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Zimbabwe wants mining companies to list on local exchange

5 April 2018 Comments (0) Actualites, Africa, Economy, Mining

HARARE (Reuters) – Zimbabwe wants mining firms to list on the local bourse as part of efforts under new president Emmerson Mnangagwa to boost investment and local ownership of its vast mineral resources, a new bill before parliament showed.

Mnangagwa, who took power in November when the military ousted Robert Mugabe after nearly four decades, has vowed to revitalise the economy and unlock investment in the mining sector after years of reticence by foreign investors.

“No mining right or title shall be granted or issued to a public company unless the majority of its shares are listed on a securities exchange in Zimbabwe,” the bill says.

Companies seeking rights to mine in the platinum-rich country but already listed elsewhere must notify the mines minister and use the funds from such public offers to develop the mine in Zimbabwe, the bill said.

A failure to comply would mean a liability of a fine equivalent to 100 percent of the cash raised at the foreign listing or as much as 10 years in prison.

Industry lobby group, Chamber of Mines, said its members were not opposed to the proposal to list on the local bourse but warned that exchange may not be deep and liquid enough for companies to raise capital.

“Our members are not averse to listing on the local bourse but it has no capacity to meet the needs of the members,” Chief Executive Isaac Kwesu said.

“Mining is a capital intensive business and some of our larger mines are listed on foreign exchanges because they are able to raise large amounts for working capital and for investment.”

Four mining companies, including Canada’s Falcon Gold and local diversified miner RioZim, are listed on the Zimbabwe Stock Exchange, which has a market capitalisation of around $8 billion.

 

(Reporting by Alfonce Mbizwo, editing by David Evans)

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Trafigura signs three-year cobalt deal with Shalina Resources subsidiary

5 April 2018 Comments (0) Actualites, Africa, Mining

LONDON (Reuters) – Commodities trader Trafigura has signed an offtake agreement for cobalt hydroxide running to December 2020 with Shalina Resources and its subsidiary Chemaf, based in the Democratic Republic of Congo (DRC), Chemaf said in a statement on Wednesday.

Interest in cobalt reflects a shift in the automotive industry to electric cars (EV), powered by lithium-ion batteries which also require components made from the metal as well as other materials such as nickel.

Trafigura has already increased its foothold in nickel with an exclusive offtake agreement with Finland’s Terrafame, that also produces zinc and cobalt.

“If as expected EVs account for an increasingly significant proportion of a growing global vehicle fleet from 2025, it will drive sharp rises in demand for nickel and cobalt,” Trafigura Chief Executive Jeremy Weir said in the company’s 2017 annual report.

“That provides a very promising environment for our growing cobalt and nickel trading activity.”

Chemaf specialises in cobalt and copper exploration. It produced about 5,000 tonnes of cobalt last year from its Etoile mine and processing plant in Lubumbashi, with production set to rise to 7,000 tonnes this year.

More than 60 percent of global cobalt production comes from the DRC. Trading and mining group Glencore, the world’s biggest producer of cobalt, has already signed major offtake agreements with Chinese companies.

Trafigura traded 69.9 million tonnes of metals and minerals in 2017, up 18 percent from 2016.

 

(Reporting by Julia Payne; Editing by Susan Fenton and David Holmes)

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South Africa’s Gold Fields ties up with Canada’s Asanko in Ghana

29 March 2018 Comments (0) Actualites, Africa, Business, Mining

JOHANNESBURG (Reuters) – South Africa’s Gold Fields will buy a near 50 percent share of Asanko Gold Inc’s Ghana subsidiary and take a stake in the Canadian miner in a $202.6 million deal announced on Thursday.

Investors were cautious, questioning whether the African joint venture would make a return any time soon and sending Gold Fields’ shares down nearly 6 percent, in an already weak bullion sector.

Gold Fields said in a statement that as well as acquiring half of Asanko Gold Ghana’s 90 percent interest in the Asanko Gold Mine, its Ghana subsidiary will also acquire associated properties and exploration rights in the African country.

Shares in Goldfields fell more than the broader bullion sector – which was down 2.8 percent – tumbling 5.9 percent to 46.01 rand by 0858 GMT.

“There’s always some execution risk, they are buying these things but can they actually make money out of it, is what the market is asking,” said Cratos Capital equities trader Greg Davies.

The deal includes an upfront payment of $165 million on closure of the transaction and a deferred payment of $20 million. Gold Fields’ subsidiary will also take a 9.9 percent stake in Toronto-listed Asanko for $17.6 million in a share placement.

