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Zimbabwe hopes to transform mining sector with $4.2 bln platinum deal

Comments (0) Actualites, Africa, Economy, Mining

HARARE (Reuters) – A Cypriot investor signed a $4.2 billion deal on Thursday to develop a platinum mine and refinery in Zimbabwe, an investment that President Emmerson Mnangagwa said showed the country was “open for business”.

Signing the agreement with Cyprus-based Karo Resources, Mines Minister Winston Chitando said work would start in July, with the first output of platinum group metals expected in 2020, aiming to reach 1.4 million ounces annually within three years.

It was unclear, however, where all the funding would come from and analysts said the project start date of July looked very ambitious.

Located in the Mhondoro-Ngezi platinum belt, west of Harare, where Impala Platinum Holdings has operations, the project will include a coal mine and power station to produce electricity for the smelter, and should employ 15,000 people when fully implemented, Karo head Loucas Pouroulis said.

Keen to revive the mining sector after years of reticence by foreign investors during Robert Mugabe’s rule, President Mnangagwa said the deal showed things had changed since his ascendancy after Mugabe’s ousting in November.

“Zimbabwe is open for business and whoever stands in the way, hurting business in this country, will fall. It is not business as usual anymore, things have to change,” Mnangagwa said at the signing ceremony.

The project was first mooted six years ago but had been held back by government red tape and “other unnamed vested interests, which are corrupt interests,” he said.

Mines Minister Chitando added: “This is the largest investment structure in the country’s mining industry in Zimbabwe. The landscape of Zimbabwe’s mining industry will never be the same.”

Zimbabwe’s government did not give details of the source of funding for such a big investment.

Industry sources, who asked not to be named, said there was no obligation to provide any cash until firmer plans for the development were in place.

Cyprus-born Pouroulis spent his early career with industry giant Anglo American in South Africa, branching out on his own to establish more niche operators such as Petra Diamonds, Eland Platinum and Tharisa Minerals, according to his profile on Tharisa’s website.

As well as heading Karo, Pouroulis is chairman and founder of Tharisa, in which his family has a 45 percent stake.

Tharisa, which has chrome and platinum operations in South Africa’s Bushveld, has made clear its interest in the potential of Zimbabwe, which holds the world’s second-largest platinum deposits after neighbouring South Africa.

The company, however, has a market capitalisation of only 5.5 billion rand ($464 million), although it is well regarded by many city analysts and its share price has rallied 15 percent this year.

HSBC initiated covered of the stock on Thursday, rating it a buy. It predicted it would have a net cash position of $185 million by the end of 2022 and said platinum prices should benefit from continued supply curtailment in South Africa because of regulatory and funding uncertainty.

Foreign investment stalled in Zimbabwe during the later years of Mugabe’s reign.

Analysts say the outlook is still uncertain, but interest is strong in a country that has rich, underexplored resources.

An investment conference on Zimbabwe in London last week was heavily oversubscribed.

On Monday, Mnangagwa’s government amended the Mugabe-era Indigenisation and Economic Empowerment Act, which aimed to increase black Zimbabweans’ ownership of mines by preventing foreign entities holding majority stakes.

The revised law removed that stipulation for most types of mining, but not diamond and platinum mines.

Chitando said Karo Resources was expected to comply with the empowerment law by giving up majority ownership in the project. He did not elaborate.

($1 = 11.8491 rand)

 

(By MacDonald Dzirutwe; Additional reporting by Barbara Lewis in London; Editing by Ed Cropley/Robin Pomeroy/Susan Fenton)

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First Quantum hopes to resolve mammoth $8 bln Zambian tax bill

Comments (0) Actualites, Africa, Canada, Economy, Mining

TORONTO/LONDON (Reuters) – Canada’s First Quantum Minerals on Wednesday was hopeful of resolving a dispute with Zambia over a whopping 76.5 billion Zambian kwacha ($8.07 billion) bill for unpaid duties on imported mining equipment.

