word on the ground has been that the opening could be any day now, since the bridge’s lights were turned on in September last year, as if to signal that southern African logistics could be in for an early Christmas surprise but still to now, there is no concrete evidence as to when the bridge will be open for use.
There has been speculation that the necessary bilateral agreements between Botswana and Zambia haven’t been signed yet.
Its time the bridge is opened now especially since the announcement of the closure of Livingstone-Vic falls, this will aid in goods moving smoothly both north and south as well as faster turnaround times as transporters won’t have to deal with the ferry system.
Vedanta denied halt of KCM split, A Zambian court on Monday dismissed a motion by miner Vedanta Resources’ seeking to stop a state-appointed provisional liquidator from splitting up its Konkola Copper Mines (KCM) unit and selling the assets.
Vedanta has been in an ongoing dispute with the Zambian government since May 2019, when the Zambian government, which owns 20% of KCM through state mining investment firm ZCCM-IH, handed control of the mine to a liquidator.
Vedanta said the plan to split KCM is illegal, and would result in a substantial loss in revenue for Zambia.
In an announcement in December, President Edgar Lungu said KCM would be split into two subsidiary companies, KCM SmelterCo Ltd and Konkola Mineral Resources Ltd, which would be effective 1 February 2021.
While the split was delayed by Vedanta’s injunction order, it is noted that the two entities are expected to begin to operate soon.
Tanzanian assets revived, Barrick Gold reported last week that it had successfully revived its North Mara and Bulyanhulu gold mines in Tanzania with North Mara having significant improvements and underground production being restarted at Bulyanhulu.
Both mines produced close to the top of their production guidance in 2020 under Barrick’s first full year. The Tanzanian operations delivered a combined output of 462,472 ounces for the year.
During the fourth quarter, North Mara posted a record throughput while Bulyanhulu recommenced processing of underground ore, Bulyanhulu is scheduled to be in full production during the first half of 2021.
Barrick assumed control of these assets after re-acquiring Acacia Mining in September 2019. The company is now managing the mines.
Barrick is currently optimizing a 10-year plan to make the combined North Mara and Bulyanhulu mines its seventh tier-one asset by bringing them into the lower half of the industry’s cost curve. At the same time, the company continues to work on improving relations with its host communities.
Zimbabwe scraps indigenisation law, last week miners in Zimbabwe were worrying over an amendment to ownership laws that seemingly reintroduce the country’s controversial laws which were previously scrapped in 2018. The change in laws back then paved the way for foreign owned entities to rightfully hold up to 100% ownership of a mine.
However, the wording of this amendment was unequivocally flawed, leaving it very much open to interpretation. In a joint statement issued by the ministries of finance and mines it was claimed that “last weeks’ notice may have caused some misconception to some inventors and other stakeholders in the mining sector”
Coincidentally, whilst this has captivated the attention of many, it has come to light that the Zimbabwean government has granted mining entity Great Dyke Investments a five-year tax exemption. In a notice, deemed to have come into effect from 1 January 2020, it is stated that “the receipts and accruals of Great Dyke Investments (Private) Limited, as per the Special Mining Lease Agreement signed between the Government of Zimbabwe and Great Dyke Investments (Private) Limited are approved”.
Nigeria to aid Mozambique in terrorism fight, Nigeria has offered to support Mozambique in its fight against Islamist insurgents in the gas-rich northern province of Cabo Delgado. Nigeria joins a list of numerous African and international countries offering aid to the terrorism rife region.
More than 2,000 people have been killed and more than 500,000 others displaced in the violence, according to the International Committee of the Red Cross.
It is said that Nigeria is ready to share its experience of fighting Islamist militants and provide support to Mozambique. But observers will question whether it’s best placed to offer advice, given the continued insecurity in Nigeria.
Mozambican President Filipe Nyusi urged the defence and security forces to fight hard against terrorists in the province of Cabo Delgado and against the Renamo Military Junta in central Mozambique.
Nyusi also urged those who have joined terrorist organizations and armed rebel groups to surrender, disarm, demobilize and reintegrate into the society.
Happy New Year! Abeyla Exports would like to wish our Chinese customers a happy new year with many blessings for the year ahead!
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