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South Africa’s AMCU, platinum mines fail to reach wage deal

6 September 2016 Comments (0) Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s biggest platinum mine-workers’ union and the industry have failed to reach a deal on workers’ pay, the union said on Monday, raising the prospect of industrial action in the world’s biggest producer of the white metal.

The Association of Mineworkers and Construction Union (AMCU), which led a crippling five-month strike in 2014, has been in talks with Anglo American Platinum, Impala Platinum and Lonmin since July this year.

 

(Reporting by Tiisetso Motsoeneng; Editing by Ed Cropley)

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Angolan President fires finance minister Manuel

5 September 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

LUANDA (Reuters) – Angolan President José Eduardo dos Santos fired Finance Minister Armando Manuel on Monday two months after the government of Africa’s biggest oil producer broke off talks with the IMF over emergency funding.

In a cabinet reshuffle, dos Santos also replaced his agriculture minister and dropped the powerful Chief of Staff in the presidency, Edeltrudes da Costa, who was implicated in a recent land eviction.

A statement said Manuel, who was appointed in 2013 and whose term had been due to run to 2017, would be replaced by capital markets commission head Augusto Archer de Sousa Hose, more commonly known as Archer Mangueira.

Over the last two years, Manuel had presided over an economic slump caused by a sharp drop in oil prices that sapped dollar inflows, hammered the kwanza and prompted heavy government borrowing.

The kwanza slid more than 30 percent against the dollar in 2015, and in January the central bank allowed for another 15 percent weakening to 155 against the dollar.

The currency was bid at 165/dollar on Monday, according to Thomson Reuters data. On the black market, it has been trading as low as 600.

The weaker currency has seen inflation soar to 35 percent from 10 percent a year ago, forcing the central bank to hike interest rates by 675 basis points since June 2015.

However, it said on Monday it had kept its benchmark rate unchanged at 16 percent at its latest policy meeting.

Before his appointment, 53-year-old Mangueira was President of Angola’s Capital Markets Commission, making him a familiar face to foreign investors, and had recently been brought onto the central committee of the ruling MPLA party.

Diplomats said his promotion was not a major surprise, especially in the wake of the government’s decision in late June to end emergency financing talks, supported by Manuel, with the International Monetary Fund (IMF).

Angola’s economic slump has fuelled opposition to dos Santos’ 36-year rule, although the MPLA re-elected him as its leader last month ahead parliamentary elections in 2017.

 

(Reporting by Herculano Coroado; Writing by Stella Mapenzauswa; Editing by Ed Cropley)

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Despite cuts, Big Oil to expand production into the 2020s

5 September 2016 Comments (0) Business, Latest Updates from Reuters

By Ron Bousso

LONDON (Reuters) – Never mind the drop in crude prices, huge spending cuts and thousands of job losses – the world’s top oil and gas companies are set to produce more than ever for some time.

While top oil companies struggle with slumping revenues following a more than halving of prices since mid-2014 after years of spectacular growth, their production has persistently grown as projects sanctioned earlier in the decade come on line.

Overall production at the world’s seven biggest oil and gas companies is set to rise by around 9 percent between 2015 and 2018, according to analysts’ estimates.

With an expected recovery in prices, the increased production should boost cash flow and secure generous dividend payouts, which had forced companies to double borrowing throughout the downturn.

“There are a lot of projects coming on stream over the next three years that will support cash flow and ultimately dividend,” Barclays analyst Lydia Rainforth said.

And despite a drop in new project approvals, companies have throughout the downturn cleared a number of mammoth undertakings such as Statoil’s Johan Sverdrop oilfield off Norway and Eni’s Zohr gas development off the Egyptian coast.

Others opted to acquire new production, such as Royal Dutch Shell, which bought smaller rival BG Group for $54 billion this year, and Exxon Mobil through investments in Papua New Guinea and Mozambique.

