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ArcelorMittal SA plans $323 mil rights issue, plus possible bond

8 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – ArcelorMittal’s South African business plans to raise up to $323 million through a rights issue and is considering a $350 million bond issue, it said on Friday, as it battles falling steel demand, rising cheap imports and higher costs.

Steel companies around the world are grappling with a global supply glut that has sent producers’ share prices to their lowest levels in more than a decade and prompted the ArcelorMittal parent company to cut its full-year profit guidance on Friday.

ArcelorMittal SA, Africa’s biggest steelmaker, plans to raise between 4 billion rand and 4.5 billion rand ($322.77 million) from new shares that could dilute the current shareholding by 30 percent, it said after flagging an annual loss expected to be 11 times bigger than last year’s 277 million rand.

The cash call, at least 14 percent bigger than the company’s market capitalisation, is fully underwritten by the parent company.

The South African business is also considering issuing up to $350 million of bonds, finance chief Dean Subrimanian told Reuters.

“The bond would be subject to how much we raise on the rights issue,” he said.

The company said it would use the money to pay off debt, which stands at 3.2 billion rand, with the balance used for operational and capital expenditure.

Shares in ArcelorMittal SA fell as much as 12.6 percent to their lowest level in 14 years on Friday. By 1125 GMT, the stock had recouped some of the losses to trade 6 percent lower at 7.36 rand.

 

JOB CUTS

To cope with weak demand and rising costs, the company has said it would close parts of its Vereeniging Works plant and cut about 283 jobs as part of a review of its operations.

Along with industry rivals, ArcelorMittal SA has also asked the South African government to introduce import and anti-dumping tariffs to help them compete against cheap steel coming mainly from China.

“If we go, the industry goes.” Chief Executive Paul O’Flaherty told reporters on Friday.

ArcelorMittal SA reported 16 percent higher output in the quarter to Sept. 30, but sales to China fell 20 percent.

“Market conditions are expected to remain tough and all our units are expected to maintain their current below-capacity production levels,” it said

Separarely, the company and its raw material supplier Kumba Iron Ore have amended their supply agreement, under which ArcelorMittal SA paid costs plus 20 percent for iron ore.

Under the new deal, ArcelorMittal SA would pay an export parity price, or the price Kumba can expect to get if its product is exported, that would be discounted by as much as 7.5 percent depending on the market price of iron ore.

“This pricing amendment is commercially acceptable and sustainable for both parties,” Kumba Chief Executive Norman Mbazima said in a statement.

 

(Editing by Tiisetso Motsoeneng and David Goodman. By Zandi Shabalala. Reuters)

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South Africa’s rand falls to record low on strong U.S. jobs data

7 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand weakened sharply to a record low against the dollar after firmer-than-expected non-farm payrolls data from the United States on Friday.

By 1413 GMT the rand had slipped 2.0 percent to 14.1700, its weakest level ever against the greenback as the growing likelihood of a rate hike by the Federal Reserve in December pressured emerging assets.

“The move is dollar bound, because of the non-farm payrolls. It means they (U.S. Fed) can start lifting interest rates and that is obviously bad for the rand,” NKC African Economics chief economist Christie Viljoen said.

The local unit ignored central bank data showing domestic net gold and foreign exchange reserves edged up slightly to $41.308 billion in October but succumbed to dollar strength following the positive jobs data.

The dollar rose to a 6-1/2 month high after the U.S. jobs report beat expectations, increasing 271,000 last month to its largest rise since December 2014.

Stocks also fell, with the blue-chip index down 2.5 percent to 47,332 points following the U.S employment figures.

 

(Reporting by Mfuneko Toyana; Editing by James Macharia, Reuters)

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An Untapped Resource: Emerging Fields of Employment for Women in the Middle East

6 November 2015 Comments (0) Business, Featured, Middle East

middle east women in tech

Echoing global trends, in the Middle East the number of women pursuing a university degree is equal to, or higher than the number of men. In Kuwait, Qatar, Saudi Arabia, and Jordan women constitute respectively 67%, 63%, 57%, and 51% of university graduates. Arab women outnumber men in even the hard sciences. Indeed, the number of female STEM graduates is higher in the Middle East than it is in Western Europe. But as of yet, these advances in education have not translated into jobs. The number of women in paid employment in the MENA region is the world’s lowest, at 32%. In Jordan that figure is 16%. And women are more than three times as likely to be unemployed as men in Saudi Arabia and Qatar. In Kuwait, nearly 80% of the unemployed are women.

Persistent social and economic barriers – both perceived and real – are standing in the way. How will women travel to work when they’re not allowed to drive? Who will escort them? Who will look after their children? And what happens if they become pregnant? Comprehensive female employment will require governments to enact new laws. And it will require companies to create separate offices, bathrooms, entrances, and more.

