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Sibanye clears most illegal miners from gold shafts

26 February 2018 Comments (0) Actualites, Africa, Business, Economy, Mining, Politics

JOHANNESBURG (Reuters) – Precious metals producer Sibanye-Stillwater arrested nearly 1,400 illegal miners at its South African gold shafts last year in a blitz the company says has mostly ended the practice at its mines.

Illegal gold mining has plagued South Africa for decades and it costs the government and the industry more than 20 billion rand ($1.7 billion) a year in lost sales, taxes and royalties, according to a Chamber of Mines report last year.

Sibanye Chief Executive Neal Froneman vowed last year to take the war to illegal miners and clear them from its shafts by January 2018 under the battle cry “Zero Zama”, after the Zulu term for illegal miners.

According to data provided to Reuters by Sibanye, it made 797 arrests in 2017 linked to illegal mining at its Cooke operations and 1,383 overall. The blitz peaked in June with more than 500 arrests, above the 443 arrests in 2016 as a whole.

While Sibanye fell short of its goal of stamping out illegal mining altogether, Sibanye’s head of security Nash Lutchman said based on available intelligence, “there are only about 40 to 50 illegal miners operating now, scattered across our Kloof and Driefontein operations”.

Froneman said last year the number of illegal miners in the company’s gold operations numbered “in the thousands”. Sibanye was the first South African gold miner to set itself a deadline to stop the practice.

Most zamas are undocumented immigrants from neighbouring countries who have long provided migrant labour for South Africa’s mines, but are now being laid off. The syndicates that support them and traffic the illegal metals are well-funded, well-established and highly dangerous, security experts say.

 

‘END OF STAGE ONE’

Sibanye’s drive was helped by the mothballing of its loss-making Cooke operation west of Johannesburg, which was the epicentre of illegal mining activity in its shafts.

Illegal miners gain access to working gold mines through bribery and other means, forcing companies to dispatch security teams to the shafts and to tighten entrance measures.

Sibanye spent 300 million rand last year and will spend another 300 million rand this year on access and biometric controls at the entry points to its gold mines.

“It still costs us so I don’t know if we will ever declare a victory but we are at the end of stage one,” Froneman told Reuters.

“My biggest concern about illegal mining is the corruption of our supervisors and our employees. That just sets a path for creating a rotten organisation. Everybody gets bribed and the integrity of the business just gets undermined,” he said.

Froneman admitted there was no guarantee illegal miners would not try to return, so the company needed to maintain its costly vigilance.

Security experts have said Sibanye would struggle to eradicate illegal mining completely but could reduce it by 90 percent.

Sibanye is the second South African gold producer to announce a milestone linked to illegal mining this month.

AngloGold Ashanti said it would spend up to $500 million to mechanise its Obuasi mine in Ghana.

The gold mine was rendered worthless when it was invaded by thousands of illegal miners. They were removed by the military last year and the South African company decided to revive the mine as an automated operation after a feasibility study.

($1 = 11.5400 rand)

 

(By Ed Stoddard;Editing by James Macharia and David Clarke)

 

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Woolworths Holdings’ H1 profit falls on Australia arm write-down

22 February 2018 Comments (0) Actualites, Africa, Australia, Business, Economy, Politics

JOHANNESBURG (Reuters) – South African retailer Woolworths Holdings Ltd posted a 15 percent fall in half-year profit on Thursday hurt by a hefty write-down charge on the value of its David Jones business in Australia and tough trading conditions in its home market and Australia.

Woolworths paid a big premium to bulk up in Australia via David Jones as part of Chief Executive Ion Moir’s ambitions to turn the firm into a leading southern hemisphere retailer, but the delayed execution of certain initiatives aimed at transforming David Jones is threatening that ambition.

“A challenging market, along with some mistakes in the implementation of new systems and ranges, has had an impact on our clothing businesses both in South Africa and Australia,” Moir said in a statement.