Shell is expected to see the strongest growth among its peers over the next two years at 8 percent, according to BMO Capital Markets.

Production is unlikely to drop after 2020, and could post modest growth as companies continue to bring projects onstream, albeit at a slower pace, BMO analyst Brendan Warn said.

French oil major Total, for example, plans to clear three major projects by 2018 – the Libra offshore oilfield in Brazil, the Uganda onshore project and the Papua LNG project – that will begin production after 2020.

“We won’t see 5 to 10 percent growth that we’ve seen from companies in recent years. It will be closer to 1 or 2 percent,” Warn said.

 

SUSTAINABLE

Capital spending, or capex, for the sector is set to drop from a record $220 billion in 2013 to around $140 billion in 2017 before modestly recovering, according to Barclays.

But companies have learnt to do more with the money after slashing expenditure and tens of thousands of jobs, while the cost of services such as rig hiring dropped sharply throughout the downturn.

“2017 is the sweet spot for integrated companies. It took two to three years to adjust to the drop in oil prices, and a lot of the efficiencies introduced in recent years will roll into 2017, when projects kick in and free cash flow will improve,” Rainforth said.

The resilience is mostly due to new gas projects coming on stream as companies shift towards the less polluting hydrocarbon that is expected increasingly to displace oil demand in coming decades.

The slower pace of project development after a decade of rapid growth that was accompanied by soaring costs will help companies, Warn said.

“That is much more sustainable for a major that will reduce the number of large capex projects.”

 

(Reporting by Ron Bousso; Editing by Dale Hudson)

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The Workers Strike Back: Unions Take Action in South Africa

2 September 2016 Comments (0) Latest Updates from Reuters, Politics

Image: Striking miners dance and cheer after they were informed of a 22 percent wage increase offer outside Lonmin's Marikana mine

In mid-August, an estimated 15,000 workers for the South African power company went on an illegal strike after weeks of wage increase negotiations. Employed by Eskom, South Africa’s largest electricity company, nearly one third of the work force protested the wage ceiling and inadequate housing allowances. Eskom had pre-emptively obtained a court interdict banning employees from striking after negotiations with major unions turned sour. The unions that represent Eskom employees had demanded their wages be increased by 12-13%, but Eskom refused to budge above 7-9%, and claimed wage discrimination as a hangover from apartheid. Workers felt that their grievances warranted more than negotiations, and thus went on strike.

Unpopular Policies

Eskom was established in 1923 and generates approximately 95% of the country’s electricity. Over the past seventy-odd years, Eskom has been the center of a variety of dramatic incidents, but perhaps the most pertinent is their policy of “load shedding.” Beginning in response to inadequate power supplies starting in 2007, Eskom began the practice of load shedding, or regular, scheduled blackouts to reduce the stress upon the electricity grid, turbines and power sources. In order to meet the demand of South Africans with an inadequate supply, different regions are purposely deprived of electricity so that it can be directed elsewhere on a complex schedule. The vast majority of South Africa’s energy comes from aging coal-fired power stations. In what can only be a planned irony, the strike came on the one-year anniversary of “no shedding,” or an entire year without planned power cuts. Eskom had been looking forward to publicizing their success but were instead faced with the possibility of a black-out due to a shortage of workers.

Workers Unite

As South Africa’s largest producer of energy, Eskom is considered a vital service company. In South Africa, workers in vital service industries can be prevented from striking despite their constitutional right to do so. After weeks of negotiations with workers and their unions (primarily the NUM and Numsa, or National Union of Metalworkers of South Africa), Eskom realized workers were likely to strike regardless of the preventative law. They then applied for and were granted an interdict, opening up any workers who did strike for legal action by the company. Eskom’s national spokesman, Khulu Phasiwe, said that workers who did not show up to work because they were striking would have to account managers the reasons for to their absence without leave. 15,000 workers, or about one third of Eskom’s total employee base, considered the strike worth the risk. Workers demonstrated outside power stations in the eastern provinces, while others went on strike across the country.