However, representing a highly educated talent pool and an untapped resource that could offer the region a competitive advantage, women are perfectly qualified to play a productive role in the workforce. And indeed, there are now some positive signs that fields of female employment are starting to emerge and that businesses are starting to capitalize on the potential of Middle Eastern women.

More female Internet entrepreneurs in the Middle East than in the West

Technology is playing a significant role. In a region where nearly a third of the 355 million population are aged 15 to 25, Internet and social media penetration is very high. Nearly 90% access the web from home (except in Jordan and Egypt where the figure is 44%-50%). And nearly nine in ten Internet users log in to social media every day. Nowhere in the world does Twitter have more active users in proportion to the population than in Saudi Arabia. Unsurprisingly, the region is also the world’s fastest-growing e-commerce market.

The combination is creating opportunities for women, allowing them to set up small businesses from home where they can at once conform to traditional social norms and work. Indeed, where only 10% of Internet entrepreneurs across the world are women, in the MENA region that figure is 35%.

sheburgerJust a few examples: Emirati Shaikha Eissa has built a successful burger company, She Burger, on Instagram utilizing her 25,000 followers. Mona Ataya has launched a baby product retail site, Mumzworld, targeting female shoppers, which employs 40 people and sells more than 100,000 products. And prominent Palestinian Instagrammers Ruba Abdulhadi and Badea Jaber, have brought luxury western fashion to the Middle East with an e-shop, ElMuda.com, which leverages social content.

ElMuda.com was supported by Oasis500, the first early stage and seed investment company in Jordan and the MENA region. And there are many other bodies similarly investing in the region’s female entrepreneurs. The Gaza Sky Geeks accelerator is actively working to increase women’s leadership in the Gaza start-up sector. Girls in Tech is working to inform women in urban and rural communities around the world about the possibilities that tech can open up. And the US State Department has a TechWomen initiative which pairs MENA female tech entrepreneurs with American counterparts in Silicon Valley.

Fetchr is revolutionizing Middle Eastern delivery with a female workforce

E-commerce is also creating further employment opportunities for women. For example, GPS delivery app Fetchr has developed a female workforce to revolutionize delivery in the region. Currently, much of e-commerce is paid for cash on delivery (60%), but if a woman is home alone she won’t answer the door for a male driver. This results in returned products, lag times in payment, and repeat delivery trips. In solution, Fetchr, operating in Saudi Arabia, Dubai, and Bahrain, has employed women to make the deliveries.

Co-founders Joy Ajlouny and Idriss al-Rifai say: “In Saudi Arabia, women are not allowed to drive. Our deliverywomen will not be driving, they’ll just be knocking on doors. And because Saudi law dictates that all women must be accompanied in public spaces by a mahram, a male-relative or in-law escort, Fetchr employs family teams. Father-daughter, brother-sister, uncle-niece.” The company is also actively hiring female drivers in the UAE where women are allowed to drive.

Creating new business spaces for women

Fetchr is not the only company capitalizing on the business benefits of a female workforce. In Saudi Arabia, the Olayan Group, a 30-company conglomerate led by Lubna Olayan, is similarly committed to female employment. The Group, which deals in investing, real estate, manufacturing and distribution for foreign brands including Coca-Cola, Ritz Crackers, and Oreos, currently employs some 400 women (3% of its 12,000 Saudi-based employees). It has set a target to have 1,000 female employees in roles at all levels, from the factory floor to sales and management, by 2016.

Lubna Olayan

Lubna Olayan

The Group’s first female employees, mostly disadvantaged women, made history when they became Saudi Arabia’s first ever female factory workers, sewing surgical gowns at Enayah. Coca-Cola bottling now has an all-female bottling line. And Nabisco Arabia has a woman-only production line. Olayan companies have installed female prayer rooms and created partitions in offices, canteens, and factory floors to give their women workers privacy in line with regulations. There are also women-only buses to and from work.

Because yes, in the short term female employment in the MENA region will take some investment. But in the long term, capitalizing on the potential of a whole sector of society will also come with benefits.

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Botswana’s August trade balance slips to $159 mil deficit y/y

6 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

GABORONE (Reuters) – Botswana’s trade balance swung to a 1.7 billion pula ($159 million) deficit in August from a 1.82 billion pula surplus in the same period last year due to a sharp fall in diamond exports, the statistics agency said on Friday.

On a month-on-month basis, the trade balance recorded a 1.7 billion deficit in August compared with a 486 million pula in July.

The data shows that while imports remained relatively flat, the August month-on-month deficit was driven by a significant 34 percent decline in exports from 4.6 billion pula to 3.03 billion pula.