Australia has recorded soft retail sales growth for months as cut-throat competition, relentless price discounts and online competition sap demand for brick-and-mortar shopping.

While in South Africa retailers have struggled to grow earnings as weak economic growth and clothing markdowns by competitors hit sales.

Woolworths, which sells groceries, food and homeware, said headline earnings per share (HEPS) fell to 206.3 South African cents in the six months to Dec. 24, from 242.6 cents a year earlier, while earnings per share turned into a loss of 505.9 cents on the David Jones impairment.

Woolworths booked a non-cash impairment charge of A$712.5 million ($556.04 million) against the carrying value of David Jones as a result of the cyclical downturn and structural changes that have hurt performance across the Australian retail sector.

The retailer, which paid 21.4 billion rand ($1.84 billion) for David Jones in 2014, said the impact of these changes have been exacerbated by poor or delayed execution in certain key initiatives in David Jones.

David Jones sales were 3.3 percent lower on a comparable basis, while comparable store sales were 3.4 percent lower in Woolworths South Africa, hurt by underperformance in Woolworths Fashion, Beauty and Home.

The group declared an interim cash dividend of 108.5 cents, an 18.4 percent decrease on the prior period.

“Encouragingly, we are seeing signs of recovery now, with political change in South Africa expected to lead to increased consumer confidence,” Moir said.

South Africa’s new president, Cyril Ramaphosa, was sworn in as head of state last Thursday after his scandal-plagued predecessor Jacob Zuma resigned on orders of the ruling African National Congress.

 

($1 = 1.2814 Australian dollars)

($1 = 11.6563 rand)

 

(Reporting by Nqobile Dludla; Editing by Gopakumar Warrier)

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Sibanye-Stillwater falls into annual loss, closes dividend tap

22 February 2018 Comments (0) Actualites, Africa, Business, Economy, Health, Mining

JOHANNESBURG (Reuters) – South African-based gold and platinum producer Sibanye-Stillwater reported an attributable loss for 2017 and in a bid to preserve cash turned off the dividend flow that has made it a darling of investors

Sibanye’s share price fell 5 percent, underscoring disappointment among investors who have grown accustomed to hefty dividend payouts from the Gold Fields spin-off.

The company’s operations, including the troubled Rustenburg assets it acquired from Anglo American Platinum, delivered solid results, with the loss stemming from impairments, provisions for occupational healthcare claims, and restructuring and transaction costs among other factors.

Sibanye-Stillwater reported an attributable loss of 4.437 billion rand ($333 million) for the year ended 31 December 2017, compared with attributable earnings of 3.473 billion rand ($237 million) for the year ended 31 December 2016.

“In the near term, cash preservation is prudent and as a result no final dividend is being declared,” the company, which has given over 4 billion rand back to shareholders since 2013, said.

Sibanye initially positioned itself as a dividend play with cash flowing from mature South African gold assets that did not require huge investment, but it has been expanding into platinum and beyond South Africa, diverting its dividend flow.

Its dividend yield is now 2.882 percent, almost the same as the 2.84 percent for Johannesburg’s All-share index.

The healthcare provision has been put aside for an expected settlement in a class-action suit against six current and previous South African gold producers related to a fatal lung disease. This also hit AngloGold Ashanti’s earnings.

It was launched almost six years ago on behalf of miners suffering from silicosis, a fatal lung disease contacted by inhaling silica dust in gold mines, and is expected to be settled in a few months.

Overall, Sibanye’s operational performance was good, suggesting it will return to profits and dividends.

The company said its labour-intensive Rustenburg platinum operations west of Johannesburg – which under Amplats were loss-making and flashpoints of violent labour unrest – contributed 1.6 billion rand or 18 percent to group adjusted EBITDA.

“The Rustenburg operations have consistently delivered solid production and improved financial results, with approximately 1 billion rand in cost savings and synergies realised in the first year of incorporation, well ahead of initial expectations of 800 million rand over three to four years,” the company said.

