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Nigeria to review mining licences as part of industry overhaul

22 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria will review all its mining licences as its wants to overhaul a largely unproductive sector dominated by artisan miners, the mining ministry said on Monday.

The West African nation wants to lower dependency on oil production as crude prices tumble and boost output of solid minerals that contribute only 0.34 percent to GDP, according to official data.

Africa’s largest economy has some gold and iron deposits but little seismic data exists as the government has focused on oil exploration in the past decades.

To make a sector 80 percent dominated by artisan miners more efficient, mining minister Kayode Fayemi said all licences would be reviewed by March 1, according to a statement.

“We will work with stakeholders to review existing licenses and bring them up to date where there are issues,” he said in the statement, his first policy comments since taking office last month. “The period from today to 1st March 2016 should be considered an amnesty period to allow regularisation of papers.”

He said Nigeria had 44 known minerals including gold, iron ore, bitumen, zinc, tin and coal but authorities needed to get better data before deciding on a policy focus.

Nigeria has attracted few foreign investors to the mining sector due to a lack of roads, corruption and weak regulation.

 

(Writing by Ulf Laessing; Editing by David Evans)

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Zimbabwe platinum mines seek lower royalty fees amid low prices

15 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

HARARE (Reuters) – Zimbabwe should reduce the royalty fee levied on platinum producers from the current 10 percent to help mining firms offset the impact of low prices, the country’s mining chamber has said.

Zimbabwe has the world’s second largest known deposits of platinum after South Africa but mines have struggled with low prices, a black empowerment law forcing mines to sell more than 50 percent of the business to locals, and power shortages.

In a commentary on the 2016 budget presented to parliament in November, the Chamber of Mines said royalty fees charged on the local divisions of Anglo American Platinum and Impala Platinum should be cut.

“The platinum sector requires support in the form of royalty reduction to restore viability, especially during this period of depressed prices,” the mining chamber said in a statement seen by Reuters on Tuesday.

Platinum prices are near seven-year lows of about $850 an ounce, hobbled by slowing demand in top consumer China and as the Volkswagen’s emissions-cheating scandal weighs on market sentiment.

Zimbabwe charges the 10 percent royalty rate on gross platinum sales. The government expects platinum production to increase to 468,791 ounces next year from 423,288 this year.

A 15 percent platinum levy on raw exports was deferred to January 2017 to allow mines to build smelters and base metal refineries, a move the mining chamber welcomed.

“In 2016, the sector will continue to be weighed down by depressed commodity prices, power shortages, inadequate capital and an unsustainable cost structure, compounded by high electricity tariffs, high cost of funding and sub-optimal royalty,” the chamber said.

 

(Reporting by MacDonald Dzirutwe; editing by Ed Stoddard and David Clarke)

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South32 to cut more than 400 jobs at South African manganese mine

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

JOHANNESBURG (Reuters) – Australian-listed South32 plans to cut 447 jobs at a South African manganese mine, the National Union of Mineworkers (NUM) said on Monday, in the latest in a slew of layoffs in the embattled industry.

The union, which is the country’s largest mining labour body, said it had received notice from South32 that the company planned to cut the jobs and called on the mines ministry to “intervene to halt” to prevent the layoffs.

NUM said over 1,000 workers are employed at the Hotazel mine in Kuruman, about 550 km (341 miles) south east of Johannesburg.

South32 spokeswoman Lulu Letlape said the company was consulting with employees through unions on job cuts. Voluntary redundancies and early retirements were being considered to minimize the impact on workers, she said.

South32 produces manganese, silver, nickel and coking coal, some of the industrial mainstays that have been hardest hit globally in the wake of China’s economic slowdown.

South32, which was spun off from BHP Billiton in May, said its review of its South African manganese operations would be completed by December and said its mines were unlikely to restart until January.

Mining companies in South Africa are under pressure from rising costs and falling prices, forcing companies to close shafts and cut jobs to survive, angering unions, which have opposed the layoffs.

