Glencore’s Zambia unit to keep most workers despite suspension

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LUSAKA (Reuters) – Glencore’s Zambian subsidiary Mopani Copper Mines will retain most of its workers even after copper production is suspended following a drop on the metal’s price, a source close to the company said on Friday.

An electricity shortage in the southern African nation and weaker copper prices have put pressure on the mining industry, threatening output, jobs and economic growth in Africa’s second-biggest copper producer.

The source said Mopani was in talks with the government and unions over Glencore’s plan to suspend operations and invest to improve efficiency at the mine.

The president of Zambia’s largest mining union said the move by the government could help save thousands of jobs.

“Over the next 18 months, Mopani will invest $500 million in expansion projects. A large number of employees are expected to be kept for mine development and care and maintenance,” the source told Reuters.

“We want Mopani to be efficient and competitive in the global copper market. It will also extend the mine life.”

Mining and trading company Glencore said on Monday it would suspended dividends, sell assets and suspend some copper production at Mopani and its Katanga Mining division in Democratic Republic of Congo for 18 months.

Mopani is the second largest employer in Zambia after the government with about 21,000 direct and contract workers.

Mopani would offer workers at the mining firm voluntary separation packages in line with Zambian law after the talks with the government ended, the source said.

A second source said the company was talking to the government and unions, but job cuts had not be discussed.

“As far as we are concerned everything is normal. We are undertaking a study to optimise our production efficiency with the unions and the government. Until we conclude that study we can’t make any pronouncements,” the source at Mopani said.

Glencore, Vedanta Resources, China’s NFC Africa and CNMC Luanshya Copper Mine have all said they will shut down some operations in Zambia because of the harsh business environment.

Electricity shortages and the slide in copper have driven the kwacha currency to record lows amid a sell-off in commodity-linked currencies as China’s economy slows.

By Chris Mfula (Reuters)

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Glencore holds talks with Congo officials on Katanga mine

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KINSHASA (Reuters) – Glencore held talks with Congolese officials in Kinshasa on Thursday over the company’s plans to suspend some copper output at its Katanga Mining unit for 18 months, an adviser to the prime minister said.

The adviser, who asked not to be identified, said there could be an announcement by the mining ministry on Friday regarding the talks. A Glencore spokesman declined to confirm Thursday’s meeting.

The London-listed company said on Monday it planned to suspend 400,000 tonnes of copper output at Katanga and at Mopani Copper Mines in Zambia over the next 18 months.

“This is not a mine that is going to close. It’s just a moment when the copper price is very, very low,” said the adviser, referring to Katanga Mining. “When they sell copper they lose money.”

He said Glencore’s Mutanda Mining operation in Congo was a more efficient operation and did not face the same problems.

A Glencore source said the company would invest about $900 million in Katanga Mining to modernize it. This would bring the production cost per pound down from $2.50 to about $1.65 by time mine reopens in 2017.

By comparison, Mutanda Mining’s cost of production is around $1.33 per pound of copper because it is a newer mine, the source said.

The source declined to comment on potential job losses, saying discussions about employment continued.

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Philippe de Moerloose : “The Key to Successful Development in Africa is Mechanization”

Comments (1) Africa, Featured, Latest Updates from Reuters

by Sheldon Mayer, Managing Editor

Philippe de Moerloose is a Belgian businessman and the CEO of Consortium SDA-SDAI, a group that specializes in automobile distribution and is a top provider of agricultural machinery in Africa. Along with CBA Trading and SDIAG, SDA-SDAI’s affiliates are heavily involved in the distribution of vehicles, Philippe de Moerloose seeks to advance the dynamic process of mechanization of African agriculture. SDIAG, the official John Deere distributor for DRC, Rwanda and Burundi, cooperated with the Agricultural Mechanization Initiative issued by Kinshasa’s government which de Moerloose not only supports, but also wants to expand to bring African agriculture into the next era.


