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South Africa’s AMCU union launches strike at Sibanye’s Kroondal mine

27 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Workers began an indefinite strike at Sibanye Gold’s Kroondal platinum mine in South Africa on Friday to demand transport because they were being attacked after working night shifts, their union said.

“The company doesn’t want to provide transport for its employees and these are basic conditions of employment,” Joseph Mathunjwa, president of South Africa’s Association of Mineworkers and Construction Union (AMCU) told Reuters.

AMCU is the main union at the Kroondal mine located in the Rustenburg platinum belt and has about 7,000 workers.

Sibanye’s spokesman James Wellsted said the gold and platinum producer would seek a court order to stop the strike because it was negatively affecting output.

“With metal prices being low for AMCU to now go on strike over issues that are being dealt with is irresponsible. This poses a threat of to the viability of the mine,” he said.

AMCU led a record and sometimes violent five-month wage strike at three major platinum producers in 2014.

Unions and platinum companies are expected to start wage talks in the next few weeks.

Sibanye acquired the Kroondal mine when it bought Aquarius Platinum in October last year for $295 million.

 

 

(Reporting by Zandi Shabalala; Editing by James Macharia)

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Anglo American appoints Bruce Cleaver CEO of De Beers

27 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

(Reuters) – Global mining company Anglo American Plc said it appointed Bruce Cleaver as chief executive of its diamond mining unit De Beers Group, after previous CEO Philippe Mellier decided to step down.

De Beers, the world’s largest diamond producer by value, will remain part of Anglo American’s operations even after a radical restructuring of the latter, in the belief that surging Chinese and Indian demand for diamonds will outstrip dwindling supply.

Cleaver, previously group director of strategy and business development, will take over the role on July 1, the company said.

Cleaver, 51, was first appointed to De Beers’ board in 2008 and served as its co-acting CEO in 2010 prior to Mellier’s appointment.

Anglo American has an 85 percent stake in De Beers.

 

(Reporting by Mamidipudi Soumithri in Bengaluru; Editing by Anupama Dwivedi and Sunil Nair)

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South Africa’s NUM union says rejects power firm Eskom’s wage hike offer

18 May 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s National Union of Mineworkers said on Wednesday its members had rejected a 5 percent wage hike offer from power utility Eskom, and demanded increases of up to 18 percent.

The union demanded an increase of 18 percent for the lowest paid workers and 15 percent for the highest paid workers.

 

(Reporting by Stella Mapenzauswa; Editing by James Macharia)

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Recession looms as South Africa’s manufacturing, mining contract

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

JOHANNESBURG (Reuters) – South Africa’s manufacturing output resumed its decline and mining production contracted as weak global demand pushed the country’s ailing economy closer to a recession.

Manufacturing production shrank 2 percent in March and mining output plunged by 18 percent – the most on record – figures from Statistics South Africa showed on Thursday.

“The economy is very weak, and with these set of figures, we’re looking at the possibility of a contraction in the first quarter,” said Dennis Dykes, the chief economist at Nedbank.

South Africa’s economy grew 1.3 percent last year and 0.6 percent in the fourth quarter, and in its February budget, the National Treasury lowered its forecast for 2016 to 0.9 percent from 1.7 percent. The International Monetary Fund has cut its outlook for 2016 to 0.6 percent.

All three major ratings agencies have cited weak growth and policy upheavals as major risks to South Africa’s investment-grade rating.

Last Friday, Moody’s maintained the country’s Baa2 rating but with a negative outlook. Fitch and Standard & Poor’s rate the country’s debt just one notch above sub-investment grade and are due to revisit the ratings in June.

“You go back to brass tacks and ask if government is sending the right signals when it comes to a stable policy environment. But you look at sectors like mining and agriculture and the policy environment there is terrible,” Dykes said.

Last year, South Africa recorded its lowest annual rainfall since comprehensive records began in 1904, as an El Nino-driven drought ripped through the region, putting millions at risk of food shortages.

The government and mining companies have been deadlocked for years over proposed changes to the Mining Charter that will require the companies to keep black ownership at 26 percent.

South Africa, one of the world’s biggest metals producers, has been hit by a slide in commodities prices that has come on top of widespread labour unrest among miners.

“We need to be cognisant that our mining sector is under pressure and that it’s a global theme,” said Elna Moolman, an economist at Maquire First Securities. “We need to look for alternatives. And given that we are very strong in the services, this is an area we need to focus on.”

Moolman said an increased focus on tourism, which has already benefited from a weaker currency, and upping the export financial and business services would help lift the economy.

