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ArcelorMittal South Africa seeks power producer to build new plant

12 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – ArcelorMittal South Africa is looking for an independent power producer to build an 800 megawatt gas-fired power station on land at its Saldanha steel works to help ensure its survival, Chief Executive Paul O’Flaherty said.

ArcelorMittal, which is reviewing its Saldanha operation partly due to high electricity costs, is willing to take as much as 220 MW of the plant’s capacity and the company is in talks with other industrial users and the government to sign long- term contracts for the rest.

Building an independent power plant is vital for the survival of Saldanha, O’Flaherty told Reuters, adding that state-owned utility Eskom’s rising electricity prices were unaffordable.

Electricity accounts for nearly a third of costs at Saldanha, the company’s newest and only export-focused plant, compared with less than 10 percent for the rest of the company.

“An environmental impact study is underway on our land,” O’Flaherty said adding that ArcelorMittal South Africa would not own the project.

On Friday, the company reported a slightly narrower loss than expected, sending its shares soaring.

There are also expectations that the government will give local steelmakers further protection beyond the 10 percent steel import tariff agreed in August.

Shares in ArcelorMittal South Africa were up a further 12.74 percent at 6.99 rand by 1200 GMT on Friday.

 

(Reporting by TJ Strydom and Thekiso Lefifi; Editing by Greg Mahlich)

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South Africa’s rand slides as President’s speech disappoints

12 February 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

JOHANNESBURG (Reuters) – South Africa’s rand weakened on Friday after President Jacob Zuma’s state-of-the-nation address that analysts and economists said did not deal with concerns raised by rating agencies.

By 0645 GMT the rand had slipped 0.7 percent to 15.9100 per dollar, pushed lower by the president’s failure to address investor worries over fiscal policy as well weak mining and manufacturing data.

Bonds also weakened, with the benchmark paper due in 2026 adding 7 basis points to 9.24 percent.

“There was only limited recognition of the current economic malaise with an overplaying of success of past policy targets,” said Peter Attard Montalto, head economist for emerging markets at Nomura International.

Analysts said ratings agencies were keen to hear the president announce a clear plan detailing how South Africa would improve economic growth, predicted at only 0.9 percent in 2016 by the central bank.

On Thursday, data from the statistics agency showed mining production declined 0.3 percent in December, while manufacturing grew slightly in the same month.

“The impact of the commodity price rout has been disastrous for domestic mining industry,” analysts at NKC African Economics said in a note.

“Unfortunately, new Mineral Resources Minister Mosebenzi Zwane offered little in the way of viable relief strategies when he addressed Mining Indaba earlier this week.”

Stocks opened higher, with the JSE Top-40 blue-chip index adding 0.65 percent to 42,324 points in early trade.

 

(Reporting by Mfuneko Toyana; Editing by Biju Dwarakanath)

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South Africa’s Woolworths to conserve cash as growth slows

11 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African retailer Woolworths Holdings Ltd will aim to conserve cash as growth slows in its home market, Chief Executive Ian Moir said on Thursday.

Shares in the retailer slid to a two-month low despite posting a 30.6 percent jump in first-half profit.

Woolworths, which sells upmarket food and clothing, warned rising interest rates in South Africa would further pressure consumers in Africa’s most advanced economy, where it makes nearly 60 percent of its sales.

“It would be more conservative, in what is a volatile environment, to offer scrip rather than cash,” said Woolworths Chief Executive Ian Moir, referring to dividends paid in shares rather than cash.

Shareholders will have a choice between a scrip and a cash dividend, the company said.

If all shareholders chose scrip, Woolworths would have 1.5-1.6 billion rand more for investment and to pay off debt, Moir said.

The company is committing capital to its expansion plans in Australia, said Moir, where it last year bought department store chain David Jones.

South Africa’s retailers are battling to boost sales as consumers check spending, though Woolworths has done better than rivals due to its appeal to high-income customers.

But a severe drought in southern Africa and the weaker rand is expected to stoke food price inflation, and though higher maize prices should not have a direct impact on higher income shoppers, their spending could sag.

“When we see food inflation coming through, our customers, even at the upper end, tend to buy less items,” said Moir.

Sasfin Securities analyst Alec Abraham said though Woolworths posted good operational results, Moir’s downbeat comments on South Africa’s growth outlook might have contributed to the share price fall on Thursday.

Earnings per share were affected by costs to acquire David Jones and the dilutive effects of share issues to finance the transaction and a black empowerment deal.

Headline earnings per share, the most widely watched profit measure in South Africa, which strips out certain one-off items, were up 30.6 percent at 253.5 cents for the six months ended Dec. 31.

Shares in Woolworths were down 7.5 percent at 86.37 rand by 1050 GMT, compared with a 2.1 slide in the JSE’s benchmark Top-40 index.