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Botswana sees budget deficit narrowing in 2016

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GABORONE (Reuters) – Botswana’s budget deficit will narrow to 0.03 percent of gross domestic product from a previous forecast of a 2.6 percent shortfall, the ministry of finance said on Thursday.

The department attributed this to expected growth in revenue collected from non-mineral taxes, which it said would likely grow 10.4 percent to 10.32 billion pula ($977 million).

“This significant growth rate of the non-mineral revenue is encouraging since it reflects possible success of our diversification efforts,” the department said in budget strategy paper.

Botswana halved its 2015 growth forecast in August to 2.6 percent from 4.9 percent previously, citing expected weakness in the diamond market which accounts for nearly 40 percent of its budgetary revenue and around 85 percent of exports in dollar terms.

Sluggish sentiment in the market has seen both De Beers and Botswana’s Okavango Diamond Company (ODC) sales falling by over 20 percent in the first six months of the year.

The ministry added that it projected total revenues and grants rising 3.1 percent in the 2016/17 financial year from previous estimates.

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Bollore invests 30 mln euros in Ivory Coast-Burkina rail link

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ABIDJAN (Reuters) – Bollore has invested 30 million euros ($33.6 million) to buy trains for the freight and passenger line it operates between Burkina Faso and Ivory Coast, the French company said.

Landlocked Burkina Faso relies partly for its exports and imports on the ports of its southern neighbour Ivory Coast, the biggest economy in French-speaking West Africa. It also uses ports in other neighbours Ghana and Togo.

“We have invested around 30 million euros to acquire trains, including six received today,” Lionel Labarre, director of Bollore Africa Logistics, said on Wednesday.

“We are still waiting for nine locomotives that will add to the 20 that are already in service,” he said, adding that Bollore would also develop the station in Abidjan, Ivory Coast’s main city.

Trains take about 36-hours to do the 1,260-km (787-mile) journey between Abidjan and Burkina Faso’s capital Ouagadougou, and carriages are often packed with people, trade goods and animals being carried to market.

Bilateral trade between Burkina Faso and Ivory Coast hit 290 billion CFA francs ($495 million) in 2014, up from 165 billion in 2011, Prime Minister Daniel Kablan Duncan said at a ceremony to mark the arrival of the six new engines.

Most of the trade runs via rail and road links. Cargo traffic between the two countries stood at 610,000 tonnes last year, up from 402,000 tonnes in 2011, Duncan said.

Developing the rail line is a strategic priority for Ivory Coast and a tool for regional integration, said Duncan, adding that the country was aiming for 2 million passengers a year in the next few years up from 300,000 now.

Bollore has operated the Ivory Coast-Burkina Faso railway since 1995 and has recently been awarded a concession for a rail link between Niger, Benin and Togo.


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IMF will not see new Zimbabwe loans in at least three years

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HARARE (Reuters) – The International Monetary Fund said on Thursday it would be at least three years before Zimbabwe can start accessing loans from international lenders and needs to deepen economic reforms in the medium term to strengthen its ability to repay debt.

Domenico Fanizza, head of a visiting IMF mission said there were no quick and easy fixes to Zimbabwe’s recovery, adding that what was needed in Zimbabwe were costly reforms that would take time to be felt by ordinary citizens.

The once promising southern African nation owes foreign creditors $9 billion and has been struggling for five years to recover from a catastrophic recession that send hyperinflation into billions amid widespread food shortages.


(Reporting by MacDonald Dzirutwe; Editing by James Macharia, Reuters)

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Room to Breathe: Balancing Climate Change with Development

Comments (0) Africa, Environment, Latest Updates from Reuters, Politics

seyni nafo

By Sheldon Mayer, Managing Editor

In preparation for the 21st United Nations Climate Change Conference (COP21) to be held in Paris in early December, the African Group representative, Seyni Nafo, is readying the hard line he will take with the need to balance Africa’s development and to reduce the horrific impacts of climate change upon the continent.