Zambia has reduced “significant” tax assessments against it in the past, Chief Executive Philip Pascall said on a conference call with analysts. He declined to speculate on the possible outcome of Zambia’s review of the latest claim, which involves more than 23,000 documents and could take up to six months.

The bill comprises $150 million in higher import duties, $2.1 billion in penalties and $5.7 billion in interest, First Quantum said. It relates to $540 million in mining equipment imported to its Sentinel copper mine between 2012 and 2017.

“We have, in the past, seen assessments that were significant and then the settlement might be reduced considerably,” Pascall said. “In this context, it’s not prudent for us try and speculate.”

The company’s preliminary review of assessment documents, which require approval by the Zambian Revenue Authority (ZRA) before imports are released, show an erroneous application of both higher and lower duties than appropriate, Pascall said.

It was unclear how Zambia calculated the $2.1 billion penalty, First Quantum said, noting that smuggled goods tend to get a 300-percent penalty for customs avoidance, while simple errors typically get a 15-percent penalty.

“This is clearly an eye-watering amount,” Bernstein analyst Paul Gait said in a note to clients, comparing the $8-billion bill to First Quantum’s market capitalization on Wednesday morning of about $9.5 billion.

“If anything like these claims is actually enforced, it will make Zambia largely uninvestable for any mining company, and probably any other industry as well,” Gait said.

First Quantum, which has paid a cumulative $3 billion in taxes to Zambia, said it was unaware why the matter was made public, an unusual move for Zambia. The company’s two copper mines in Zambia are unaffected by the issue.

Zambia, which collected 39.1 billion kwacha in taxes last year, netted 4.4 billion kwacha in hidden assets from small companies after they were offered amnesty for such declarations. Dozens of mining companies operate in Zambia, primarily extracting copper.

The Zambian Revenue Authority said it had started detailed audits on all companies for compliance, suggesting other miners may come under scrutiny.

First Quantum shares dipped nearly 2 percent on Wednesday to C$17.68. Shares sank 12.4 percent in Toronto on Tuesday before trading in the stock was suspended.

($1 = 9.4810 Zambian kwachas)

 

(Reporting by Susan Taylor in TORONTO and Zandi Shabalala in LONDON; Editing by Tom Brown and Bernadette Baum)

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Ethiopia signs $600 million loan, grant deal with World Bank

Comments (0) Actualites, Africa, Economy, Infrastructure

ADDIS ABABA (Reuters) – The World Bank agreed a $600 million loan and grant to Ethiopia on Tuesday to fund roads and other infrastructure projects in urban areas.

The Washington-based bank said the funds would “help strengthen the capacity and performance of local urban governments, expand sustainable urban infrastructure and services, as well as promote local economic development”.

Ethiopia’s urban population is growing by 3.8 percent annually on average, one of the fastest rates in sub-Saharan Africa and presenting challenges to infrastructure, services and jobs, the bank said.

“To successfully manage urbanisation … cities are likely to require fiscal transfers for the foreseeable future. This programme will help cities to realise their revenue potential,” Abebaw Alemayehu, the World Bank’s team leader for the project, said in a statement.

The programme will also support projects in 73 towns across the country and benefit more than 6.6 million people, he said.

Under a 2015-2020 development plan, Ethiopia plans to set up less than 10,000 “rural development centres” in a bid to ease the influx of people to its capital Addis Ababa.

Earlier this month, the World Bank also approved a $375 million loan to Ethiopia to fund a national electrification project.

 

(Reporting by Aaron Maasho; Editing by Susan Fenton)

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Kenya’s central banker urges firms to invest after surprise rate cut

Comments (0) Actualites, Africa, Economy

NAIROBI (Reuters) – Kenya’s central bank hopes its surprise interest rate cut this week will encourage firms to invest more to spur lagging economic growth, Governor Patrick Njoroge said on Tuesday.

Growth slid to an estimated 4.8 percent last year from 5.8 percent the year before, mainly due to a drought, a prolonged presidential election and a sluggish private sector credit growth.

