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Zimbabwe wants mining companies to list on local exchange

Comments (0) Actualites, Africa, Economy, Mining

HARARE (Reuters) – Zimbabwe wants mining firms to list on the local bourse as part of efforts under new president Emmerson Mnangagwa to boost investment and local ownership of its vast mineral resources, a new bill before parliament showed.

Mnangagwa, who took power in November when the military ousted Robert Mugabe after nearly four decades, has vowed to revitalise the economy and unlock investment in the mining sector after years of reticence by foreign investors.

“No mining right or title shall be granted or issued to a public company unless the majority of its shares are listed on a securities exchange in Zimbabwe,” the bill says.

Companies seeking rights to mine in the platinum-rich country but already listed elsewhere must notify the mines minister and use the funds from such public offers to develop the mine in Zimbabwe, the bill said.

A failure to comply would mean a liability of a fine equivalent to 100 percent of the cash raised at the foreign listing or as much as 10 years in prison.

Industry lobby group, Chamber of Mines, said its members were not opposed to the proposal to list on the local bourse but warned that exchange may not be deep and liquid enough for companies to raise capital.

“Our members are not averse to listing on the local bourse but it has no capacity to meet the needs of the members,” Chief Executive Isaac Kwesu said.

“Mining is a capital intensive business and some of our larger mines are listed on foreign exchanges because they are able to raise large amounts for working capital and for investment.”

Four mining companies, including Canada’s Falcon Gold and local diversified miner RioZim, are listed on the Zimbabwe Stock Exchange, which has a market capitalisation of around $8 billion.

 

(Reporting by Alfonce Mbizwo, editing by David Evans)

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Time to cut? Nigeria central bank gathers for first 2018 meeting

Comments (0) Actualites, Africa, Economy

LONDON (Reuters) – The Nigerian central bank’s monetary policy committee will finally meet on Wednesday to set interest rates for the first time this year.

Interest rates have been stuck at a record high of 14 percent since July 2016. However, the committee had to cancel its January meeting due to an inability to form a quorum following a number of departures that reduced it to just five out of 12 members.

A majority of analysts taking part in a Reuters poll said they expected rates to stay on hold for now, but that they would be cut later in the year.

Here are three graphics showing Nigeria’s changing economic dynamics.

 

1/ EASING PRESSURE

The pace of inflation has steadily slowed since the start of 2017, with the core reading hovering close to the 12 percent mark. And with exchange rates fairly stable and demand-related pressures absent, inflation rates could be sinking further, making Nigeria ripe for easier monetary policy.

“After a year of lethargic disinflation, the drop in headline inflation to 14.3 percent in February 2018 ignites hope that inflation is still on a steady course towards the target 9.0 percent ceiling and that conditions could continue improving to favour unwinding the present hawkish monetary stance,” StratLink wrote in a note to clients.

 

2/ WHERE’S THE GROWTH?

Nigeria returned to growth in 2017 with the economy expanding 0.83 percent after shrinking by 1.58 percent in 2016, which was its first annual contraction in 25 years. However, latest growth figures are still well below its potential, the recovery has been fragile, and private sector credit lending lacklustre.

Political stalemate has been a common occurrence in Nigeria and has hampered reforms, while lawmakers still have to pass the 2018 budget. But with elections coming up in 2019, the heat is on for policy makers to help stimulate growth.

“The main focus will be to try and do something positive to the economy, to try to kickstart bank lending to the economy against a very weak backdrop, where the budget has not been passed and money supply is weak,” said Razia Khan, chief economist for Africa at Standard Chartered.

 

3/ RISING BUFFERS

Meanwhile a recovery in oil prices, successful debt sales including rolling local into external debt, and a significant amount of portfolio investment have helped replenish the central bank’s coffers. In March, foreign exchange reserves stood at $46.2 billion – a near 9 percent jump month-on-month.

Nigeria’s foreign exchange buffer has climbed 53 percent since March 2017 when it stood at $30.30 billion – though reserves remain far from the peak of $64 billion in August 2008.