Mr. Nafo, of Mali, will be representing the 54-country continent in UN negotiations in the UN Framework on Convention on Climate Change (UNFCCC), a multilateral treaty signed  in 1992. The 34-year-old Nafo has said that “it’s a positive agenda. It will bring concrete initiatives, not just statements but ambitious initiatives,” an issue that is always of concern in UN treaties due the unenforceable nature of most documents.

Seyni Nafo: There and Back Again

A position of influence is not new to Nafo, the son of an international banker who held lofty positions, including with the African Development Bank. Even with four siblings including a twin, Nafo’s voice was always heard. As Nafo and his family dutifully followed his father, Nafo rubbed shoulders with the elite, particularly during his time at Lycée Saint-Martin-de-France in Pontoise. Run by the Congregation of the Oratory, Nafo said that the Lycée Saint Martin was “not necessarily a school of excellence, but a school of bourgeois or aristocrats,” which built his character and formed the foundation for the strong leader he is today.

Representing nearly 1 billion people in Africa’s struggle to maintain development in the face of carbon emission reductions takes a certain kind of leader: according to Alix Mazounie of the Climate Action Network, Nafo has the necessary “x-factor.” “[Nafo] has a real ability to negotiate with developed countries, and encourage them to do more for Africa…he prefers realistic commitments rather than aberrant figures,” both of which are integral qualities when dealing with the at times glacial UN body.

Before he arrived at the peak of African climate negotiations, Nafo spent a great deal of time abroad. After completing his studies, he worked as a trader in Chicago and learned the ropes of high-powered finance in the world’s carbon emission leader. After returning to Mali 27 years ago, Nafo’s view on climate change sharply focused—“we have no choice,” he said, but to turn to renewables.

A Breath of Fresh Air

While he continues to work as a trader in the African market, he is acutely conscious of the vast differences in his current (albeit officially unknown) income and his potential income were he a hedge fund manager in the United States. The fact that he knows the opportunities available to him and yet remains in his current position as Africa’s climate change forerunner shows his true character. By using his knowledge of international markets, he has embraced the challenges of representing a continent that has relatively little sway in terms of negotiating climate deals but that bears the brunt of the negative effects of climate change.

Nafo’s comments are usually population-centric, and mean to bring attention to Africa’s particularly difficult position. During a 2012 conference, Nafo issued a firm response to US climate envoy Todd Stern, saying that “Africa is at the forefront of climate impacts; science shows that temperatures [have risen] approximately 150% more than the global average…that means the destruction of crops on a huge scale…crops [that] belong to subsistence farmers and the result is devastation and famine. This is not a game with numbers; it’s a question of people’s lives.” 

Keeping Development Alive In Hostile Climate

Nafo knows that sacrificing development in order to reduceAfrica’s relatively low emissions would have would have catastrophic implications. He is a strong proponent of clean energy because it provides an opportunity to maintain development while lowering emissions. “Not only Africa is the region that has the least amount of greenhouse gas emissions and which is the most vulnerable,” says Nafo, “but it is also the region with the greatest potential for renewable energy and the one with the lowest rate of current energy access.” For Nafo, clean energy is the safest, fastest and surest way to develop the continent. While his commitment to clean energy is not purely a commitment to bluer waters and cleaner skies, it shows a deep understanding of Africa’s bargaining power.

A Fair Shot

For Africa, reducing the impacts of climate change is anything but a game. The summit provides an ideal platform to push their development plans as climate-friendly: Africa has borne the brunt of climate change’s negative impacts despite contributing only 3% of the world’s carbon emissions, according to Nafo. The African continent has been crippled by drought and famine, plagued by seemingly endless civil war, and is now at the mercy of the world’s largest emission offenders.