“This is a remarkable result from assets which, before being part of the Sibanye-Stillwater Group, had been delivering significant and sustained losses for many years,” said chief executive Neal Froneman.

 

(Reporting by Ed Stoddard; Editing by Tiisetso Motsoeneng and Adrian Croft)

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In “tough but hopeful” budget, South Africa raises VAT for first time in 25 years

21 February 2018 Comments (0) Actualites, Africa, Economy, Politics

CAPE TOWN (Reuters) – South Africa’s new leadership announced on Wednesday it was taking the politically risky step of raising value-added tax for the first time in 25 years, part of efforts to cut the deficit and stabilise debt under new President Cyril Ramaphosa.

The government of Africa’s most industrialised country has to plug a revenue hole in its budget and repair its economy after nine years of mismanagement under the scandal-plagued Jacob Zuma.

The move to raise VAT to 15 percent from 14 starting in April is expected to generate an additional 23 billion rand ($2 billion) of revenue in 2018/19.

But with the VAT rate unchanged since 1993 the move was likely to prove unpopular ahead of a national election next year.

“This is a tough, but hopeful budget,” Finance Minister Malusi Gigaba said, acknowledging the reality in his budget speech to parliament on Wednesday.

“We decided that increasing VAT was unavoidable if we are to maintain the integrity of our public finances.”

As Gigaba read his budget speech, the rand extended gains to 0.81 percent against the dollar, government bonds firmed and retail shares on the stock exchange fell.

Whatever cabinet Ramaphosa finally settles on will face an uphill battle to revitalise growth and create jobs in a nation still polarized by race and inequality more than two decades after the end of white-minority rule in 1994.

Much of the blame for the state of the economy has been laid at the door of Zuma and his allies. He was forced to step down as president this month by the ruling African National Congress (ANC), following a series of scandals. He has denied all wrongdoing.

But treasury officials sought to project a relatively optimistic outlook as they assessed economic prospects for the immediate future.

Gigaba said poor households would be cushioned against the VAT rate rise through a zero-rating of basic food items such as maize meal and beans, and welfare payments increases.

And the Treasury saw GDP growth at 1.5 percent this year, up from an estimated 1 percent last year, helped by a recovery in agriculture and improved investor sentiment.

South African debt faces the risk of a downgrade to “junk” by Moody’s after downgrades to sub-investment grade by S&P Global Ratings and Fitch last year. Moody’s said it would make a ratings decision soon after the budget announcement.

“We believe we have done enough to avoid a downgrade. We have taken the tough decisions. You can see our debt rates stabilising, you see our budget deficit improving,” Gigaba told a media briefing separately.

 

‘ASSAULT ON THE POOR’

But opposition leader and head of the Democratic Alliance party Mmusi Maimane said the budget meant the cost of living for poor people would rise sharply.

“This is a budget that is an assault against poor people. What we saw today is a consequence of nine years of mismanagement of the economy by the ANC.”

The ultra-left Economic Freedom Fighters, which has six percent of the seats in parliament, boycotted the speech. It demanded that Gigaba, a Zuma ally, be removed.

The Treasury said South Africa faced a 48.2 billion rand revenue gap in the current 2017/18 fiscal year ending in March, down from an earlier estimate of 50.8 billion rand, and that the revenue shortfall was expected to continue into the medium term.

In a sign that it was mostly middle to high income earners who were targeted by the tax increases, the Treasury said the excise duty on luxury goods would be raised to 9 percent from 7 percent, among other taxes.

The budget deficit is expected to narrow to 3.5 percent of gross domestic product (GDP) by 2020 from 4.3 percent in the 2017/18 fiscal year, while gross debt is seen narrowing to 56 percent of GDP in the 2020/21 fiscal year from nearly 60 percent seen in the October mid-term budget statement.