The finance ministry expects growth to rebound to 5.8 percent this year but pressure to rein in the fiscal deficit could see the government scale back on ambitious infrastructure projects, weighing down economic output.

“It really has to be the private sector that picks that up,” Njoroge said. “We will have to re-balance away from public sector driven to private sector driven economic growth.”

Kenya’s total debt has risen to about 50 percent of GDP, from 42 percent in 2013, as it borrowed locally and abroad to build infrastructure including a new railway line from Nairobi to the port of Mombasa.

The government has pledged to cut the fiscal deficit to 7 percent of GDP at the end of this fiscal year in June, from 8.9 percent in 2016/17, and to less than 5 percent in three years.

Monday’s 50-basis-point cut in the benchmark lending rate to 9.5 percent took much of the market by surprise, with seven of 11 analysts polled by Reuters having forecast no change.

Njoroge said a cap on commercial interest rates could interfere with the aim of the easing stance of boosting credit, as banks lock out borrowers who are deemed too risky.

“We may have a perverse reaction, where indeed, the lowering of the CBR rate leads to a reduction in the level of credit,” he told a news conference. “We will stand ready to take any action to counter if it actually began to manifest itself.”

Private sector credit increased by 2.1 percent in the year to February, well below the central bank’s target of 12-15 percent.

Njoroge said the central bank is pushing commercial banks to be less careless in their lending and correctly asses the risk profiles of borrowers when writing loans.

“The point here is not just having low interest rates … the fundamental issue is to have risk-based pricing of loans,” Njoroge said.

 

(By Omar Mohammed; Additional reporting by George Obulutsa; Editing by Duncan Miriri and Andrew Heavens)

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Nigeria and Kenya inching closer to interest rate cuts

Comments (0) Actualites, Africa, Economy

JOHANNESBURG (Reuters) – Nigeria and Kenya will follow Ghana’s lead and cut rates in the third quarter, a Reuters poll found, as long as there is a monetary committee quorum in Abuja and an easier commercial lending policy in Nairobi.

A Reuters poll of 11 analysts for some of Africa’s major central banks, taken in the past four days, found the majority saying Nigeria and Kenya’s benchmark rates will remain at 14.0 and 10.0 percent respectively next week.

Eight of the 12 members still need to be appointed to Nigeria’s Monetary Policy Committee (MPC) – so there is unlikely to be a meeting next week – while Kenya remains hamstrung by a bill limiting commercial lending rates to 4 percentage points above its official rate.

Nigeria’s central bank was forced to cancel its January meeting as it was unable to reach a quorum. But the Senate plans to start screening new members for the interest rate committee after it held up some of President Muhammadu Buhari’s nominees in a political spat.

Inflation in both Nigeria and Kenya slowed recently, making both ripe for easier policy, and according to the poll there will be 200 and 100 basis points worth of cuts coming this year, respectively.

“There is a case for policy loosening in Nigeria and Kenya, but inflation in Nigeria has been stickier at least until February and the delay in appointing new members of the MPC has also held up policymaking,” said John Ashbourne, Africa economist at Capital Economics.

Nigeria has navigated several challenges in the past three years, dealing with dollar shortages and an economy that came out of its first recession in a generation in 2017.

But growth in the last quarter of 2017 rose to 1.92 percent compared to a 1.73 percent contraction in the same period of the previous year.

On Wednesday the International Monetary Fund approved a request by Kenya to extend by six months a stand-by loan that was due to expire at the end of March, giving it time to finish mandatory reviews.

Amending a bill on interest limits for commercial bank loans is one of the conditions the IMF needed to approve the “rainy day” loan facility and so an amendment could happen soon, said Aly-Khan Satchu, CEO of Rich Management in Nairobi.

The bill meant banks decided a large number of borrowers – mainly small traders and informal sector workers – were too risky to receive loans.

Unless the bill is scrapped or modified to take advantage of slower inflation and rates fall further, banks are likely to exclude yet more would-be borrowers from credit – effectively tightening rather than easing monetary conditions.