 

 

(By Mfuneko Toyana. Editing by James Macharia, Larry King)

 

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South Africa’s mining output plunges the most on record in March

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

JOHANNESBURG (Reuters) – South Africa’s mining output fell the most on record in March, a result of last year’s ramp up in mining activity after a five-month strike two years ago, a statistics body said on Thursday.

Total mining output plunged 18 percent in March year-on-year compared to an 8.3 percent drop the previous month.

“It’s the biggest year-on-year drop ever,” Statistic South Africa statistician Juan-Pierre Terblanche said. “It’s a base effect of last year when there was a big spike after the mines recovered fast after the strike.”

Platinum mining companies Anglo American Platinum, Impala Platinum and Lonmin are still reeling from effects of the record 2014 pay strike and sustained low commodity prices.

 

(Reporting by Zandi Shabalala, editing by David Evans)

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South Africa’s AngloGold Ashanti posts free cash flow in Q1

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

JOHANNESBURG (Reuters) – AngloGold Ashanti Ltd posted a free cash flow in its first quarter compared with an outflow last year due to cost and debt cuts, Africa’s biggest bullion producer said on Monday.

“We generated significant free cash flow again despite the lower gold price, which shows the continued success of our self-help measures to reduce debt by improving margins,” said Srinivasan Venkatakrishnan, chief executive officer, AngloGold Ashanti.

The company, which has 17 mines in nine countries, said free cash flow in three months to March-end reached $70 million from an outflow of $40 million in the first quarter of 2015.

Adjusted gross profit edged up to $210 million at the end of March from $209 million in the same period last year.

AngloGold said it cut debt and costs during the quarter, resulting in cash flow, benefiting weaker local currencies against the dollar.

South African miners sell their commodities in dollars while paying costs in rand, boosting margins when the exchange rate weakens against the greenback.

Production in the quarter fell 7 percent to 861,000 ounces compared with the same period last year, due to planned reductions from Obuasi, Tropicana and Morila mines, and unplanned output drop in Kibali joint venture.

 

(Reporting by Zandi Shabalala; Editing by Sherry Jacob-Phillips)

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Sub-Saharan Africa rail projects promise to increase trade

26 April 2016 Comments (0) Africa, Business, Featured

uganda railway

Rail projects proposed or under way on the southern continent will cost an estimated $60 billion.

Railway projects totaling more than $60 billion are proposed or under way in sub-Saharan Africa.

That estimate comes from Terrapin, which is organizing a major rail conference June 28-29 in Johannesburg. According to Terrapinn, projects in Uganda, Namibia, Batswana, Mali, and Nigeria have the largest budgets, ranging from $8 billion up to nearly $14 billion each.

One massive project is a 3,000-kilometer rail line that will link Benin, Burkina Faso,

Niger, Ivory Coast, Nigeria, Togo and Ghana.

These nations and mining companies that operate within them are funding the project as the mining industry seeks to increase mineral exports from 109,000 tons a year to 3.4 million tons in 2020, a 30-fold increase.

Without rail network, transport expensive

The lack of a cross-border rail network has made transport expensive, especially in land-locked countries such as Niger, which derives 11 percent of its gross domestic product from mining, and Burkina Faso, which derives 13 percent of GDP from mining.

The rail network also is expected to boost trade among the linked nations and drive economic development in other sectors.

Nigeria also has ambitious plans for domestic rail lines, including one linking Lagos and Kano and another between Lagos and Calabar along the coast. Both were designed to ease commuter congestion and facilitate transport of goods.

However, plans were thrown into doubt in April when the Nigerian National Assembly removed $300 million in funding for the coastal project from the 2016 budget. Funding for a third line between Idu and Kaduna was severely reduced as well.

New line will transport coal

Meanwhile, Botswana and Namibia in southern Africa, are seeking private investment to build a 1,500-kilometer rail line that would transport coal from land-locked Botswana’s fields to Namibian ports on the Atlantic coast.

The project was estimated to cost $15 billion when first proposed in 2011. In 2015, the two countries staffed an office to begin looking into legal and cross-border issues that will have to be addressed.

In Mali, China has agreed to finance an overhaul of a rail line linking the capital of Bamako to Dakar in Senegal. Renovation of the 1,300-kilometer rail line will cost a total of $2.5 billion.

China will also train engineers and technicians and overhaul more than 20 train stations and domestic routes.

China will build Ugandan network

China will also play a role in development of a light-rail commuter network in the Ugandan capital of Kampala. The two countries in December signed an agreement for the China Civil Engineering Construction Corporation to build the first phase of the project at a cost of about $440 million.