($1 = 11.6359 rand)

 

(By Olivia Kumwenda-Mtambo and Mfuneko Toyana. Additional reporting by Wendell Roelf and Alexander Winning in Cape Town; Editing by James Macharia and Richard Balmforth)

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Investors fear South African market euphoria is overdone

20 December 2017 Comments (0) Actualites, Africa, Economy

LONDON (Reuters) – Businessman Cyril Ramaphosa, the new leader of South Africa’s ruling ANC party, needs to fix a sluggish economy and a deeply divided society. Market euphoria after his election may not reflect the looming slog, fund managers say.

The outcome, announced late on Monday, was widely expected. The rand has rallied 7 percent against the dollar since Thursday, and government bond yields fell 58 basis points over the same period. Credit default swaps, used to price default risks, are down around 16 bps since end-Thursday.

On Tuesday, shares in South African banks – a barometer of economic and political health – jumped 8 percent.

Ramaphosa, likely to become South Africa’s president after the 2019 elections, is considered an improvement on scandal-mired Jacob Zuma. But the good news seems already in the price – a CDS-based model by S&P Capital shows South African foreign debt priced in line with its rating for the first time in 2 1/2 years following the ratings cut in late November.

The country’s domestic bonds have long traded as if its credit rating were a notch lower, the model shows, with yields well above similarly rated countries such as Indonesia.

Many even reckon the market reaction is overdone. JPMorgan analysts see the rand now as 9 to 11 percent “rich”, based on recent moves in other emerging currencies as well as weaker prices for gold and platinum, major South African exports.

“If you look at local (bond) markets, I’d say the market relief was probably not justified by fundamentals. The structural weakness is very entrenched and won’t go away easily,” said Anders Faergemann, senior portfolio manager at PineBridge Investments.

He was citing sub-one percent growth, stubborn inflation, a 28 percent jobless rate, rising government spending and capital shortfalls at state-run companies. Those problems could be tough to fix in 2018, when Zuma will still be president.

“That could lead to policy paralysis, and that is the real risk,” Faergemann said.

The news has not altered the view on South Africa at AXA Investment Managers, where Sailesh Lad, the head of emerging debt, retains an underweight position.

Ramaphosa is not a “game-changer”, Lad said, noting the budget deficit blowout, announced in October by finance minister Malusi Gigaba, remained in place. Gigaba’s budget pencilled in a big increase in borrowing and a deficit increase to 4.3 percent of gross domestic product.

The higher spending had appeared to confirm that the rating on South African local bonds would be cut to “junk” territory by Moody’s and S&P Global, ejecting the debt from key indexes and triggering capital outflows of over $10 billion.

However, Moody’s held off the downgrade last month and Ramaphosa-linked market gains partly reflect hopes it may not do so at its early-2018 review.

If the new ANC leader does implement promised reforms, some hope the country could eventually regain investment grade, as Portugal has just done and Ireland did in 2014.

But most predicted South Africa will be harder to fix, given Ramaphosa’s narrow victory margin, racial divides and entrenched corruption, with his ascent merely having delayed the inevitable to later in 2018.

Political risk consultancy Eurasia reckons, in fact, that with elections looming, the ANC may lurch further to the left, and will not therefore “provide sufficient grounds to reverse ratings downgrades before mid-2018.”

 

(By Karin Strohecker and Claire Milhench. Additional reporting by Marc Jones, Sujata Rao and Ritvik Carvalho, writing by Sujata Rao, editing by Larry King)

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Drought to hit South Africa’s 2018 wine harvest

19 December 2017 Comments (0) Actualites, Africa, Agriculture

JOHANNESBURG (Reuters) – South Africa, the world’s seventh biggest wine producer, is expected to see the smallest harvest in more than a decade in 2018 after drought and lower plantings hit yields, industry experts said.

The winelands are mostly in the coastal Western Cape province which was declared a disaster area in May due to a severe drought that has dried up dams and led to water restrictions for residents and industry.

The 2018 harvest is expected to be much smaller than the estimated 1,434,328 tonnes produced in the 2017 crop, based on a survey conducted in the last week of November by industry body South African Wine Industry Information and Systems (Sawis).

