Latest Updates from Reuters

Zambia’s Lungu says won’t take over struggling mines

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LUSAKA (Reuters) – Zambia does not plan to take over mines that have shed jobs after a sharp fall in global copper prices, President Edgar Lungu said on Thursday, backtracking from a warning earlier this month that the state would take over such mines.

Lungu said the economy would grow at a slower pace than previously estimated due to the struggling mining industry and electricity shortages, but that government would implement austerity measures to cope with the decline.

“The government can run the mines but we have no intention to take over the mines,” Lungu said, adding that government tried its best to keep the job losses to a minimum and that the troubles in the sector would lower economic growth.

On the job losses in the mines, Lungu said during a speech from his office that the government had tried its best to keep the job losses to the barest minimum.

“We would have lost all the jobs if we insisted on no job losses. The mines have told us why these jobs are being lost. The challenges in the mining sector are bound to continue. The government can run the mines but we have no intention to take over the mines,” he said.

Lungu earlier this month warned that he would not allow Glencore’s local unit to lay off workers.

The company has been cutting its copper output to support flagging global prices.

Vedanta Resources’ Zambian unit Konkola Copper Mines KCM) said it would mothball its loss making Nchanga underground mine by the end of the month.


(Reporting by Chris Mfula; Writing by Mfuneko Toyana; Editing by James Macharia)

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Zambia’s 2016 economic growth seen below 4%

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LUSAKA (Reuters) – Zambia’s economic growth will fall below 4 percent in 2016 due to a combination of domestic and international pressures but expansion in Africa’s second-largest copper producer will pick up in subsequent years, the World Bank said on Thursday.

“We expect growth to fall below 4 percent in 2016 and an improvement in growth in 2017 and 2018,” World Bank senior economist Gregory Smith said at a media briefing.

Severe electricity shortages, a plunge in global copper prices to record lows and a faltering currency have hurt the southern African country’s economy. The government forecasts growth at 4.6 percent in 2015.


(Reporting by Chris Mfula; Writing Mfuneko Toyana; Editing by James Macharia)

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Gold extends gains on geopolitical tensions but US rate view drags

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SINGAPORE (Reuters) – Gold added to overnight gains on Wednesday on a softer dollar and heightened tensions after Turkey shot down a Russian warplane, but the rally was capped on expectations of a U.S. rate hike next month.

Turkey shot down the Russian jet near the Syrian border on Tuesday, saying the plane had violated its air space, in one of the most serious publicly acknowledged clashes between a NATO member country and Russia for half a century.

U.S. President Barack Obama and French President Francois Hollande, meeting in Washington, urged against an escalation, while NATO Secretary-General Jens Stoltenberg said the military alliance stood in solidarity with Turkey.

The tensions triggered a sell-off in equities and the dollar, while boosting the safe-haven yen, gold and government debt.

Spot gold edged up 0.3 percent to $1,078.61 an ounce by 0645 GMT, following a 0.6 percent gain on Tuesday. U.S. gold rose 0.5 percent, after a near 1 percent gain in the previous session.

“Gold rose on flight-to-quality as investors sought protection from volatile financial markets in the wake of global stresses,” said HSBC analyst James Steel.

“While we think gold may be supported, we are not anticipating a robust rally, and look for only moderate gains, with a lot of upside resistance,” he said.

Despite the gains, gold wasn’t too far from a near-six-year low of $1,064.95 hit last week on increasing views that the Federal Reserve will hike U.S. rates next month for the first time in nearly a decade.

Gold tends to benefit from ultra-low U.S. rates, which lower the opportunity cost of holding non-yielding bullion.

Data on Tuesday supported views of a December rate hike. The U.S. economy grew at a healthier clip in the third quarter than initially thought.

Traders will be eyeing more U.S. data due later on Wednesday, including weekly jobless claims and October new home sales, to gauge the strength of the economy.

Liquidity, however, could be thin ahead of the U.S. Thanksgiving holiday on Thursday.

Among other precious metals, silver rose for a second session after dipping to a six-year low of $13.86 earlier this week, while platinum was trading just above a seven-year low.

Palladium rose nearly 1 percent to $540.65.


(Reporting by A. Ananthalakshmi; Editing by Richard Pullin and Subhranshu Sahu)

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South African rand steadies but looming U.S. rate hike poses risk

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JOHANNESBURG (Reuters) – South Africa’s rand was largely unchanged against the dollar in early Wednesday trade but analysts said the short-term prognosis was for the currency to weaken as U.S. interest rates look set to rise.

The JSE securities exchange’s Top-40 futures index was up 0.6 percent, indicating the actual index would open 265 points higher.

