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South African rand pulls back on domestic growth worries

13 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand retreated from 10-week highs against the dollar on Wednesday, as nagging worries about domestic growth offset the boost from a generally risk-on global environment.

Stocks were set to open a touch firmer, with the Top-40 futures index of the JSE securities exchange edging up 0.3 percent.

The rand traded at 14.4225 to the greenback by 0859 GMT, down 0.57 percent from Tuesday’s close at 14.3410.

The currency had climbed to 14.2755 on Tuesday, its strongest since May 3, partly buoyed by a surprise jump in local manufacturing output.

The outlook for the economy, however, still remains downbeat, raising the risk of credit rating cuts before the end of the year. The IMF has cut its growth forecast for 2016 to 0.1 percent from the 0.6 percent predicted in May.

South African government bonds also dipped on Wednesday, and the yield for debt due in 2026 added 1.5 basis points to 8.675 percent.

 

(Reporting by Stella Mapenzauswa; Editing by Toby Chopra)

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South Africa’s Sibanye Gold to cut jobs at loss-making Cooke 4 mine

11 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Sibanye Gold has began talks with unions for job cuts at its Cooke 4 mine after failing to stem heavy losses at the operation.

The company first broached the subject of job cuts at the mine with unions in November 2014. Since then Cooke 4 has continued to fall short of production targets and accumulate losses forcing the producer to re-open talks, the company said.

The chief executive of Sibanye’s Gold operations, Wayne Robinson, said in a statement the losses at the mine threatened the viability of the other three Cooke operations.

“It is unfortunate that despite the joint efforts of stakeholders, the Cooke 4 operations have been unable to meet required production and cost targets and has continued to operate at a loss,” said Robinson.

The Cooke operations, including four mines and three processing plants, had an operating loss of 4 million rand ($274,000) in 2015, the company said.

Job cuts are a thorny issue in Africa’s most industrialised country where the unemployment rate is near 27 percent, a big concern for companies faced with labour disputes. Unions were unavailable to comment but have opposed job cuts elsewhere.

Sibanye spokesman James Wellsted said the previous round of negotiations in November had led to some job cuts and a new plan to revamp the mine but the operation continued losing money.

He said the mine was unlikely to run with fewer people if it was unable to pay for itself.

“I don’t want to preempt the consultation process and obviously we are looking for solutions but we have not been able to improve the situation,” Wellsted said when asked whether the mine would be shut.

Sibanye employs 1,700 workers at Cooke 4 and about 7,000 workers at all its four Cooke operations, he said.

($1 = 14.6182 rand)

 

(By Zandi Shabalala. Editing by James Macharia)

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South Africa’s rand steady, stocks to open higher

11 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand held its ground early on Monday and was seen getting a boost from improved risk appetite as investors search for higher yields on expectations interest rates will stay low in leading economies.

At 0630 GMT, the rand traded at 14.5825 per dollar, not far off its New York close of 14.5750 on Friday.

“The much-stronger-than-expected (U.S.) payrolls figure has not hurt global risk appetite or the rand. The market has taken the figure as confirmation that the US economy is not slowing down but not so strong that the Fed will have to hike” Rand Merchant Bank analyst John Cairns said in a note.

“A rate cut from the Bank of England on Thursday would further encourage risk-taking.”

Several U.S. Federal Reserve officials are scheduled to speak this week, offering plenty of opportunities for the market to glean clues about policy.

Stocks were set to open higher at 0700 GMT, with the JSE securities exchange’s Top-40 futures index up more than 1 percent.

In fixed income, the yield for the benchmark instrument due in 2026 dipped 2 basis points to 8.685 percent.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by Andrew Heavens)

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South Africa’s AMCU union to start wage talks with platinum firms next week

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

JOHANNESBURG (Reuters) – The largest union in South Africa’s platinum industry said on Thursday it would be demanding higher wages for its members when it begins wage talks next week with Anglo American Platinum, Impala and Lonmin.

The union will seek a net salary of 12,500 rand ($853) as minimum wage for its lowest paid members who now take home around 8,000 rand or a 56 percent increase, and a 15 percent hike for higher paid employees when the talks start on July 12.