 

(Reporting by Zandi Shabalala; Editing by James Macharia and Louise Heavens)

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South Africa’s Harmony Gold pays off debt as weaker rand lifts revenue

2 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Harmony Gold has repaid debt of 1.1 billion rand ($78 million) after benefiting from South Africa’s weaker rand currency, the company said on Wednesday, sending its shares rising.

Harmony has repaid $50 million on a $250 million revolving credit facility and another 400 million on its 1.3 billion rand facility, the company said in a statement, adding that its mines were performing in line with the set targets.

The company generates more than 90 percent of its revenue in South Africa, but has plans to expand into Papua New Guinea, where it jointly owns the project to develop the massive Golpu deposit with Australia’s Newcrest.

“Our hard work of the last couple of years is finally paying off, enabling us to reduce our debt, strengthen our balance sheet and provide us with even more certainty that we can fund the Golpu project,” Harmony Chief Executive Graham Briggs.

Shares in Harmony climbed 7.38 percent to 9.46 rand by 1130 GMT following the news, compared to a 2 percent rise in the Johannesburg Securities Exchange’s Gold Mining Index.

($1 = 14.3360 rand)

 

(Reporting by TJ Strydom; Editing by James Macharia)

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Sibanye Gold says to conclude platinum acquisitions, shrugs off lower prices

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

JOHANNESBURG (Reuters) – Sibanye Gold said on Monday it remained committed to concluding the acquisition of two platinum assets despite lower prices as it awaited the approval of shareholders and South Africa’s anti-trust authorities.

The bullion producer said it expected a decision from the South African Competition Commission in March 2016 while shareholders are set to vote in January on the acquisition of Aquarius Platinum and Anglo American Platinum’s Rustenburg mine.

Platinum prices sank 16 percent in November to near seven-year lows on prospects of a U.S interest rate hike and ongoing concerns of oversupply. Despite this Sibanye said it would go ahead with the transactions.

“As highlighted when these transactions were announced, whilst near-term economic headwinds and supply side factors have resulted in downward pressure on metal prices, the long-term outlook for PGM demand remains constructive,” Chief Executive Neal Froneman said.

 

(Reporting by Zandi Shabalala; Editing by Himani Sarkar)

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Zambia’s Lungu says won’t take over struggling mines

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

LUSAKA (Reuters) – Zambia does not plan to take over mines that have shed jobs after a sharp fall in global copper prices, President Edgar Lungu said on Thursday, backtracking from a warning earlier this month that the state would take over such mines.

Lungu said the economy would grow at a slower pace than previously estimated due to the struggling mining industry and electricity shortages, but that government would implement austerity measures to cope with the decline.

“The government can run the mines but we have no intention to take over the mines,” Lungu said, adding that government tried its best to keep the job losses to a minimum and that the troubles in the sector would lower economic growth.

On the job losses in the mines, Lungu said during a speech from his office that the government had tried its best to keep the job losses to the barest minimum.

“We would have lost all the jobs if we insisted on no job losses. The mines have told us why these jobs are being lost. The challenges in the mining sector are bound to continue. The government can run the mines but we have no intention to take over the mines,” he said.

Lungu earlier this month warned that he would not allow Glencore’s local unit to lay off workers.

The company has been cutting its copper output to support flagging global prices.

Vedanta Resources’ Zambian unit Konkola Copper Mines KCM) said it would mothball its loss making Nchanga underground mine by the end of the month.

 

(Reporting by Chris Mfula; Writing by Mfuneko Toyana; Editing by James Macharia)

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Lonmin shareholders provisionally approve crucial rights issue

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

LONDON (Reuters) – Lonmin shareholders provisionally approved the company’s deeply discounted $407 million share issue on Thursday, its chairman said, as the beleaguered platinum producer seeks cash to stay afloat.

Battered by strikes, rising costs and weak platinum prices, South Africa-focused Lonmin said last month it also planned to raise another $370 million in loans to refinance debt currently due in May 2016.

The final results of the votes will be announced later on Thursday, Chairman Brian Beamish said after the shareholder meeting in London.

The loss-making platinum producer had asked its shareholders to vote on five proposals, including consolidation of Lonmin shares. Shareholders also provisionally authorised its directors to allot new shares.