The South African miner said the $203 million deal fitted in with its strategy to improve its portfolio by lowering all-in costs and extending mines’ lifespans to enhance cash generation.

Asanko, which is expected to produce 253,000 ounces of gold annually from 2019 to 2023 with a life-of-mine of at least 15 years, also has the potential to make further discoveries, Gold Fields said.

“The Asanko joint venture will give immediate access to low cost production ounces, increasing the quality of the Gold Fields’ portfolio,” the South African miner said.

(Reporting by Tanisha Heiberg and Nqobile Dludla; Editing by Susan Fenton)

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South Africa cuts main interest rate as inflation falls within range

28 March 2018 Comments (0) Actualites, Africa, Economy

PRETORIA (Reuters) – South Africa’s central bank cut its main interest rate to 6.5 percent on Wednesday, in another boost for the economy after ratings agency Moody’s left intact its last investment-grade credit rating.

Traders and economists had expected the 25 basis-point cut in the repo rate after a slowdown in consumer price inflation to 4.0 percent in February, which put price growth well within the central bank’s 3-6 percent target range.

It was the first easing step since July and comes as South Africa rides a wave of investor optimism in the wake of President Cyril Ramaphosa replacing scandal-plagued Jacob Zuma as head of state in February.

The rand fell, however, as the rate cut dents somewhat the appeal of local assets versus developed-market peers. Banking stocks also fell.

South African Reserve Bank Governor Lesetja Kganyago told a news conference that inflation risks had subsided somewhat since January and that the bank had raised its economic growth forecast for this year to 1.7 percent from 1.4 percent.

But he said that the bank had not started “a journey of cutting” and that the future path of the repo rate would depend on data.

Four members of the Monetary Policy Committee voted to cut the rate while three wanted to keep it on hold, Kganyago said. There was no discussion of a more aggressive 50 basis-point rate cut.

Despite the central bank’s broadly upbeat tone, Kganyago said that the growth outlook remained relatively constrained and that the policy-setting committee would prefer to see inflation expectations anchored closer to the midpoint of its target range.

Analysts said they were not expecting to see a flurry of further rate cuts.

Razia Khan, an Africa-focused economist at Standard Chartered, said: “We think that today’s 25 basis-point cut was probably it in terms of South Africa’s easing cycle”.

Moody’s said on Friday that it expected to see a strengthening of South Africa’s institutions under Ramaphosa which could translate into greater economic and fiscal strength.

S&P Global, another of the “big three” ratings agencies, said it wanted to see stronger per capita growth before it would consider raising its credit rating.

 

(Reporting by Olivia Kumwenda-Mtambo and Nomvelo Chalumbira; Writing by Alexander Winning; Editing by James Macharia and Hugh Lawson)

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South African rand at one-month peak after Moody’s rating reprieve

26 March 2018 Comments (0) Actualites, Africa, Economy

By Olivia Kumwenda-Mtambo

JOHANNESBURG (Reuters) – South Africa’s rand raced to a one-month high against the dollar on Monday and government bonds firmed as investors cheered Moody’s decision to change the country’s credit outlook to stable from negative while affirming an investment-grade rating.

Moody’s late on Friday affirmed South Africa’s debt at ‘Baa3’, the lowest rung of investment grade, saying the previous weakening of national institutions was gradually reversing which supported an economic recovery.

While the decision to affirm the rating was widely anticipated by market participants and largely priced in, the unexpected move to revise the rating outlook boosted markets.

At 0850 GMT, the rand traded at 11.6400 per dollar, 0.94 percent firmer than its New York close on Friday and its firmest level since Feb. 27, Thomson Reuters data showed.

In fixed income, the yield for the benchmark government bond due in 2026 dipped 10 basis points to 7.89 percent, reflecting firmer bond prices.

“What surprised markets on Friday is that Moody’s upgraded the rating outlook from negative to stable – which means that a downgrade is no longer likely even in the medium-term, unless of course new developments overtake us,” Commerzbank analysts said.

On the bourse, banks bucked the weaker trend on the broader market, rising 0.65 percent with FirstRand up 0.8 percent to 69.26 rand.

Banks, considered the barometer of both political and economic sentiment, have largely borne the brunt of previous credit ratings downgrades given their substantial exposure to sovereign debt and various state-owned companies.

INTERESTS RATE CUT?

A downgrade to a “junk” rating by Moody’s would have seen South Africa removed from Citi’s World Government Bond Index (WGBI) and could have triggered up to 100 billion rand ($8.58 billion) in asset sales by foreign investors.

Moody’s is the only major ratings agency that rates South African debt as investment grade after S&P Global Ratings and Fitch downgraded the sovereign to “junk” status last year following a deterioration in the country’s economic outlook.