“At the rate that inflation is running I think surely we should push every worker in the mining sector to be (earning) 12,500 rand,” AMCU’s president Joseph Mathunjwa told reporters, adding that he would push for a one-year wage agreement.

The platinum firms did immediately respond to requests for comment.

While South Africa is by far the world’s largest platinum producer, the industry has been squeezed by rising costs, labour unrest and plunging global prices for the commodity.

Demand for the metal used to build emissions-cutting catalytic converters in automobiles has also been tepid.

The union made similar pay demands during the platinum wage talks in 2014 as well as in the gold sector in 2015, saying it was seeking “a living wage” for its members.

In both instances the hardline union was unsuccessful, which triggered a record five-month work stoppage in the platinum sector in 2014. The union did not hold a pay strike in 2015.

The companies are still recovering from the 2014 strike with Lonmin and Implats forced to raise cash from investors and Amplats hastening its mechanisation drive through sales.

“We will be approaching these wage negotiations with both parties respecting each other because they know what we are capable of,” Mathunjwa told Reuters.

This year’s wage-bargaining season has kicked off in the power, automotive and mining sectors, with some demands ranging from 13 to 20 percent, far above the current inflation rate of 6.1 percent.

($1 = 14.6545 rand)

 

(By Zandi Shabalala. Editing by James Macharia)

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South Africa’s net reserves rise to $40.826 billion in June

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

JOHANNESBURG (Reuters) – South Africa’s net gold and foreign exchange reserves rose to $40.826 billion in June from $40.48 billion in May, Reserve Bank data showed on Thursday.

Gross reserves rose to $46.366 billion from $46.081 billion previously, the central bank said.

The forward position, which represents the central bank’s unsettled or swap transactions, edged down to $1.616 billion in June from $1.64 billion in May.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by Kevin Liffey)

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South Africa should not underestimate ratings downgrades risk

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

JOHANNESBURG (Reuters) – South Africa should not underestimate the risk of credit rating downgrades this year if the ailing economy does not improve, Central Bank Deputy Governor Daniel Mminele said on Wednesday.

Pretoria dodged ratings downgrades from Moody’s, S&P Global Ratings and Fitch earlier this year, giving policymakers time to act to strengthen the economy of Africa’s most industrialised country before the next round of reviews due by December.

Analysts have said South Africa’s economy faces hurdles and that the threat of “junk” status is looming.

“During May and June, South Africa received confirmations of unchanged credit ratings from all three major credit rating agencies,” Mminele said in a speech posted on the bank’s website.

“These confirmations, however, came with a very clear message: further improvements in the macroeconomic fundamentals are required.”

He said this suggested that “in the absence of demonstrable progress being made as part of a concerted effort involving all social partners, the risk of downgrades during the next reviews towards the end of this year should not be underestimated.”

The bank expects South Africa’s economy to grow by 0.6 percent this year and a modest recovery is seen over the next two years, but Mminele said the assumptions underlying the estimate had not factored in any possible spillover effects from Britain’s vote to leave the European Union.

“The UK’s present and future are now riddled with uncertainty, naturally accompanied by a flight to safety,” Mminele said.

“For South Africa, the implications through direct trade links are expected to be relatively minimal. In 2015, the UK accounted for only 4 percent of our total merchandise exports.”

Mminele, however, said financial linkages were far larger relative to the size of the South African economy.

For example, the value of South African assets owned by UK corporates and investment funds amounted to 46.5 percent of South Africa’s gross domestic product (GDP) at the end of 2014.

In turn, South African investors owned UK assets amounting to 33.2 percent of the African country’s GDP.

“In addition, both foreign direct investment and portfolio flows are also significant. This means that South Africa could very well be affected by the realization of tail risks emanating from asset liquidation by UK corporates and investment funds,” Mminele said.

 

(Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia)

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Tinkering with South African fiscal policy won’t boost growth

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

JOHANNESBURG (Reuters) – South Africa’s economy is not growing fast enough to create jobs, but tax cuts or increases in public spending are unlikely to stimulate growth, a senior Treasury official said on Tuesday.