 

(Writing by Mfuneko Toyana; Editing by James Macharia, Reuters)

 

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Mauritius tourist arrivals rise 10.4% in 10 months to Oct

6 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

PORT LOUIS (Reuters) – The number of tourists visiting Mauritius rose 10.4 percent in the 10 months to October from the same period last year, with more arrivals from Asia, figures showed on Friday.

Tourism is an important component of the economy and a key source of hard currency for the Indian Ocean island state, best known for its luxury spas and beaches.

Arrivals increased to 912,770 during the period, the ministry of Tourism said. Numbers from Asia rose 24.1 percent to 166,487, with visitors from China up 42.4 percent.

“Barring any unexpected circumstances, we should attract an additional 100,000 tourists this year,” Xavier-Luc Duval, the minister of Tourism said in a statement.

Last month Duval told Reuters in an interview that a major focus was boosting numbers during the island’s winter season, running from June to September, by drawing more visitors from India, China, Africa and Russia.

The number of tourists visiting from Europe, which accounts for two-thirds, rose by 9.9 percent to 487,487.

Despite the rising numbers, central bank figures suggested tourist revenues in the first half had fallen by 3.5 percent. The tourism minister said hotels had not seen a revenue fall and the central bank has said it is reviewing its figures.

 

(Reporting by Jean Paul Arouff; editing by Drazen Jorgic and John Stonestreet)

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Tunisian annual inflation rises to 4.6% in October

5 November 2015 Comments (0) Business, Latest Updates from Reuters, Middle East

TUNIS (Reuters) – Inflation rose to 4.6 percent in October after remaining steady for the past three months at 4.2 percent, official figures showed on Thursday.

The food and drink price index rose 5.6 percent in October from a year earlier, the state statistics institute said.

Tunisia’s central bank said last week it had cut its main interest rate to 4.25 percent from 4.75 percent to boost economic growth, as inflation rates fell.

Inflation dropped to 4.4 percent in the first 10 months of this year, compared with 5.5 percent last year.

The bank does not target a particular inflation rate but says the highest that should be tolerated is 5 percent.

 

(Reporting by Tarek Amara; Editing by Tom Heneghan, Reuters)

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South Africa’s Harmony Gold narrows quarterly loss, output rises

5 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African bullion producer Harmony Gold on Thursday reported a smaller first quarter loss and said it aimed to wipe out its debt over the next two years.

Harmony said headline loss per share for the three months to end-September totalled 120 cents from a loss of 725 cents in the preceding quarter mainly due to benefits from restructuring and optimising efforts resulting in higher production.

The loss was mainly due to 14 percent weakening of the rand against the dollar in the period, the company said.

Gold production rose 10 percent to 281,385 ounces from 256,465 ounces in the previous quarter.

South Africa’s gold industry is being squeezed by falling prices and rising costs such as electricity and labour and companies are slashing costs to stay afloat.

By the end of September, Harmony had cash of 1.5 billion rand ($1078 million) and debt totalling $250 million.

Chief financial officer Frank Abbott told reporters on a conference call that the company intended to repay all its debt over the next two years before spending on its Golpu mine in Papua New Guinea intensified.

“The intention is to repay our debt over the next two years so when the bigger funding starts at Golpu we are sitting with a balance sheet without debt,” he said.

Harmony, which reaps about 90 percent of its gold from South Africa, expects to start a study on the second stage of development of its Golpu mine by December 2015.

Harmony said it expected the gold price to remain flat in the medium term but expected a long term recovery due to gold being used as an investment tool and store of value.

(Reporting by Zandi Shabalala; Editing by James Macharia, Reuters)

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Lonmin faces collapse if shareholders reject $400 mln cash call

4 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Lonmin, world’s No.3 platinum miner, urged shareholders to approve a $400 million equity cash call at a meeting next week, saying in a document posted on its website the injection was crucial to its survival.

Lonmin’s shares in London fell 6.8 percent to 23.93 pence by 1223 GMT. The Johannesburg-listed stock was down by 8 percent at 5.00 rand.

Battered by strikes, rising costs and weak platinum prices, Lonmin said last month it planned to raise the money and another $370 million in bank loans to refinance debt due in May 2016.

The firm, founded in 1909 as the London and Rhodesian Mining and Land Company, said that if shareholders do not approve the rights issue at a meeting on Nov. 19, lenders would not provide the loans to push back the maturity of the 2016 debt to 2020.

“As a result, the group may have to cease trading at some point between December 2015 and May 2016 and shareholders could lose the entire value of their investment,” the company said on its website.

Lonmin was hit harder than other producers by the platinum mining strike in 2014, South Africa’s longest and costliest, as unlike its peers, virtually all its operations are concentrated in the strike-affected Rustenburg area.