At 0648 GMT the rand traded at 14.0250 versus the dollar, barely moved from Tuesday’s New York close at 14.0370.

The rand was aided by broad-based dollar losses as investors cut crowded long positions in the lead-up to the U.S. Thanksgiving holidays.

“The rand will continue to be vulnerable for further depreciation as we approach the start of U.S. monetary policy normalisation – widely expected to happen in mid-December,” NKC African Economics said in a note.

“Higher local interest rates will not remedy this situation as the rand remains at the mercy of broader emerging market sentiment.”

The rand has given up most of last week’s gains after pushing to 2-1/2 week highs following a surprise 25 basis point hike in rates by the South African Reserve Bank.

Government bonds edged higher on Wednesday, and the yield for benchmark debt due in 2026 dipped 2 basis points to 8.43 percent.


(Reporting by Stella Mapenzauswa; Editing by Ed Cropley)

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Nigeria central bank cuts rates for first time in six years

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ABUJA (Reuters) – Nigeria’s central bank surprisingly cut the benchmark interest rate to 11 percent from 13 percent on Tuesday, its first reduction in the cost of borrowing in more than six years, in an effort to stimulate growth in Africa’s biggest economy.

The bank also reduced the cash reserve ratio for commercial banks to 20 percent from 25 percent, another move to try to inject liquidity into the banking system and encourage lending.

The central bank has been injecting cash into the banking system since October in a bid to stave off recession in Africa’s top oil producer, which has been hit hard by the sharp fall in crude prices over the last year.

“We must stimulate growth,” Governor Godwin Emefiele said, adding that committee members had voted by a margin of eight to two in favour of the reduction.

He said the step was taken “in consideration of the weakening fundamentals of the economy, particularly the low output growth, rising unemployment and the uncertainty of the global economic environment”.

The move took many in the market by surprise. In a Reuters poll, 15 of 23 analysts had predicted the central bank would hold the monetary policy rate at 13 percent, while four expected a 100-basis point cut.

The bank also broadened its interest rate corridor to 200 basis points above the benchmark rate and 700 basis points below, which means it will borrow from commercial lenders at four percent and lend to them at 13 percent.

The regulator hopes the measures will provide an incentive to banks to lend to local manufacturers such as food producers – in line with President Muhammadu Buhari’s policy of boosting output of rice and other basic food items.

Nigeria’s benchmark 20-year bond yield fell 95 basis point between Monday and Tuesday as some traders had expected the central bank to lower rates.

Emefiele said fresh liquidity from the cash reserve rate cut would only go to banks that were ready to channel it into “employment generating activities” such as infrastructure projects, the agricultural and minerals sectors.

He rapped those banks which had used a cut in the cash reserve ration in September to invest in bonds rather than lend to households and businesses.

“Unfortunately what we have found out is that rather than banks redeploying that liquidity… what the banks do is just dump their money on CBN (the central bank) and earn 11 percent – and I use the words – for doing nothing,” Emefiele said.

Standard Chartered’s chief Africa economist Razia Khan said the easing of monetary policy was aimed at boosting the real economy but their success would also depend on the availability of foreign exchange.

The central bank has restricted access to foreign currency to stop a slide in the naira, effectively pegging it at 197 to the dollar. Emefiele said the restrictions, which importers say is crippling their operations, were working well.

“Nigeria has sacrificed free movement of capital in order to keep the NGN at 200 (per dollar) while cutting interest rates to help the budget,” Charles Robertson, head of research at Renaissance Capital.

“Unfortunately this will not produce budget revenue growth…It also reduces the return for owning naira, which will presumably encourage more purchasing of U.S. dollars instead,” he said.

(By Julia Payne and Camillus Eboh. Additional reporting by Lagos newsroom; Writing by Alexis Akwagyiram and Ulf Laessing; Editing by Ed Cropley and Richard Balmforth)

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Glencore’s Zambia copper mining unit lays off 4,300 workers: company and union sources

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LUSAKA (Reuters) – Glencore’s Zambian unit has laid off 4,300 workers, union and company sources said on Tuesday, as the mining and trading company deepens cuts in copper output to support flagging prices.

“The company started giving out the letters of redundancy yesterday and has continued with the exercise today,” one union official said, referring to Glencore unit Mopani Copper Mines.

The union source said around 5,000 employees working for contractors would also lose their jobs as Mopani would only maintain two contractors specialized in the sinking of shafts.

Mopani had said in a letter dated October 21 giving notice of redundancy to mine unions that the firm was still losing millions of dollars and had to take action to secure its long term viability.

Mining companies are under Zambian law required to labour unions at least one month’s notice before laying off employees.

Zambia’s President Edgar Lungu said earlier this month he would not allow Glencore’s unit to lay off workers.