Eskom workers demanded that their wages be increased incrementally, starting with a “10% increase of the lowest salaries, 8.5% of the highest income and housing allowance of 3,000 rand,” approximately $222 USD. Prior to the strike, the company refused to budge above a 9% increase. According to the country’s largest union, National Union of Mineworkers (NUM), the lowest paid Eskom worker earns about 9,000 rand, or $666 per month. While cost of living in South Africa is lower than in, say, the United States, $666 is not enough to live on, particularly if one is supporting a family.

NUM released a bold statement saying that “the NUM members are very angry at the attitude of Eskom refuses to end the wage system of apartheid.” In various interviews, several workers claimed racial discrimination, and some women claimed gender bias as well. Under apartheid, white South Africans were paid a higher wage for the same job than black South Africans. This legalised and codified racism ended in name with the collapse of apartheid in 1994, but continues in practice to this day in every sector of South African life. All of NUM’s members at Eskom went on strike. It is not just the racially-based wage discrimination that drove workers to strike, but also the unlivable wages they receive for their labor.

The Enemy of My Enemy…

Prior to the strikes, the NUM and Numsa had been bitterly divided over their ideologies and desires. This strike, however, has brought them together: a spokesperson from NUM said “whatever differences we may have with Numsa, we have a common enemy now, which is Eskom.” Eskom ensured the public that negotiations are underway to bring an end to the civil action, but it seems unlikely the issue will be put to rest any time soon.

 

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South Africa’s antitrust body rejects appeal to delay Massmart complaint

2 September 2016 Comments (0) Business, Economy, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African grocery retailers have lost a bid to delay a hearing into a complaint brought by Massmart that accuses them of anti-competitive behaviour, the antitrust watchdog said on Friday.

Large food retailers Shoprite, Spar, Pick n Pay had sought to delay the hearing into Massmart’s complaint on the grounds there is already a wider investigation into factors that could be distorting competition.

Massmart, a division of Arkansas-based Wal-Mart, lodged the complaint in 2014, saying its expansion into the grocery sector was being hampered by lease arrangements that restrict malls from renting out space to rival food retailers.

Known for its Game chain that mainly sells electronic goods, Massmart has been trying to push into the grocery market since Wal-Mart took a controlling stake in 2011, a move that pits it against rivals that also include upmarket food retailer Woolworths.

The Competition Commission has said exclusive clauses in leasing agreements, which can restrict malls from renting out space to rival food retailers for up to 20 years, could be one of the features preventing more competition.

Its sector-wide investigation, which will also examine competition between small informal foreign-owned shops and local stores popularly known as “spazas”, is expected to be completed by the end of May 2017.

 

(Reporting by Tiisetso Motsoeneng; editing by David Clarke)

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South Africa’s cabinet reappoints Zuma ally as head of national airline

2 September 2016 Comments (0) Economy, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s government has reappointed Dudu Myeni as the chairwoman of South African Airways, the loss-making state-owned airline, it said on Friday.

The cabinet said Myeni, an ally of President Jacob Zuma, was appointed alongside 11 other board members to the board of SAA. The new team will meet the Minister of Finance Pravin Gordhan who will provide direction from a shareholder perspective, it said in a statement.

On Thursday a Finance Ministry source said officials in the department had opposed Myeni’s selection, but had managed to push through some preferred candidates to the cash-strapped airline’s new board.

SAA has been surviving on state-guaranteed loans and has failed to submit financial statements for the past two years, with results for 2015/16 held back after the Treasury refused to grant it 5 billion rand ($343 million) in additional loan guarantees.

Myeni’s reappointment comes two days after asset manager Futuregrowth said it had halted lending to state-owned firms over concerns of political interference in their administration.

In December Zuma denied rumours that he had had an affair with Myeni or that their ties had led to the sacking of then-finance minister Nhlanhla Nene, who had rebuked Myeni for mismanaging a 1 billion-rand deal with Airbus.