Sawis, which will give its final crop estimate in August, did not give a figure for 2018 but said it would likely be less than in 2017.

“If in certain areas we don’t get rain it could end up smaller,” Sawis Chief Executive Officer Yvette van der Merwe told Reuters.

VinPro, an industry body, expects the 2018 crop to be the smallest since 2005, when 1,157,631 tonnes were harvested due to drought and diseases in some production areas.

“This means that wine grape producers’ water resources were cut by 40 percent to 60 percent and they could not fully meet their vines’ water demand,” Vinpro consultation service manager for the wine industry, Francois Viljoen, said in a statement.

South Africa which produces 3.9 percent of the world’s wine, harvests its winelands between February and March.

Western Cape dams were only 34.6 percent full last week compared with 50.4 percent in the same period last year, according to local government statistics that show a steady annual falls from 2014 when they were 90 percent full.

White and black frost damage in the Breedekloof, Robertson and Worcester regions could also hurt the 2018 harvest. Paul MakubeSenior, agricultural economist for FNB Business, estimated harvests would be 10,000 to 15,000 tonnes lower in those areas.

South Africa’s wine industry, which exports 440 million litres of wine a year and sells 400 million litres locally, could see higher prices if the crop is significantly decreased.

“If you have a lower crop the prices are going to be higher and it will eventually be passed on to the consumers,” said Makube, saying any price rise would depend on the harvest size.

Global wine production in 2017 is also set to fall to 246.7 million hectolitres – its lowest since 1961 – further supporting prices, after harsh weather in western Europe damaged vineyards, the Paris-based International Organisation of Vine and Wine (OIV) said in its estimates in October.

 

(By Tanisha Heiberg. Editing by James Macharia and Edmund Blair)

 

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South Africa’s private-sector activity slows in November: PMI

5 December 2017 Comments (0) Actualites, Africa, Economy

JOHANNESBURG, Dec 5 (Reuters) – South African private sector activity slowed in November as new orders and output fell, a survey showed on Tuesday.

The Standard Bank Purchasing Managers’ Index (PMI), compiled by IHS Markit, fell to 48.8 in November from 49.6 in October, staying below the 50 mark that separates expansion from

contraction.

“Lower underlying demand formed the basis for the decline as new orders fell at the quickest pace observed since early 2016.

This led output to fall, and at a faster rate than that noted in the previous month,” IHS Markit said in a statement.

South Africa’s economic gloom has been compounded by allegations of corruption in state-owned companies and of influence-peddling in government that have hurt investor confidence.

The ruling African National Congress will this month elect a successor to President Jacob Zuma as party chief, adding to the climate of uncertainty.

“Apart from South Africa’s economy being characterised by generally weak growth, we note that the rating agency review on November 24th and the upcoming ANC elective conference will have

delayed production and consumption decisions,” Standard Bank economist Kim Silberman said.

S&P Global Ratings downgraded South African debt to junk status on Nov. 24, citing its deteriorating economic outlook and public finances. Moody’s put the country on review for a

downgrade.

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Africa’s major central banks embarking on policy easing cycle ride

20 July 2017 Comments (0) Latest Updates from Reuters

By Vuyani Ndaba

JOHANNESBURG (Reuters) – Africa’s major central banks are entering an easing cycle as they try to stimulate growth after months of drought, austerity drives and confidence issues across the continent, a Reuters poll found on Thursday.

Much of southern and eastern Africa is still recovering after an El Niño-related drought wilted crops last year. Poor business confidence in South Africa and foreign exchange restrictions in Nigeria have also hampered growth.

“We expect that African monetary policy is entering a widespread and protracted period of policy easing. This will provide a boost to growth,” said John Ashbourne, Africa analyst at Capital Economics.

Ghana, which agreed a three-year fiscal discipline deal with the International Monetary Fund in exchange for aid in 2015, cut 100 basis points from its benchmark interest rate in May and is expected to do the same on Monday, putting it at 21.50 percent.