Mopani was expected to pay the 4,300 workers a total of $33 million, two company sources with knowledge of the retrenchment plan told Reuters.

Swiss-based Glencore has pledged to cut its net debt to $20 billion by the end of 2016 to regain the trust of investors after its shares tumbled to record lows this year.


(Reporting by Chris Mfula; Editing by James Macharia)

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Congo cuts growth forecast to 7.7% as copper output falls

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KINSHASA (Reuters) – Democratic Republic of Congo lowered its 2015 economic growth forecast to 7.7 percent from an earlier prediction of 8.4 percent due to weak commodity prices and lower mining output, the prime minister’s office said in a statement on Monday.

The economy of Africa’s largest copper producer grew by 9.5 percent in 2014, according to the government, which had predicted growth of 10.3 percent for 2015 in May.

But demand has been hurt by falling demand for minerals, particularly in top industrial metals consumer China. Three-month copper on the London Metal Exchange hit a fresh 6-1/2 year low on Monday at $4,444 a tonne before recovering slightly to $4,500.

Congo’s economy is heavily dependent on the export of raw minerals. Copper and cobalt exports alone accounted for 79 percent of the value of Congo’s exports in the first half of 2015, according to the Central Bank.

In another blow, Swiss-based trading house Glencore began an 18-month suspension of copper and cobalt production at its Katanga Mining unit in the country’s southeast in September.

The mine produced about 15 percent of Congo’s total copper output prior to its suspension. The country’s chamber of mines estimates that the production freeze combined with power shortages will cause output of the metal to fall from 1.03 million tonnes in 2014 to about 980,000 tonnes this year.

Prime Minister Augustin Matata Ponyo said last month that the mine’s suspension would cost the government about $215 million in tax revenues next year.

The statement from Matata Ponyo’s office on Monday promised that the government would study measures to diversify the economy, without elaborating further.


(Reporting By Aaron Ross; Editing by Dominic Evans)


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Egypt to procure poultry locally following industry pressure

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CAIRO (Reuters) – Egypt will stick with buying its poultry domestically, turning its back completely on international tenders and bowing to pressure from its local producers, traders said on Monday.

The ministry of supplies said it will sign a protocol on Tuesday with the Egyptian Poultry Association to supply chicken at government cooperatives, just two weeks after holding its first-ever international tender for poultry.

Earlier this month the ministry said that Egypt’s state buyer, the General Authority for Supply Commodities (GASC) would import a broader array of essential items, including poultry and meat, in order to counter rising prices.

Egypt’s urban consumer inflation jumped to 9.7 percent in October on the back of rising food prices. Earlier in the month President Abdel Fattah al-Sisi said the government would take action to counter price increases.

GASC’s decision to tender for poultry upset local industry, which then offered to match the prices offered by companies that had submitted bids in the tender, one trader said.

Egypt’s local press reported last week that an offer from a U.S. company had been accepted to supply 500 tonnes of poultry, but GASC has yet to announce details of the deal, leading many traders to believe it would be canceled.

The decision to instead procure poultry locally raises questions over whether the importing body will be able to expand its mandate without running into fierce resistance from local industries that employ thousands of workers.

The ministry of supplies declined to comment.


(Reporting by Eric Knecht and Maha El Dahan, editing by William Hardy)

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South Africa’s Netcare FY profit up 10%, lags consensus

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JOHANNESBURG (Reuters) – South Africa’s second-largest private hospital firm Netcare missed estimates with a 10 percent increase in full-year profit on Monday as weaker demand in the United Kingdom offset a strong showing at home.

Netcare, which runs Britain’s largest private hospital network, BMI Healthcare, said diluted headline EPS totalled 170 cents in the year to the end of September, below a 190 cent-estimate in a Reuters poll of 10 analysts.

While demand for private healthcare is increasing in South Africa thanks to a fast-growing middle class, tentative economic growth in the United Kingdom has led to a drop in the number of Britons with private medical insurance.

Netcare said sales rose 6.1 percent to 33.7 billion rand ($2.41 billion).


(Reporting by Tiisetso Motsoeneng; Editing by Sunil Nair, Reuters)

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Zambia needs measures to lower deficit, restore confidence: IMF

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LUSAKA (Reuters) – The implementation of measures to lower Zambia’s fiscal deficit will go a long way towards restoring market confidence, the International Monetary Fund said on Friday.

“The pressures on the economy have not only reflected the impact of external shocks but also the waning market confidence,” the IMF said in a statement.

“Fiscal discipline has been undermined by additional spending commitments that stand in contrast to lower-than-budgeted revenues.”


(Reporting by Chris Mfula; Writing by Stella Mapenzauswa; Editng by Joe Brock)

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