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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”