Medians in the poll predict South Africa will make a first quarter trim of 25 basis points to 6.75 percent and while Kenya will hold steady on Monday it is expected to cut 100 basis points to 9.00 percent in the second quarter of next year.

Nigeria is expected to hold rates at 14.0 percent on Tuesday, and through this year, but will reduce borrowing costs by 175 basis points across 2018.

BATTERED CONFIDENCE CHIPS AT GROWTH

Aly-Khan Satchu, CEO of Nairobi-based Rich Management said policymakers in Africa’s biggest economies have lost credibility and it would be difficult to regain that.

To try to reduce demand for dollars, Nigeria banned the importing of 41 items, but that only fuelled the gap between the official and black market rates for its naira currency.

The policy, alongside a commodity price slump that hurt oil exports, has since 2015 forced its central bank to hike the benchmark rate 300 basis points to 14 percent as it tried to deal with much faster inflation and restore the currency’s strength.

Nigeria — Africa’s biggest economy — fell into recession for the first time in 25 years in 2016 but is expected to turn in growth of 1.0 percent this year and 2.5 percent the following.

South Africa is expected to expand 0.7 percent this year after escaping a six-month recession last quarter that was partly due to weak confidence and drought.

Confidence in South Africa’s economy has been sapped by the chopping and changing of finance ministers four time since the end of 2015 by President Jacob Zuma. The last change in March triggered a credit rating downgrade to “junk” status.

Kenya is expected to grow 5.2 percent this year and 5.9 percent next.

Growth slowed to 4.7 percent in the first quarter, hit by a credit slow down after authorities late last year capped the interest banks could charge on loans.

However, Ghana is expected to fare better than most, growing 6.1 and 6.8 percent in 2017 and 2018 respectively, supported by the IMF programme, recovering from 3.5 percent last year.

On Tuesday, President Nana Akufo-Addo said Ghana would not extend its three-year aid programme with the IMF beyond April 2018, but the fund urged it to do so to allow time to complete the programme’s goals.

 

 

(Editing by Jonathan Cable/Jeremy Gaunt)

 

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Mazda recalls additional 19,000 vehicles in South Africa over airbag scare

17 July 2017 Comments (0) Latest Updates from Reuters

CAPE TOWN (Reuters) – Mazda Motor Corp. is recalling 19,000 cars in South Africa due to airbag safety concerns as the Japanese carmaker extends a global recall to cover a wider manufacturing period, its local unit said on Monday.

The recall was prompted by investigations in Japan and North America for three different types of Takata Corp manufactured airbags over safety concerns that inflators were defective.

The U.S. National Highway Traffic Safety Administration said in July that new testing was prompting Takata Corp to declare 2.7 million air bag inflators defective in Ford Motor Co, Nissan Motor Co and Mazda vehicles.

Takata air bag inflators have been linked to 17 deaths and more than 180 injuries worldwide, and the recalls will eventually cover about 125 million inflators.

 

(Reporting by Wendell Roelf, editing by Louise Heavens)

 

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Kumba Iron Ore expects surging interim profits after price recovery

14 July 2017 Comments (0) Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Kumba Iron Ore said it expects half-year profits to rise by as much as 58 percent due to a recovery in iron ore prices.

Kumba, which is 70 percent owned by Anglo American, said headline earnings per share (EPS) were likely to be between 13.70 rand and 14.85 rand for the six months through June, an increase of between 46 percent and 58 percent.

“The increase in earnings for the period is largely attributable to higher export iron ore prices, partially offset by the stronger rand/US$ exchange rate,” the company said in a statement.

Headline EPS is the main profit measure in South Africa and strips out certain one-off items.

Shares in Kumba were down 1.2 percent at 171.50 rand by 0710 GMT, hit by a near 3 percent drop in China’s iron ore futures after data added to concerns about surplus supply.

 

(Reporting by TJ Strydom; Editing by Susan Fenton)

 

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