Plans call for a 240-kilometer network with rail lines from the city center to Entebbe, Nsangi, Wakiso and other towns surrounding the capital. To ease traffic congestion, Uganda also launched an experimental commuter rail line in December between Kampala and Namanve.

Terrapinn listed the following countries with projected rail costs in its report: Uganda ($13.8 billion), Namibia-Botswana ($10 billion), Mali ($9.5 billion), Nigeria ($8.3 billion), Mozambique –Malawi ($4.4 billion), South Africa ($4.3 billion), Kenya ($4 billion), Angola ($3.3 billion), Cameroon ($2.9 billion), Zambia ($1 billion), Democratic Republic of the Congo ($630 million), Zimbabwe ($450 million), Ghana ($300 million), and Tanzania ($40 million).

Terrapinn earlier this year reported a boom in rail development in the Middle East and North Africa with proposals and projects estimated at more than $350 billion, with a number of high-speed rail lines under way.

Railways are vital to economic growth

According to the African Development Bank, railways have an important role to play in the economic development of the continent.

“Rail transport is inevitably critical to support economic development. Unless this mode of transport is developed, Africa may not realize its full potential in exploiting its abundant natural resources and wealth,” the bank said in a 2015 report.

However, the African Development Bank report said the poor condition of rail and rolling stock in many African countries is undermining the potential of rail systems to make a strong contribution to economic growth.

Unfortunately, the ability of African countries to attract investment for railway upgrades has been mixed, it said.

However, the report said support for investment in rail infrastructure will grow as African production of goods and minerals increase and as environmental concerns are heightened.

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South Africa could extend talks on proposed empowerment rules

22 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa could extend consultations on a draft law opposed by mining companies that say the move to redress imbalances of the nation’s past apartheid rule would impose unfair conditions over black ownership.

Mining minister Mosebenzi Zwane announced the potential extension at a business briefing on Friday and later said that talks with the industry over the proposed changes to the Mining Charter would take place next Monday and Tuesday.

The new draft of the charter says that companies must be at least 26 percent black-owned at all times, even if some of the black shareholders choose to sell out.

Mining companies argue that after they have complied with the 26 percent black empowerment rule it shouldn’t be their responsibility to monitor the ownership balance continually.

A 30-day consultation period started when the draft law was published last Friday, but the mining industry has said this is not long enough.

“Should it be necessary for us to go beyond 30 days that call will be made as the necessity arises,” Zwane said. “Rather than us complaining about time, let’s engage.”

The news about next week’s talks was announced by Zwane at AngloGold Ashanti’s TauTona mine west of Johannesburg, where he said: “It (the draft law) is just a proposal, which is why we are saying ‘come, let’s talk’.”

The Chamber of Mines, which represents companies such as Anglo American and Glencore, said it was not consulted about the proposed changes and that the draft law comes at a difficult time for commodity producers contending with depressed prices and rising costs.

“We are saying it’s a tough time and, for us to regulate and go through these processes right now, the industry is taking strain,” the chamber’s president Mike Teke told Reuters.

AngloGold CEO Srinivasan Venkatakrishnan, meanwhile, said that judgment should be reserved until after “robust engagements and discussions” have been completed.

“We have high expectations,” he said of the talks.

Failure to meet the empowerment targets could result in mining permits or rights being revoked.

“This draft seems to me like all stick and no carrot for the industry,” said one fund manager at a large South African firm. “The whole situation adds another layer of confusion.”

A court process is under way to clarify the “once-empowered, always-empowered” principle and could have an impact on the draft bill.

Zwane said that investors should not be concerned by the bill because the process will be transparent and inclusive.

“I don’t foresee a situation where investors should be scared of people practising their democratic right to engage,” he told Reuters. “Let’s get real with the issues, let’s talk.”

 

(By Zandi Shabalala. Additional reporting by Ed Stoddard; Editing by James Macharia and David Goodman)

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Mugabe looks to nationalize Zimbabwe’s diamond industry

19 April 2016 Comments (5) Africa, Business, Featured

Robert Mugabe

Zimbabwe’s longtime President, Robert Mugabe, has announced the state will seize all of the nation’s diamond mines.

Zimbabwe’s controversial President, Robert Mugabe, has announced a massive change to the country’s diamond mining industry, in that all assets will now be state owned. In a move that is a throwback to his socialist roots, Mugabe claims that foreign mining companies have profiteered for too long off one of the nation’s most valuable commodities and he will ensure that the nation now reaps the rewards from its diamonds.