 

(Reporting and graphics by Karin Strohecker; Editing by Gareth Jones)

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South Africa cuts main interest rate as inflation falls within range

Comments (0) Actualites, Africa, Economy

PRETORIA (Reuters) – South Africa’s central bank cut its main interest rate to 6.5 percent on Wednesday, in another boost for the economy after ratings agency Moody’s left intact its last investment-grade credit rating.

Traders and economists had expected the 25 basis-point cut in the repo rate after a slowdown in consumer price inflation to 4.0 percent in February, which put price growth well within the central bank’s 3-6 percent target range.

It was the first easing step since July and comes as South Africa rides a wave of investor optimism in the wake of President Cyril Ramaphosa replacing scandal-plagued Jacob Zuma as head of state in February.

The rand fell, however, as the rate cut dents somewhat the appeal of local assets versus developed-market peers. Banking stocks also fell.

South African Reserve Bank Governor Lesetja Kganyago told a news conference that inflation risks had subsided somewhat since January and that the bank had raised its economic growth forecast for this year to 1.7 percent from 1.4 percent.

But he said that the bank had not started “a journey of cutting” and that the future path of the repo rate would depend on data.

Four members of the Monetary Policy Committee voted to cut the rate while three wanted to keep it on hold, Kganyago said. There was no discussion of a more aggressive 50 basis-point rate cut.

Despite the central bank’s broadly upbeat tone, Kganyago said that the growth outlook remained relatively constrained and that the policy-setting committee would prefer to see inflation expectations anchored closer to the midpoint of its target range.

Analysts said they were not expecting to see a flurry of further rate cuts.

Razia Khan, an Africa-focused economist at Standard Chartered, said: “We think that today’s 25 basis-point cut was probably it in terms of South Africa’s easing cycle”.

Moody’s said on Friday that it expected to see a strengthening of South Africa’s institutions under Ramaphosa which could translate into greater economic and fiscal strength.

S&P Global, another of the “big three” ratings agencies, said it wanted to see stronger per capita growth before it would consider raising its credit rating.

 

(Reporting by Olivia Kumwenda-Mtambo and Nomvelo Chalumbira; Writing by Alexander Winning; Editing by James Macharia and Hugh Lawson)

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Djibouti plans new container terminal to bolster transport hub aspirations

Comments (0) Actualites, Africa, Business, Economy, Infrastructure

ABIDJAN (Reuters) – Djibouti is in talks with French shipping company CMA CGM to develop a new container terminal at an initial cost of $660 million as part of the tiny African country’s bid to expand into a sea and air transport hub for the continent.

Aboubakar Omar Hadi, chairman of the Djibouti Ports and Free Zone Authority (DPFZA), told Reuters on Tuesday that the authority hopes to award the concession in July. It was also prepared to buy out DP World’s stake in an existing container terminal to end a row with the Dubai port operator and avoid arbitration, he said.

Djibouti’s strategic location has led the United States, China, Japan and former colonial power France to build military bases there.

Its ports already serve as an entry point for cargo which is then sent by smaller vessels to ports along Africa’s eastern coast, but it is now seeking to become a sea-air transshipment hub for the entire continent.

To do this, Hadi said DPFZA was also planning to construct a $350 million airport and expand Air Djibouti’s fleet of cargo aircraft.

The new container terminal project could break ground as early as September with construction expected to take 24 months, Hadi said, speaking on the sidelines of the Africa CEO Forum in Abidjan, Ivory Coast.

“We are going to build DICT, Doraleh International Container Terminal. This is a new plan,” he said. “We are in discussions with CMA CGM.”

The port authority was not in talks with any other potential partners, he said. CMA CGM did not immediately respond to a request for comment.

Once operational, Hadi said the port terminal would boast an annual capacity of 2.4 million twenty-foot equivalent units (TEU), but subsequent expansion phases would bring that up to 4 million TEUs.