South Africa’s unemployment currently hovers close to 27 percent of the labour force, while data on Monday showed employment in the formal sector fell by 0.2 percent to 9.273 million people in the first quarter of the year.

The Treasury estimates that Africa’s most industrialised country could grow by 0.9 percent this year compared with 1.3 percent in 2015, while the central bank and the International Monetary Fund have forecast 2016 growth at 0.6 percent.

“It is unlikely that growth … will come from tinkering or manipulation of macroeconomic policy variables …, in other words reducing taxes or increasing expenditure,” Director General Lungisa Fuzile told a business conference organised by the Gordon Institute of Business Science.

Finance Minister Pravin Gordhan in February unveiled a package of spending cuts, civil service job freezes and moderate tax hikes, partly to avoid credit rating downgrades.

Fuzile said reforms were underway at more than 300 publicly-owned companies which the Treasury has pledged to wean off state bailouts, though he did not elaborate.

Many of these firms are a drain on the state budget and have been flagged by all three major ratings agencies as a risk to South Africa’s investment grade status.

 

ELECTIONS LOOM

Fuzile said he was concerned about the quality of governance among those firms, adding that the Treasury was close to finalising proposals for merging two state-owned airlines, South African Airways (SAA) and SA Express.

However, political analysts say the reform of state firms could suffer amid preparations for local government polls in August and factional contests in the ruling African National Congress which have led to violence and deaths across the country.

“Under such circumstances, you are not going to have a sober debate in cabinet about what to do to fix (the state firms). The calculus is not sound governance,” analyst Prince Mashele told Reuters on the sidelines of the business conference.

South Africa’s private sector contracted in June after expanding for the first time in a year in May as output fell and companies cut jobs, a survey showed on Tuesday, while another report pointed to waning consumer confidence.

 

(By Mfuneko Toyana. Editing by James Macharia and Gareth Jones)

 

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Paul Ballen looks to make ice-cream a South African passion

4 July 2016 Comments (0) Africa, Featured, Leaders

Paul Ballen Ice Cream

Paul Ballen’s ice-cream startup is making waves with its unique flavors and fresh approach.

Ice-Cream is pretty big business across much of the world, but South Africa is not a name that most would connect with the frozen treat. Paul Ballen is a man intent on changing this, and on creating a brand of ice-cream that is known for its quality and innovative flavors.

Ballen’s company, the eponymous Paul’s Homemade Ice-Cream, has been creating a stir in his hometown Johannesburg with its bold varieties and focus on high quality ingredients.

As the Paul’s Homemade Ice-Cream range expands and grows in popularity, ice-cream lovers will be hoping it spreads outside of its home country.

It started with a gift

The beginning to Ballen’s company began only 6 years ago, when his mother bought him an ice-cream maker for his 21st birthday. Something that was initially just a bit of fun in his parents’ kitchen, turned into a passion and a small source of income. Bellen said, “I started playing with different flavors and textures. I shared it with my friends and…ran it as a side business throughout my university studies and began supplying delis and cafés.”

Paul's ice cream flavors

Paul’s ice cream flavors

This small project slowly grew, as Ballen used social media to show people his latest flavor creations. One machine in his parents’ kitchen became three machines in the garage, as Ballen began to take orders from friends and local people. At this stage the business had grown, but it was still a very small operation. However, Paul Ballen decided to team up with a University friend, Josh Amoils, and as business partners the duo decided to make Ballen’s passion a full time enterprise.

Amoils said, “I was excited about new ventures and new opportunities and we decided to give it a go in March 2014. We moved from the garage at Paul’s parents’ house to a workshop…we simultaneously had to get on the road and visit distributing outlets to try get our ice cream out there. Things just developed from there. We just constantly kept moving forward.”

Innovative flavors lead the way

A consistent factor with Paul’s Ice-Cream, whether from his early experiments in 2010 to his latest releases, is the focus on unusual flavors and fresh ingredients.

While the range includes classic ice-cream flavors, Ballen is constantly trying new combinations and ideas to ensure that the range excites consumers.