Critics say government plans to form a new committee to be supervised by Zuma that would oversee state-owned enterprises like SAA will limit Gordhan’s control over firms.

The rand has slid more than 8 percent against the dollar since Aug. 23, also on renewed fears that Gordhan could be charged over the activities of a surveillance unit set up when he was head of the tax department which police say illegally spied on politicians.

($1 = 14.5933 rand)

 

(Reporting by TJ Strydom; Writing by Stella Mapenzauswa; Editing by Greg Mahlich)

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Rwanda signs $818 mln deal for new international airport

2 September 2016 Comments (0) Africa, Business, Economy, Latest Updates from Reuters

By Clement Uwiringiyimana

KIGALI (Reuters) – Rwanda has signed a deal with the African division of Portuguese construction firm Mota-Engil to build an international airport at a cost of $818 million, the company and government officials said.

They said the first phase of the airport, which is part of a push to attract more tourists and boost Rwanda as a conference destination, would cost $418 million and is expected to start in June next year and be completed by December 2018.

Rwanda’s plans for the new Bugesera International Airport date back to 2011 when it first announced it was seeking bids from the private sector to design, build, finance, maintain and operate the airport through a 25-year concession.

“The first phase is for 1.7 million passengers (per year) capacity and it gets all infrastructure associated for $418 million,” Mota-Engil Africa Chief Executive Officer Manuel Antonio Mota told reporters late on Thursday after signing an agreement with government officials.

Rwanda said in a statement that Mota-Engil would operate the airport for 25 years, with an option to extend another 15 years.

When it first sought bids, the government said the first phase would involve building passenger and cargo terminals and a 4.2 km runway to handle large commercial airplanes, while the second phase would be for a second runway and more terminals.

Mota-Engil said the second phase costing $400 million was expected to raise the airport’s handling capacity to 4.5 million passengers per year.

Neither Mota-Engil nor the government said when the second phase would start.

The existing international airport in the capital Kigali has an annual capacity of 1.6 million, according to the Rwanda Civil Aviation Authority, though it has little scope for expansion.

“Bugesera International Airport is coming in at the time when it is badly needed because we all know that the current airport capacity is not matching the growth of our traffic in terms of aircrafts, in terms of passengers,” James Musoni, Rwanda’s minister for infrastructure, said.

The coffee and tea producing country expects its economy to grow 6 percent this year and 2017 and then 6.5 percent in 2018.

 

(Editing by George Obulutsa and David Clarke)

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Kenya sees tourism revenues rising 18 pct to 100 bln shillings

1 September 2016 Comments (0) Business, Economy, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya sees earnings from tourism rising to 100 billion shillings ($990 million) in 2016, helped by improved security, infrastructure and marketing, the president’s office said on Wednesday.

The office did not give a comparative figure, but in June, Tourism Minister Najib Balala said Kenya earned 84.6 billion shillings from tourism in 2015.

Tourism, along with tea, horticulture and remittances are Kenya’s leading sources of foreign exchange.

($1 = 101.2500 Kenyan shillings)

 

(Reporting by George Obulutsa; Editing by Toby Chopra)

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Tunisia’s state airline to cut 1,000 jobs: minister

31 August 2016 Comments (0) Economy, Latest Updates from Reuters

Tunisia's state airline

TUNIS (Reuters) – Tunisair, Tunisia’s state-owned carrier, plans to lay off 1,000 employees or more than 12 percent of its full-time workforce, as part of reform plans, the Transport Minister told Reuters on Monday.

Transport Minister Anis Guedira told Reuters the Tunsiar reforms were planned months ago as part of a programme at the airline made in agreement with major unions to reduce costs and improve competitiveness.

“We will soon lay off 400 employees who have chosen to leave voluntarily and they will receive compensation,” Guedira said. “Job cuts will reach 1,000 in Tunisair in total”.