Fifteen percent of the project’s cost will be financed through equity. Of that, the DPFZA will contribute 85 percent, with its concession partner providing 15 percent. The rest will be raised via international institutions and banks.

“We are targeting trans-shipment,” Hadi said.

 

DP WORLD DISPUTE

Meanwhile, Hadi said the port authority was ready to end a dispute with DP World over its cancellation of a concession contract for another facility, the Doraleh Container Terminal, by buying out DP World’s 33 percent stake.

Djibouti ended the contract with the Dubai state-owned port operator last month, citing a failure to resolve a dispute that began in 2012.

DP World has called the move illegal and said it had begun proceedings before the London Court of International Arbitration, which last year cleared the company of all charges of misconduct over the concession.

“We are prepared to pay them their 33 percent of shares,” Hadi said. “There is no need for arbitration. We are going to buy their shares.”

 

(Reporting by Joe Bavier; Additional reporting by Gus Trompiz in Paris; Editing by Aaron Ross and Susan Fenton)

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South African rand at one-month peak after Moody’s rating reprieve

Comments (0) Actualites, Africa, Economy

By Olivia Kumwenda-Mtambo

JOHANNESBURG (Reuters) – South Africa’s rand raced to a one-month high against the dollar on Monday and government bonds firmed as investors cheered Moody’s decision to change the country’s credit outlook to stable from negative while affirming an investment-grade rating.

Moody’s late on Friday affirmed South Africa’s debt at ‘Baa3’, the lowest rung of investment grade, saying the previous weakening of national institutions was gradually reversing which supported an economic recovery.

While the decision to affirm the rating was widely anticipated by market participants and largely priced in, the unexpected move to revise the rating outlook boosted markets.

At 0850 GMT, the rand traded at 11.6400 per dollar, 0.94 percent firmer than its New York close on Friday and its firmest level since Feb. 27, Thomson Reuters data showed.

In fixed income, the yield for the benchmark government bond due in 2026 dipped 10 basis points to 7.89 percent, reflecting firmer bond prices.

“What surprised markets on Friday is that Moody’s upgraded the rating outlook from negative to stable – which means that a downgrade is no longer likely even in the medium-term, unless of course new developments overtake us,” Commerzbank analysts said.

On the bourse, banks bucked the weaker trend on the broader market, rising 0.65 percent with FirstRand up 0.8 percent to 69.26 rand.

Banks, considered the barometer of both political and economic sentiment, have largely borne the brunt of previous credit ratings downgrades given their substantial exposure to sovereign debt and various state-owned companies.

INTERESTS RATE CUT?

A downgrade to a “junk” rating by Moody’s would have seen South Africa removed from Citi’s World Government Bond Index (WGBI) and could have triggered up to 100 billion rand ($8.58 billion) in asset sales by foreign investors.

Moody’s is the only major ratings agency that rates South African debt as investment grade after S&P Global Ratings and Fitch downgraded the sovereign to “junk” status last year following a deterioration in the country’s economic outlook.

South Africa has this year seen a return of sorely needed investor confidence since President Cyril Ramaphosa replaced scandal-plagued Jacob Zuma, who resigned in mid-February on the orders of the ruling African National Congress party.

Moody’s decision was likely to influence decision making at the three-day meeting of the South African Reserve Bank (SARB) Monetary Policy Committee, which starts on Monday, Nedbank analysts said.

The interest rates decision will be announced on Wednesday.

As consumer price inflation eases, a Reuters poll conducted before Moody’s review showed markets expect the central bank to cut its repo rate by 25 basis points to 6.50 percent to stimulate economic growth.

Forward rate agreements were on Monday pricing in a 94 percent chance of a 25 basis points rate cut in the benchmark lending rate, up from an 80 percent chance two weeks ago.

“We expect SARB to shift to an easing bias this year,” UBS analysts said. “Still, nominal and real yields should remain attractive compared to peers and support the return outlook for the rand.”

($1 = 11.6487 rand)

(Additional reporting by Tiisetso Motsoeneng; Editing by Peter Graff)

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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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