After 600 basis points worth of cuts in the past two years, Ghana is expected to press on and cut 100 basis points to 19.0 percent later this month and then continue chopping until it reaches 17.0 percent by end-year.

South Africa, Africa’s most industrialised economy, is also closer to cutting rates this year but it depends heavily on a decision by Moody’s ratings agency later this month. [ECILT/ZA]

(By Vuyani Ndaba)

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Mali militia says it obtains U.S. military vehicle from Niger raid

Comments (0) Actualites, Africa, Military, Politics

DAKAR/WASHINGTON (Reuters) – A Malian militia said on Wednesday it had obtained a sport utility vehicle abandoned by U.S. special forces in neighboring Niger during a deadly ambush last October, and offered to return it to the United States.

Four U.S. special forces members and at least four Nigerien soldiers were killed in the raid in the western Niger village of Tongo Tongo by dozens of militants armed with machine guns and rocket-propelled grenades. Islamic State’s West Africa affiliate claimed responsibility.

The ambush marked the first U.S. combat casualties in Niger. It sparked an international debate about America’s covert role tracking Islamist insurgents in the arid and thinly-populated Sahel region, south of the Sahara desert.

It also prompted discussion within the United States about the military tactics being used in remote battlefields. After the incident, President Donald Trump clashed publicly with a congresswoman who accused him of speaking insensitively to the pregnant widow of one of the American soldiers who was killed.

Colonel Mark Cheadle, a spokesman for the U.S. military’s Africa Command, said it was investigating the statement made by MSA-GATIA, a Tuareg militia group in northern Mali, but that it could not confirm its claim to have found the vehicle.

In the statement, which was accompanied by a photo of a beat-up blue Toyota Landcruiser and two military-style rifles, MSA-GATIA said it captured the material from unidentified “armed bandits” on the Mali side of the border with Niger in fighting on March 11 and 12.

“The MSA-GATIA coalition proposes returning this material to American authorities by legal channels,” the statement said.

The militia, composed mainly of ethnic Tuaregs, has frequently clashed with jihadist groups whose influence is on the rise in northern and central Mali.

The jihadists have used Mali as a springboard for attacks into neighboring Niger and Burkina Faso, including coordinated raids on the military headquarters and French embassy in the Burkina Faso capital Ouagadougou earlier this month that killed eight people.

Those attacks have alarmed U.S. officials, who fear that the Sahel could become a new haven for Islamist militants and have deployed hundreds of American troops to train local forces and gather intelligence.

 

(Reporting By Aaron Ross and Phillip Stewart; Editing by Edward McAllister and Peter Graff)

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South Africa’s Q1 business confidence rises 11 points to 45

Comments (0) Actualites, Africa, Business, Economy, Leaders, Politics

(Reuters) – South Africa’s business confidence rose in the first quarter by 11 points in a sign that the country’s economy is picking up pace, a survey showed on Wednesday.

The Rand Merchant Bank (RMB) business confidence index compiled by the Bureau for Economic Research rose to 45 points in the first quarter from 34 points in the fourth quarter but remained below the 50-mark separating the net positive and negative territories.

“First quarter confidence jump is driven more by the expectation that the recent (mainly) market-friendly political development will boost activity levels in future than an immediate improvement in the real economy,” chief economist at RMB Ettienne Le Roux said.

Business confidence was dented by policy uncertainty under the leadership of Jacob Zuma but economists say President Cyril Ramaphosa’s election as leader of the ruling African National Congress in December, and as president last month, has raised expectations that the country will make economic reforms.

South Africa’s economy grew more than expected at the end of last year as agriculture and trade recovered, data showed last Tuesday, boosting its chances of avoiding a potentially debilitating credit ratings downgrade.

Earlier in the month, The South African Chamber of Commerce and Industry’s (SACCI) monthly business confidence index (BCI) fell to 98.9 in February from 99.7 in January as exports, imports and retail sales fell.