Mugabe gave an interview in early March to the state broadcaster ZBC, during which he expressed his anger at what he sees as foreign companies plundering Zimbabwe for a precious, natural resource. Mugabe claimed that, in doing so, foreign companies made around $15 billion in profits, while Zimbabwe itself had only earned $2 billion in the same period of time and, as such, the diamond rich region of Marange would now be a “state monopoly”.

The Marange diamond fields were only discovered in 2006 but by 2013 they were producing an astonishing 16.9 million carats of diamonds, which is akin to 13% of the world’s rough diamond supply. However, this output has dropped significantly due to reluctance by companies to invest in deeper exploration. Industry group Kimberly Process states that in 2014 Zimbabwe’s diamond production was around 4.7 million carats.

While it is understandable that Mugabe may feel the country needs to earn a greater proportion of the wealth that the Marange region is host to, issues of corruption and internal theft are perhaps as large a problem as outside sources. As far back as 2012, South Africa’s former President Thabo Mbeki warned that Zimbabwe was losing much of its diamond wealth to a “predatory elite” within its own nation.

Illegality plagues Zimbabwe’s diamond industry

The NGO Partnership Africa Canada (PAC), which monitors conflict minerals in Africa, produced a damning report in 2012 that stated government ministers in Zimbabwe were the ones becoming rich off the back of stolen diamonds. Corruption and theft were so rife that the organization said, “The scale of illegality is mind-blowing” and the investigation named former mines minister Obert Mpofu as having amassed an unaccountable fortune since mining began. Mpofu was said to have been spending $20 million “mostly in cash” over a 3 year period.

If high level government figures are the very people denying the state treasury of its rightful income from Marange’s diamond mines, then will a state owned monopoly make much difference? While Mugabe has angrily pointed the finger of blame abroad, it remains to be seen whether those now in charge of the state’s new body, Zimbabwe Diamond Consolidated Company, can ensure that the profits from diamond minds find their way to the rightful government coffers.

What is certain is that the foreign companies who have been mining in Zimbabwe will not take Mugabe’s orders without a fight. China has developed closer trade agreements with Zimbabwe in recent years and the Chinese-run mining company Anjin Investments has already challenged Mugabe’s ruling at the High Court. The early indications are that the courts might well side with the mining companies as the largest mine, Mbada Diamonds, has already won its case at the High Court and been given full control of its assets.

Whether this is a ruling that Mugabe’s government will accept and adhere by is an entirely different question. While some voices have expressed concern over how this dispute could affect trade between China and Zimbabwe, Mugabe himself dismissed such worries, saying, “I don’t think it has affected any of our relations at all…I told President Xi Jinping that we were not getting much from the company, and we didn’t like it anymore in this country.”

Zimbabwe diamond mine

Zimbabwe diamond mine

Where does Zimbabwe’s diamond industry go from here?

If the government of Zimbabwe overcomes the legal challenges, maintaining the $1 billion worth of Chinese trade despite seizing Chinese interests, and eradicates the corruption that has plagued the mining industry thus far, then it would obviously earn considerably more money. However, these are a sequence of unlikely outcomes given the manner in which the move has come and given the history of the mining industry in Zimbabwe.

There is the additional concern that potential investors in other mining projects within the country could be put off by this recent announcement regarding diamonds. John Turner, head of the mining group at law firm Fasten Martineau says, “To the extent that private firms were looking at Zimbabwe thinking they were ahead of the curve, this may give them pause for though.”

Any concerns outside of Zimbabwe have not appeared to weaken the resolve of Mugabe or his government. They insist that the problem lies with theft from abroad and moreover that recent mining has actually been illegal, as the mining companies had not renewed their licenses.

Amid conflicting claims and ongoing lawsuits, who emerges as having control over the lucrative Marange diamond mines over the next few months will be of interest to many parties and people both in and outside of Zimbabwe.

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Glencore says South African coal strike violence worsens

7 April 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Glencore has laid arson charges against a South African mining union as a three-week coal strike turns increasingly violent, the mining company said on Thursday.

Workers from the Association of Mineworkers and Construction Union (AMCU) torched two trucks and offices at the Wonderfontein Mine on Wednesday night, taking the petrol bomb incidents to around 10 since the strike started, Glencore said.

Around 60 striking workers accused of intimidating other employees and damaging nearby farms have been arrested.

AMCU and the police were not available to comment.

Wonderfontein is a joint venture between Glencore and Shanduka Group, which was founded by Deputy President Cyril Ramaphosa. The mine produces 3.6 million tonnes annually.

Glencore said it was engaging with AMCU leadership over a wage dispute.

 

(Reporting by Zandi Shabalala; Editing by Joe Brock)

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