Africa has not had the same pattern of development as the majority of the world: crippled by Western imperialism and colonialism, as well as today’s mismanagement of assets, internal struggles and external pressures, Africa needs a chance to develop before its industry can be curtailed. A continent with nearly 1/7th of the world’s population and only 3% of its global emissions should not be held responsible for change. It is irresponsible of global leaders to suggest that Africa limit itself in the same way as China or the United States. A realistic (meaning enforceable) plan should be developed that promotes sustainable energy sources without decimating Africa’s burgeoning industrial sector.

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JP Morgan to remove Nigeria from government bond index

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LAGOS (Reuters) – JP Morgan will remove Nigeria from its Government Bond Index (GBI-EM) by the end of October, the bank said on Tuesday, after warning the government of Africa’s biggest economy that currency controls were making transactions too complicated.

The removal will force funds to sell Nigerian bonds, triggering potentially significant capital outflows and raising borrowing costs for the government.

Struggling with a plunge in vital oil revenue, Nigeria had imposed currency restrictions to defend the naira after the burning of dollar reserves failed to halt a slide.

The JP Morgan index tracks around $210 billion in assets under management.

Some bonds will be removed from the index by the end of September and the rest by the end of October, JP Morgan said.

The bank had warned Nigeria that to stay in the index, it would have to restore liquidity to its currency market in a way that allowed foreign investors tracking the index to conduct transactions with minimal hurdles.

Nigeria became the second African country after South Africa to be listed in JP Morgan’s emerging government bond index, in October 2012, after the central bank removed a requirement that foreign investors hold government bonds for a minimum of one year before exiting.

The index added Nigeria’s 2014, 2019, 2022 and 2024 bonds, giving Africa’s biggest economy a weight of 1.8 percent in the index.

“Foreign investors who track the GBI-EM series continue to face challenges and uncertainty while transacting in the naira due to the lack of a fully functional two-way FX market and limited transparency,” the bank said in a note.

The central bank had to devalue the naira and pegged it at a fixed rate against the dollar, turning trading into a one-way quote currency market whose lack of transparency upset investors and businesses.

The index provider said Nigeria would not be eligible for re-inclusion in the index for a minimum of 12 months. To get back in, it would have to establish a consistent record of satisfying the index inclusion criteria, such as a liquid currency market.

Nigeria’s Finance Ministry, central bank and Debt Management Office said in a statement they “strongly” disagreed with the index expulsion, saying that market liquidity was improving.

“While we would continue to ensure that there is liquidity and transparency in the market, we would like to note that the market for (government) bonds remains strong and active due … to diversity of the domestic investor base,” the statement said.

Traders told Reuters on Tuesday the central bank started rationing dollars to foreign investors last week.

Nigeria’s foreign reserves stood at $31 billion as of Sept. 7, down more than 21 percent from a year earlier, when they were $39.6 billion, the central bank said.

“Nigeria’s inclusion in the GBI-EM index was generally seen as a big step forward in its integration into global financial markets, opening the market to new investment and raising its profile worldwide. That will now be reversed,” said Alan Cameron, an economist at Exotix.

With Nigeria’s removal, countries such as Malaysia, Indonesia and Thailand have increased their weight by more 25 basis points as of Aug. 31, JP Morgan said in the note.

Foreign holdings of Nigerian government bonds stood below $2.75 billion, said Samir Gadio, the head of Africa strategy at Standard Chartered Bank. They had been around $8 billion in September 2014.

“This will initially trigger excess volatility in the market as exiting offshore accounts and onshore investors may push yields higher,” Gadio said. “A potential exclusion from the GBI-EM indices would make it more difficult to attract foreign portfolio flows in the future as Nigeria will need to rebuild its market credentials.”

By Chijioke Ohuocha (Reuters)

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Electricity shortage, low copper prices hit Zambian mines

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LUSAKA (Reuters) – An electricity shortage and weaker copper prices have put pressure on Zambia’s mining industry, threatening output, jobs and economic growth in Africa’s No. 2 producer of the metal.