“It goes without saying that the current uncertainty around land reform needs to be resolved as quickly as possible. If allowed to linger, the latest rise in the RMB/BER BCI (Business Confidence Index) could easily fizzle out with little or even no enduring positive impact on business capital expenditure and the economy at large,” Le Roux added.

 

(Reporting by Rahul B and Justin George Varghese in Bengaluru; Editing by Matthew Mpoke Bigg)

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Shell, Eni preempt any U.S. probe over Nigeria with filings

Comments (0) Actualites, Africa, Business, Economy, Europe, Leaders, Oil, US

LONDON (Reuters) – Oil giants Royal Dutch Shell and Eni have voluntarily filed to U.S. authorities internal probes into how they acquired a giant field in Nigeria as the companies seek to fight corruption allegations in Europe and Africa.

The filings, to the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), do not mean U.S. authorities are investigating Shell or Eni.  The move shows the companies are trying to preempt questions from the United States as they face one of the oil industry’s biggest-ever graft trials in Italy, to begin in May in Milan, a pending trial in Nigeria and an investigation in the Netherlands.

The case revolves around the purchase of a huge block off oil-rich Nigeria, known as OPL 245, which holds an estimated 9 billion barrels in reserves.

Italian prosecutors allege that bribes were paid in an effort to secure rights to the block in 2011. A number of top executives from both companies – including Eni Chief Executive Claudio Descalzi and former Shell Foundation Chairman Malcolm Brinded – will face trial.

Under Italian law a company can be held responsible if it is deemed to have failed to prevent, or attempt to prevent, a crime by an employee that benefited the company.

Both companies’ shares are traded on U.S. stock exchanges, putting their foreign dealings in the scope of U.S. authorities.

Shell and Eni, on behalf of subsidiaries, in 2010 entered deferred prosecution agreements with the DOJ over separate Nigerian corruption allegations.

Those pacts dismissed charges after a certain period in exchange for fines and an agreement to fulfil a number of requirements. They concluded in 2013 and 2012, respectively.

“A company’s disclosure of alleged foreign corruption to both the SEC and the DOJ in the U.S. typically means the company believed U.S. authorities needed to be made aware of this, and both agencies have the authority to prosecute under the (Foreign Corrupt Practices Act, or FCPA),” said Pablo Quiñones, executive director of the New York University School of Law program on corporate compliance and enforcement.

Quiñones previously worked as chief of strategy, policy and training at the DOJ’s criminal fraud section, a role that included helping to develop FCPA enforcement policy.

The SEC and the DOJ declined to comment on the company disclosures or whether they were looking into any allegations surrounding the block.

Eni noted its disclosure in an SEC filing, in which it said “no evidence of wrongdoing on Eni side were detected”. Shell has said publicly that it submitted the investigation to U.S. authorities and to Britain’s Serious Fraud Office.

Shell and Eni deny any wrongdoing. They say their payments for the block, a total of $1.3 billion, were transparent, legal and went directly into an escrow account controlled by the Nigerian government.

The companies and legal experts say the trial will last more than a year, with potential appeals stretching several years beyond that.

“The risk for companies is of a prolonged period of exposure to open court allegations from a state prosecutor of impropriety,” Anthony Goldman of Nigeria-focused PM Consulting said. “That will be painful and damaging.”

The Milan prosecutor charges that roughly $1 billion of the payments were funnelled to a Nigerian company called Malabu Oil and Gas, which had a disputed claim on the block, and former oil minister Dan Etete, who British and U.S. courts have said controlled Malabu. Reuters has been unable to reach Etete or Malabu for comment.

Shell has since said it knew some of the money would go to Malabu to settle its claim, though its own due diligence could not confirm who controlled the company. Eni said it never dealt with Etete or knew he controlled the company, but that the government promised to settle all other claims on the block as part of their deal.

“If the evidence ultimately proves that improper payments were made by Malabu or others to then current government officials in exchange for improper conduct relating to the 2011 settlement of the long standing legal disputes, it is Shell’s position that none of those payments were made with its knowledge, authorisation or on its behalf,” Shell said in a statement.