A source told Reuters the airline will pay about $50 million in compensation to 1,000 employees. The airline currently has around 8,200 full-time workers.

As part of broader reforms, Tunisia’s government is seeking to curb the large losses incurred by major state-owned companies, which last year amounted to about $1.5 billion.

Prime Minister Youssef Chahed has promised his new government will take tough decisions to help the economy grow and create jobs as the country comes under pressure from international lenders to push through reforms and trim public spending.

Public sector wages at about 13.5 percent of gross domestic product are among the highest in the world. The central bank said the government would need to seek more external financing for next year or it would be unable to cover those costs.

Chahed has warned an austerity programme with public sector job cuts will be inevitable if Tunisia does not introduce reforms that include the overhaul of some state-run companies.

 

(Reporting by Tarek Amara; editing by Patrick Markey and Susan Thomas)

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Nigeria in recession as low oil prices shrink economy

31 August 2016 Comments (0) Economy, Latest Updates from Reuters

By Chijioke Ohuocha and Alexis Akwagyiram

LAGOS (Reuters) – Nigeria, Africa’s biggest economy, officially slid into recession for the first time in more than 20 years as the statistics office announced a further contraction in the second quarter of the year.

The Nigerian Bureau of Statistics (NBS) said on Wednesday that gross domestic product (GDP) contracted by 2.06 percent after shrinking 0.36 in the first quarter.

It said the non-oil sector declined due to a weaker currency, while lower prices dragged the oil sector down.

A slump in crude prices, Nigeria’s mainstay, has hammered public finances and the naira currency, causing chronic dollar shortages. Crude sales account for around 70 percent of government revenues.

Compounding the impact of low oil prices, attacks by militants on oil and gas facilities in the southern Niger Delta hub since the start of the year has cut crude production by about 700,000 barrels per day (bpd) to 1.56 million bpd. The government’s 2016 budget assumed 2.2 million bpd.

On Wednesday, the statistics office said annual inflation reached 17.1 percent in July from 16.5 percent in June – a more than 10-year high – and food inflation rose to 15.8 percent from 15.3.

Nigeria’s sovereign dollar bonds fell across the curve to their lowest value in more than two weeks after the NBS released its data.

“The Nigerian economy contracted more deeply than we had expected in the second quarter,” said Razia Khan, chief economist, Africa at Standard Chartered bank.

“With a wider current account deficit it remains important for Nigeria to maintain a credible policy response, in order to attract much-needed stabilizing inflows,” she added.

The NBS figures showed Nigeria attracted just $647.1 million of capital in the second quarter, a 76 percent fall year-on-year and 9 percent down from the first quarter.

Nigeria’s economy was last in recession, for less than a year, in 1991, NBS data shows. It also experienced a prolonged recession from 1982 until 1984.

President Muhammadu Buhari was in power for some of that period as a military ruler after seizing power in a December 1983 coup and remained head of state until the military pushed him out in August 1985.

The office of the vice president, who oversees economic policy, said in a statement it expected a “better economic outlook” for the second half of 2016 “because many of the challenges faced in the first half either no longer exist or have eased”.

Niger Delta Avengers, the group claiming responsibility for most of the attacks in the oil-producing region in the last few months, said on Monday it had ceased hostilities.

Adeyemi Dipeolu, a presidential economic advisor, attributed the recession largely to a “sharp contraction in the oil sector” caused by the militant attacks.

“The rest of the second quarter data is beginning to tell a different story. There was growth in the agricultural and solid minerals sectors,” he added.

The naira remained at the record low of 418 per dollar hit on Tuesday on the black market, as dollar shortages curb activity on the official interbank market where the currency was offered as rates as weak as 365.25 this month before gaining ground after central bank interventions.

 

(Additional reporting by Felix Onuah in Abuja; Editing by Toby Chopra/Ruth Pitchford)

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