 

(Reporting by TJ Strydom; Editing by Subhranshu Sahu and Mark Potter)

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Mauritius business confidence bounces back in last quarter of 2015

11 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

PORT LOUIS (Reuters) – Higher sales volumes boosted business confidence in Mauritius during the last quarter of 2015 after a decline in the previous quarter, a survey of leading private-sector companies showed on Thursday.

The Mauritius Chamber of Commerce and Industry’s quarterly confidence index climbed 6 percent to 93.4 points. However, the index remained well below the long-term average of 100 points since the third quarter of 2012.

The Indian Ocean island’s economy grew by an estimated 3.4 percent in 2015, down from a forecast of 3.6 percent issued in September. Statistics Mauritius forecast growth at 3.9 percent this year with an expected rebound in the construction sector.

Chamber economist Renganaden Padayachy said 49.1 percent of business leaders interviewed in the survey said expansion and diversification prospects into new markets were the main growth drivers in the last quarter of 2015.

“A majority of enterprises are confident for 2016 and expect an improvement in their business this year,” he told a news conference.

 

(Reporting by Jean Paul Arouff; Editing by Drazen Jorgic and Dale Hudson)

 

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Ivory Coast 2015 cashew output hits record 702,000 T

11 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ABIDJAN (Reuters) – Ivory Coast’s 2015 cashew nut crop rose 24 percent to a record 702,000 tonnes and marketing of the crop will begin on Feb. 15, the West Africa nation’s government said on Wednesday.

The government has set a minimum farmgate price of 350 CFA francs ($0.5988) per kilogram, compared with 275 CFA francs the previous year, said government spokesman Bruno Kone. He said farmers have received a total 119 billion CFA francs in 2015.

In addition to being the world’s top cocoa producer, Ivory Coast is also Africa’s biggest cashew grower. The increase in cashew output has been boosted by government reform and investment, the statement said. A decade ago, Ivory Coast produced around 80,000 tonnes of raw nuts per year.

With output growing by over 10 percent annually amid strong demand from Asia, the cashew sector has attracted the attention of a government keen to kickstart the economy after a decade of war and political chaos that ended in a brief 2011 civil war.

($1 = 584.5300 CFA francs)

 

(Reporting by Loucoumane Coulibaly; Editing by Matthew Mpoke Bigg)

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Zambia economic growth seen at 3.7% in 2016

10 February 2016 Comments (0) Non classé

CAPE TOWN (Reuters) – Zambia’s economy is expected to grow by 3.7 percent this year, largely stable from last year and is seen expanding by more than four percent in 2017, the deputy finance minister said on Wednesday.

Christopher Mvunga also said the central bank had not intervened in the market to stabilise the struggling kwacha by selling dollars.

“We are not using reserves by any means to stabilise the kwacha, absolutely not,” Mvunga told Reuters in an interview at a mining conference in Cape Town.

The World Bank has said Zambia’s GDP growth will fall below 4 percent this year due to a combination of domestic and international pressures but expansion in Africa’s second-largest copper producer will pick up in subsequent years.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia)

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Lonmin will not shy away from merger or takeover

10 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

CAPE TOWN (Reuters) – Platinum producer Lonmin will not “shy away” from any merger or takeover but for now the company is focused on its plan to survive tough market conditions, its chief executive said on Tuesday.

Like its peers, Lonmin is battling sharp falls in commodities prices amid a supply glut and slowing demand growth in top consumer China. Its share price has tumbled by more than 95 percent since the start of 2015.

This has led to market speculation about a possible takeover of the 107-year old company and some analysts have said efforts so far to turn the company around were not enough despite cost cuts and a deeply discounted rights issue in December.

However, no concrete news has emerged.

“We are continuously looking at options to maximise value for our shareholders and all other stakeholders. Should it be of benefit to our shareholders and stakeholders it’s not something we would shy away from,” CEO Ben Magara told Reuters at a mining conference in Cape Town when asked if he would consider takeover offers.

He declined to say if Lonmin was in any talks with any potential parties.

The price of platinum has fallen about 30 percent year-on-year, forcing miners to sell assets and cut production and jobs. Around two-thirds of the industry, whose mines were damaged by the five-month strike in 2014, are making losses.

Magara said the company was for now focused on turning cash positive in a low price environment – which involves closing high-cost shafts and cutting jobs.

“That’s what I am worrying about. The investors have given us money and we must deliver. Investors are asking if we are going to deliver on this,” Magara said.

Hurt by a prolonged 2014 strike, rising costs and the plunging platinum price, Lonmin raised $400 million through a cash call in December.

The rights issue was undersubscribed even though it was deeply discounted, forcing the company’s underwriters to buy shares in the company and showed that investors were losing faith in the beleaguered mining sector.