 

CONTROL AT RISK

The proceedings have also brought together investigators in several countries, with authorities in Nigeria and the Netherlands sending information to Milan.

A Dutch anti-fraud team in 2016 raided Shell offices as part of the investigation, and a Dutch law firm has asked prosecutors to consider launching a criminal case in the Netherlands.

“I’m not aware of many cases where this many jurisdictions have been at work for so long helping each other out. The amount of cooperation is very unusual,” said Aaron Sayne of the Natural Resource Governance Institute, a non-profit group that advises countries on how to manage oil, gas and mineral resources.

A case by Nigeria’s financial watchdog, the Economic and Financial Crimes Commission, against defendants including the former attorney general, ex-ministers of justice and oil and various senior managers, current and former, from Shell and Eni, will continue in June.

There has also been at least one effort to take away the asset. Experts say it is worth billions, and Shell has spent millions developing it. Eni intends to make a final investment decision this year on developing the block and said in corporate filings that the asset has a book value of 1.2 billion euros ($1.5 billion).

The Italian court does not have the ability to rescind rights to the block, and Nigerian oil minister Emmanuel Ibe Kachikwu has said the companies should continue to develop it.

But in a lawsuit filed by the Nigerian government against JPMorgan in London for the U.S. bank’s role in transferring money from the deal, it called the agreement that facilitated Shell and Eni’s purchase “unlawful and void”.

A JPMorgan spokeswoman previously said the firm “considers the allegations made in the claim to be unsubstantiated and without merit”.

Additionally, a Nigerian court last year briefly ordered the seizure of the block.

That decision was later overturned, and Shell and Eni say they are not worried about losing the asset. But the ruling and the language in the government’s suit against JPMorgan underscore the risk.

“It’s a nice, stable asset that could produce a lot of oil for a long time,” Sayne said.

($1 = 0.8127 euros)

 

(Reporting by Libby George; Additional reporting by Stephen Jewkes and Emilio Parodi in Milan and Ron Bousso in London; Editing by Dale Hudson)

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Spotify enters into the South African market

Comments (0) Actualites, Africa, Business, Economy, Entertainment and Lifestyle, Technology

JOHANNESBURG (Reuters) – Global music streaming provider Spotify launched its services in South Africa on Tuesday, marking its entry into Africa, where there is a rapid uptake of smartphones and improving telecommunications infrastructure.

The Swedish company, launched in 2008 and available in more than 60 countries, is the biggest music streaming company in the world and counts services from Apple Inc, Amazon.com Inc and Alphabet Inc’s Google Play as its main rivals.

The South Africa launch comes as Spotify prepares for a direct listing of its shares on the New York Stock Exchange, which will allow investors and employees to sell shares without the company raising new capital or hiring Wall Street banks to underwrite the issue.

“We believe South Africa is a wonderful country to start in,” Spotify Managing Director in Middle East and Africa Claudius Boller told Reuters on the sidelines of the launch.

“We looked at the technology landscape, we looked at the maturity and actually South Africa is seen globally as a very important music market.”

Spotify also has aspirations to branch out into the rest of Africa, Boller said, without committing to timelines or geographies.

An increase in connectivity across South Africa, helped by higher investment in infrastructure, as well as a growing uptake in credit cards and bank accounts has drawn global video and music streaming providers.

Its music streaming market is dominated by players such as Apple Music, Google Play, France’s Deezer and Simfy Africa, with only a few local operators such as mobile phone operator’s MTN and Cell C with MTN Music+ and Black.

Internet and entertainment firm Naspers also recently launched music streaming platform Joox, from China’s Tencent, in which it holds a 33 percent stake.

In its filing to list its shares, Spotify said its operating loss widened to 378 million euros ($465.32 million) in 2017 from 349 million euros.

($1 = 0.8123 euros)

 

(Reporting by Nqobile Dludla; editing by Jason Neely and Pritha Sarkar)

 

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