To try to turn around its fortunes, the miner announced a plan in July to close or mothball several mine shafts, putting thousands of jobs at risk. It employs around 38,000 staff, including contractors.

 

SOME SUPPORT

The cash call has the backing of Lonmin’s third-largest shareholder, the Public Investment Corporation (PIC), which has said it was willing to take up more than it is entitled to. The South African government-owned PIC owns about 7 percent of Lonmin.

The company said the Bapo Community, which owns 2.24 percent of its shares, would also back the rights issue.

Other top four shareholders in the company include South Africa’s Kagiso Asset Management, Capital World Investors and Old Mutual Investment Group.

Lonmin said the new shares would be issued at a “significant discount”, underscoring a more than 80 percent tumble in its stock price over the past year.

“We see this as a particularly stark warning by Lonmin but it is a reminder of the extreme pressures faced in the South African platinum industry,” Investec said in a note.

Spot platinum has fallen by about 20 percent over the last year to levels last seen in 2009 due to oversupply concerns and slowing demand in top consumer China.

 

(Reporting by Zandi Shabalala; Editing by Tiisetso Motsoeneng and Louise Heavens, Reuters)

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Zambia lifts benchmark rate to record 15.5% to curb inflation

3 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LUSAKA (Reuters) – Zambia’s central bank raised its benchmark lending rate to a record 15.5 percent on Tuesday to curb soaring inflation which nearly doubled last month as the currency of the African copper producer weakened sharply.

The rate hike, the first since November 2014, also came after a steep fall by Zambia’s kwacha brought on by tumbling copper prices as the consumption in top copper consumer China slowed along with its economy.

The southern African nation had kept the key rate unchanged at 12.5 percent in August, saying it predicted inflation would breach the regulator’s 7 percent target by year end.

“Keeping inflation expectations anchored in single digits is critical,” Central Bank Governor Denny Kalyalya said.

But consumer prices rose to 14.3 percent from 7.7 percent in September, as Zambia’s currency weakened.

The central bank also lifted the cap restricting commercial bank lending rates to a maximum 24.5 percent to allow better functioning of the credit market, Kalyalya said.

The Zambian kwacha firmed 1.36 percent to 12.41 after the rate hike but later traded up 0.56 percent at 12.5000.

“This should allow the kwacha to at least stabilise,” Standard Chartered Bank Africa economist Razia Khan said.

“A more significant reversal of recent losses would require some turnaround in copper prices and much higher interbank rates.”

Economic growth is expected at 4.6 percent in 2015 due to weaker global activity and lower commodity prices as well as a domestic electricity crunch, but would tick up to 5 percent next year, finance minister Alexander Chikwanda said in the 2016 budget speech.

Zambia suffers from severe power shortages. The state utility firm Zesco Ltd has cut the electricity supply to mining firms and doubled prices for other industrial users and household consumers.

Despite these measures, the price of copper, Zambia’s main export, was still low and power outages were expected to continue putting pressure on the kwacha and spiralling inflation, BanABC head of Treasury John Mapiye said.

“We expect yields to rise and that may attract foreign portfolio investment in securities and help strengthen the kwacha temporarily,” Mapiye said.

“The cost of borrowing will increase and ultimately this will filter down to the consumer hence we still expect to see an upward spiral in the rate of inflation.”

 

(By Chris Mfula. Additional Reporting by Nqobile Dludla in Johannesburg; Editing by James Macharia and Raissa Kasolowsky. Reuters)

 

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Siemens could expand Egypt power deal, says CEO

1 November 2015 Comments (0) Business, Latest Updates from Reuters, Middle East

FRANKFURT (Reuters) – Siemens could win an expansion of its record 8 billion euro ($8.8 billion) power deal with Egypt, the German industrial group’s chief executive said in a staff newsletter.

Joe Kaeser said Egypt, whose state-run electricity grid is creaking under the weight of fast-growing demand, needed extra capacity before the start of the hot summer months – faster than Siemens could build new turbines under the existing deal.

“We had to come up with a good plan as to how we could help – and this plan pleased the president,” Kaeser said after a trip to Egypt during which he met President Abdel Fattah al-Sisi.

“We have a handshake on which we can build,” he added in the interview with Siemens Welt seen by Reuters on Friday.

The extra capacity would be 800 megawatts, which would be produced by upgrading existing power stations and putting into place decentralised power-generation units, Kaeser said. He did not say how much the deal could be worth.

The 8 billion-euro deal signed in June was for 16.4 gigawatts and is designed to boost Egypt’s power-generation capacity by 50 percent after going online in 2017.

 

(Reporting by Georgina Prodhan; Editing by Mark Potter, Reuters)

 

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