To get an idea of their range, consider that as well as offering the ubiquitous strawberry flavor, there is also a Strawberry & Pink Peppercorn. How many other brands of ice-cream offer flavors such as, White Russian, Oatmeal & Raison and Spiced Pumpkin & Marshmallow?

Paul's Homemade Ice-Cream

Paul’s Homemade Ice-Cream

While many of these flavors remain as permanent fixtures in their range, what really differentiates Paul’s Homemade Ice-Cream is that, as an artisanal product it can constantly offer limited edition flavors to keep interest high.

Ballen says, “We create really innovative flavors. Each month we run a campaign where we create a buzz around a topic or theme and then develop an ice cream flavor based on the theme, which is then available for that month.

These flavors are also highly focused on fresh ingredients with no artificial flavorings, and no automated machinery involved in creating each batch. Amoils explains that, “We only use natural ingredients, no preservatives, no additives. We don’t compromise on the quality of the ingredients, they are as good as you can get. We feel our stuff is made with love.”

The future of Paul’s Homemade Ice-Cream

Several cafes and restaurants around Johannesburg now stock Paul’s Homemade Ice-Cream, and the company has had international media interest. Despite growing interest, the company’s ice-creams remain a true craft product, as opposed to a mass-produced product that simply uses the fashionable label of “craft” for marketing.

Bullen and Amoils currently employ a workforce of 20 people, and like any successful business it is bound to grow, but neither of the two entrepreneurs wishes to alter the ethos of what has made the company so popular with its customers. Amoils explained, “We would rather maintain our current process of training up craftsmen, as opposed to investing millions in machinery to scale up production.”

While it is an admirable approach, it means that it could be a while before dessert lovers outside of South Africa get to enjoy White Rabbit or Apple Pie flavor ice-cream.

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Strategic Fuel Fund’s bid for Chevron South Africa assets faces probe

30 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s state-owned Strategic Fuel Fund (SFF) will face an investigation by its shareholder for making a bid to buy Chevron’s local assets without seeking clearance, a government official said on Thursday.

SFF, which manages crude oil reserves in Africa’s most industrialised country, said on Wednesday it had approached the oil major with an offer to buy its 75 percent stake in Chevron’s 110,000 barrels per day refinery and other downstream assets.

“An offer to purchase by an entity of the Department of Energy requires express consent from the Minister of Energy as the ultimate shareholder representative. This was neither sought nor obtained,” Director-General at the energy department Thabane Zulu said in a statement.

Zulu said his department will investigate SFF for its “complete disregard for governance processes”.

SFF officials were not immediately available to comment.

Chevron’s officials in South Africa did not immediately respond to request for comment.

Chevron, which has had a presence in South Africa for more than a century, said in January it would sell its business in the country, including its refinery in Cape Town, after making similar sales in Nigeria due to weak oil prices.

Besides the refinery, Chevron also has interests in a lubricants plant in Durban on the east coast. Its network of Caltex service stations makes it one of South Africa’s top five petroleum brands, according to its website.

 

(Reporting by Tiisetso Motsoeneng; Editing by James Macharia)

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South Africa’s slowing growth to be hit by Brexit: Reserve Bank governor

29 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – The governor of the South African Reserve Bank said on Tuesday that although the decision by Britain to exit the European Union would not cause a recession, already slowing economic growth would be hit.

Speaking to Bloomberg TV in Portugal Lesetja Kganyago said: “We would not venture into a recession at this stage, but there is no doubt that it will slow the South African economy from the weak growth that we already have.”

Finance Minister Pravin Gordhan said on Sunday financial market volatility caused by Britain’s decision to quit the EU, which sent the rand tumbling, could hurt investment flows into South Africa.

Britain voted last week in a referendum to leave the EU, wiping billions of dollars off world equity markets.

“It has affected sentiment and investors were looking for safe assets. We are not seen as one of the safe assets,” Kganyago said.

South Africa’s economy is barely growing, hobbled by power cuts last year, low commodity prices, drought and political ructions that have unnerved investors.

Africa’s most advanced economy contracted in the first quarter, putting it on track for its first recession in seven years.

 

(Reporting by Zandi Shabalala)

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