The shares were priced at just a penny each on Nov. 9, a 94 percent discount to the stock’s previous session closing price of 16.25 pence on the London Stock Exchange

“I have no doubt that there will be pressure on us when we finally start making money. Will we go and put it in a project first or will we pay investors?” Magara said.

“I think it’s important that investors will get their money back first. They deserve it.”

Lonmin has said it will continue to review its services and reduce costs, mainly through job reduction, as the slide in the price of its main commodity bites further.

“We have seen cycles come and go and I suppose this shall pass but I have to admit, it’s one of the worst I have seen,” Magara said.

 

(By Olivia Kumwenda-Mtambo, Editing by James Macharia and David Evans)

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Harsh winds, lack of rain to hit Ghana cocoa output

9 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

ACCRA (Reuters) – Ghana could lose as much as 25 percent of its projected cocoa output this season as harsh winds and a lack of rain confound efforts to boost yields in the world’s second-largest producer, a government source said.

The Harmattan wind, which blows off the Sahara, sapping soil moisture and spoiling seeds, came early this season and has intensified in recent weeks, stunting pod growth more than usual and stifling government plans for expansion.

The West African country had hoped to produce 850,000-900,000 tonnes of cocoa in the 2015/16 crop year, up from the previous season’s 740,000 tonnes.

But a government source with knowledge of crop estimates said full-year production might not exceed 750,000 tonnes, and could fall as much as 25 percent short of initial estimates.

In addition to the impact of the weather, some cocoa farms have been destroyed by seasonal bushfire, the source said.

Regulator Cocobod, which had provided free early-maturing hybrid seedlings and fertilisers to boost the crop, said it was too early to know the effect of the weather on its output target and declined to give an estimate.

“Our technical men are just about to go to the field and until they come out with their findings, it will be too early to estimate the damage caused by the Harmattan,” Cocobod spokesman Noah Amenyah said.

In major western and eastern growing regions, farmers told Reuters that they are struggling to even meet last year’s quota.

“We started the year with high hopes because they (Cocobod) gave us all the inputs we needed, but we don’t have the same level of hope now,” 59-year-old farmer Stingo Arthur said, pointing at the withered pods clustered on the trees of his 20-acre farm.

“It is severe now because there is no rain.”

Arthur had expected to harvest more than thirty 64-kilogram (141-lb) bags this season, up from 20 bags last year after boosting his farm with 516 hybrid seedlings and fertiliser last June. So far, he has harvested only 18 bags.

Chief cocoa farmer for the Eastern region, Nana Obeng Akrofi, said he had revised down his original harvest target of 200 bags to “not more than 160” from his 45-acre cocoa cultivation at Bonsu, due to the devastating effects of the Harmattan.

Ghana produces 70 percent of its output in its main crop harvest between October and January. A July-September light crop is discounted to local processing companies.

The bad weather means farmers did not see the volume of beans that normally come at the tail end of the main crop.

Weather forecasters predict rain in mid February or early March but many farmers say that will be too late for light crop beans.

“My fear is that the light crop may be worse,” Akrofi said.

 

(Reporting by Kwasi Kpodo; Editing by Makini Brice, Edward McAllister and Jan Harvey)

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Zambia scraps 73rise in electricity tariffs

9 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LUSAKA (Reuters) – Zambia has scrapped a nearly 73 percent hike in electricity tariffs for industrial and commercial users following an outcry from consumers, a spokesman for state power firm Zesco said on Tuesday.

The country’s power regulator last December approved an increase in electricity charges to 10.35 U.S. cents per kilowatt hour (KWh) from six cents.

“We have withdrawn the application we made to the Energy Regulation Board for higher electricity tariff. We had a lot of complaints and want to consult further,” Zesco spokesman Henry Kapata said.

 

 

(Reporting by Chris Mfula; Writing by Stella Mapenzauswa; Editing by James Macharia)

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Nigeria’s Dangote Cement gains after plans to expand operations

9 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s Dangote Cement share rose sharply on Monday after the firm, majority owned by billionaire Aliko Dangote, announced plans to expand.

Dangote Cement shares rose 7.8 percent on the local bourse after it said it plans to build new cement plants in Nigeria and increase local production capacity to 38.25 metric tonnes per year from 29.25 metric tonnes.

The new plants will help it cut the cost of production and lower product prices in the market, it said.

The local bourse rebounded on Monday, ending three consecutive days of decline.

The stock index, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, gained 2.02 percent to 23,977 points.

Dangote Cement, which accounts for a third of the market’s capitalisation, traded at 134.98 naira ($0.6783) at the close.

Other gainers include Unilever, which was up 4.94 percent and PZ Cussons, which rose 4.78 percent.

 

($1 = 199.0000 naira)

 

(Reporting by Oludare Mayowa, editing by Louise Heavens)

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