The power problems and copper price slide have driven the kwacha currency to record lows amid a selloff in commodity-linked currencies as key consumer China’s economy has slowed, renewing pressure on Zambia to diversify its economy.

Glencore, Vedanta Resources Plc and China’s NFC Africa and CNMC Luanshya Copper Mine have said they will shut down some operations due to the harsh business environment.

“This is serious, it could bring our economy to its knees,” independent analyst Maambo Hamaundu said.

Zambia’s power generation capacity stands at 2,200 megawatts (MW), with most of the electricity produced from hydropower, but supply is often erratic.

State power utility Zesco Ltd, which generates the bulk of the electricity, said last week it would deepen power cuts after water levels at its largest hydropower station dropped following a drought.

President Edgar Lungu said on Friday that Zambia should reduce its overall imports of goods to tackle the country’s trade imbalance, but it should import more power to address the shortages.

The Zambian government on Tuesday started importing 148 MW of power from a ship docked off the coast of Mozambique.

“CEC (Copperbelt Energy Corporation) has communicated to the mines, the need for them to begin accessing imported power,” Chama Nsabika-Kalima, spokesperson for CEC, the largest supplier of power to Zambia’s copper mines, said.

Zambia is the world’s No. 8 copper producer. The closure of mines and smelters is likely to hit its output, which was projected to increase to 916,767 tonnes by 2018 from 741,916 tonnes in 2015, largely on account of increased output at the Kansanshi mine owned by Canada’s First Quantum Minerals, according to government data.

The slide in global copper prices, to six-year lows last month, has already prompted the government to slash its economic growth forecast for this year to 5 percent, from an initial 7 percent, and the deepening power crisis and curbs to copper production risk a further slowdown, analysts say.

Copper production accounts for 11 percent of Zambia’s gross domestic product.

Labour unions are worried about the impending job cuts, while the government has asked mining companies to consult with the ministry of labour before shutting down operations.

“We started importing electricity and they have the option to buy that power and continue with the operations,” the chief government spokesman, Chishimba Kambwili, said.

The Zambia Chamber of Mines, an industry body, said it was talking to the government over the problems facing the industry.

“We understand the severity of the situation. We want to work with the government to find a long-term solution to this problem,” the chamber’s chief executive, Maureen Dlamini, told Reuters.

By Chris Mfula (Reuters)

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South Africa’s Zuma says urgent intervention needed to save mining sector

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PRETORIA (Reuters) – Consistently low commodity prices and the risk of job losses have forced the government to call an urgent meeting with labour and business leaders in South Africa’s mining sector, President Jacob Zuma said on Tuesday.

The mining industry, which contributes around 7 percent to Africa’s most developed economy, is struggling with sinking commodity prices, rising costs and labour unrest, forcing a number of companies into mine closures and layoffs.

“We meet under difficult conditions. The global economy is experiencing a downturn which is posing a challenge for South Africa’s economy, which is a net exporter of key mineral commodities,” Zuma said in opening remarks at the Mining Sector National Consultative Forum in the capital Pretoria.

The meeting comes after a 10-point plan was signed by the mines ministry, labour and industry to stem a wave of job cuts triggered by falling prices and rising costs.

Zuma’s ruling ANC party is facing increasing pressure from the left-leaning parties who accuse him of neglecting the working class ahead of local elections next year.

Mines Minister Ngoako Ramatlhodi told reporters he wanted to save mines while also conserving jobs and that the meeting with Zuma would hopefully yield solutions to the job losses.

“It is crucial, it is important and we have elevated it to the president’s level and that tells you the importance we have attached to this gathering,” he said.

Ramatlhodi has previously said almost 12,000 mining jobs were on the line in South Africa, which has an unemployment rate of around 25 percent and glaring income disparities.

South Africa sits on close to 80 percent of the world’s known reserves of platinum, a metal used in emissions-capping catalytic converters which is facing depressed demand.


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