Lonmin shares have plunged more than 90 percent this year and the company has written down $1.8 billion off the value of its assets.

The scale of Lonmin’s plight was illustrated on Nov. 9 when it priced its rights issue at just 1 pence a share – a huge discount to the stock’s previous session closing price of 16.25 pence on the London Stock Exchange.

That meant investors would have to buy 46 new shares for every one they already hold, just to retain their current stake in percentage terms.

Analysts said the low price was a strategy to force shareholders to take up their entitlement or risk having their investment in the company heavily diluted.

Lonmin had warned that if it doesn’t raise the cash it needs, its shares could be suspended.

“We had no choice but to vote in favour because we will be wiped out if this doesn’t go through. But does that mean we will be with the company in the next 10 or even two years? We don’t know,” Anthony Guildford, a Lonmin investor since 1969, said.

Some investors, including pensioners, raised concerns about the consolidation of shares.

“There had to be a better idea than consolidation. I will never see my money (14,500 pounds in shares) back at 6 pounds where I bought … They were 1.70 last Christmas!,” one investor said.

Lonmin’s London-listed shares were down nearly 5 percent at 9.74 pence by 1127 GMT.

The company has said its share sale has been fully underwritten.

South Africa’s Public Investment Corporation (PIC), which owns about 7 percent of the company, has committed to buying its full entitlement and has sub-underwritten a material portion of the issue, over and above its entitlement, Lonmin said.

Lonmin still has to convince the wider market it can be a viable business with platinum prices near seven-year lows below $850 an ounce, hobbled by slowing demand in top consumer China and as the Volkswagen’s emissions-cheating scandal weighs on platinum market sentiment.

The metal used in emissions-capping diesel auto catalysts and jewellery is on track for a 30 percent decline this year, its third consecutive annual fall.

This would be Lonmin’s third rights issue in six years after it asked for cash from shareholders in 2009 and 2012 to shore up its balance sheet.

Lonmin was hit hard last year by a five-month strike in South Africa’s platinum belt – the country’s longest and costliest – because, unlike peers such as Impala Platinum and Anglo American Platinum, almost all its operations were in the strike-affected area.

(Writing by Olivia Kumwenda-Mtambo; Editing by Veronica Brown and Susan Fenton. By Atul Prakash and Clara Denina. Reuters)

 

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South Africa’s RBPlat delays ramp up of Styldrift mine due to low prices

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

JOHANNESBURG (Reuters) – South Africa’s Royal Bafokeng Platinum will delay the ramp up of its new mine by a year as commodity prices sink to near seven-year lows, the company said on Tuesday.

The mid-tier producer now aims to fully ramp up production at the Styldrift project in the first quarter of 2020, compared with a previous plan for the first quarter of 2019, it said in a statement.

“Delaying the start of stoping at Styldrift I ensures that value is not destroyed by ramping up high quality Merensky ounces into a depressed market but that instead the business is well positioned to begin ramp-up when the market improves,” Bafokeng said.

Styldrift, with an estimated lifespan of more than 60 years, is a high grade, shallow mechanised mine in the North West province, about 100 km (62 miles) from Johannesburg.

Drilling at Styldrift could be further delayed from the first quarter of 2017 – after being pushed back from the third quarter of this year – if prices sink further, Bafokeng said.

The company had spent 5.19 billion rand ($361 million) by the end September on developing Styldrift, which is still expected to produce 2.76 million tonnes per year.

Spot platinum has recovered from seven-year lows of $851 hit on Friday on concerns about oversupply and slowing demand in top consumer China, but is still at levels last seen in 2008.

In the third quarter, Bafokeng cut its capital expenditure at Styldrift by 32 percent compared to the previous quarter on lower platinum prices while also slashing other “non-critical” spending.

Shares edged up 0.25 percent to 23.73 rand outpaced by the 1.17 percent rise in Johannesburg’s All-Share index.

 

(Reporting by Zandi Shabalala; Editing by Mark Potter, Reuters)

 

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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 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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