South Africa has this year seen a return of sorely needed investor confidence since President Cyril Ramaphosa replaced scandal-plagued Jacob Zuma, who resigned in mid-February on the orders of the ruling African National Congress party.

Moody’s decision was likely to influence decision making at the three-day meeting of the South African Reserve Bank (SARB) Monetary Policy Committee, which starts on Monday, Nedbank analysts said.

The interest rates decision will be announced on Wednesday.

As consumer price inflation eases, a Reuters poll conducted before Moody’s review showed markets expect the central bank to cut its repo rate by 25 basis points to 6.50 percent to stimulate economic growth.

Forward rate agreements were on Monday pricing in a 94 percent chance of a 25 basis points rate cut in the benchmark lending rate, up from an 80 percent chance two weeks ago.

“We expect SARB to shift to an easing bias this year,” UBS analysts said. “Still, nominal and real yields should remain attractive compared to peers and support the return outlook for the rand.”

($1 = 11.6487 rand)

(Additional reporting by Tiisetso Motsoeneng; Editing by Peter Graff)

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Zimbabwe hopes to transform mining sector with $4.2 bln platinum deal

22 March 2018 Comments (0) Actualites, Africa, Economy, Mining

HARARE (Reuters) – A Cypriot investor signed a $4.2 billion deal on Thursday to develop a platinum mine and refinery in Zimbabwe, an investment that President Emmerson Mnangagwa said showed the country was “open for business”.

Signing the agreement with Cyprus-based Karo Resources, Mines Minister Winston Chitando said work would start in July, with the first output of platinum group metals expected in 2020, aiming to reach 1.4 million ounces annually within three years.

It was unclear, however, where all the funding would come from and analysts said the project start date of July looked very ambitious.

Located in the Mhondoro-Ngezi platinum belt, west of Harare, where Impala Platinum Holdings has operations, the project will include a coal mine and power station to produce electricity for the smelter, and should employ 15,000 people when fully implemented, Karo head Loucas Pouroulis said.

Keen to revive the mining sector after years of reticence by foreign investors during Robert Mugabe’s rule, President Mnangagwa said the deal showed things had changed since his ascendancy after Mugabe’s ousting in November.

“Zimbabwe is open for business and whoever stands in the way, hurting business in this country, will fall. It is not business as usual anymore, things have to change,” Mnangagwa said at the signing ceremony.

The project was first mooted six years ago but had been held back by government red tape and “other unnamed vested interests, which are corrupt interests,” he said.

Mines Minister Chitando added: “This is the largest investment structure in the country’s mining industry in Zimbabwe. The landscape of Zimbabwe’s mining industry will never be the same.”

Zimbabwe’s government did not give details of the source of funding for such a big investment.

Industry sources, who asked not to be named, said there was no obligation to provide any cash until firmer plans for the development were in place.

Cyprus-born Pouroulis spent his early career with industry giant Anglo American in South Africa, branching out on his own to establish more niche operators such as Petra Diamonds, Eland Platinum and Tharisa Minerals, according to his profile on Tharisa’s website.

As well as heading Karo, Pouroulis is chairman and founder of Tharisa, in which his family has a 45 percent stake.

Tharisa, which has chrome and platinum operations in South Africa’s Bushveld, has made clear its interest in the potential of Zimbabwe, which holds the world’s second-largest platinum deposits after neighbouring South Africa.

The company, however, has a market capitalisation of only 5.5 billion rand ($464 million), although it is well regarded by many city analysts and its share price has rallied 15 percent this year.

HSBC initiated covered of the stock on Thursday, rating it a buy. It predicted it would have a net cash position of $185 million by the end of 2022 and said platinum prices should benefit from continued supply curtailment in South Africa because of regulatory and funding uncertainty.

Foreign investment stalled in Zimbabwe during the later years of Mugabe’s reign.

Analysts say the outlook is still uncertain, but interest is strong in a country that has rich, underexplored resources.

An investment conference on Zimbabwe in London last week was heavily oversubscribed.

On Monday, Mnangagwa’s government amended the Mugabe-era Indigenisation and Economic Empowerment Act, which aimed to increase black Zimbabweans’ ownership of mines by preventing foreign entities holding majority stakes.

The revised law removed that stipulation for most types of mining, but not diamond and platinum mines.

Chitando said Karo Resources was expected to comply with the empowerment law by giving up majority ownership in the project. He did not elaborate.

($1 = 11.8491 rand)

 

(By MacDonald Dzirutwe; Additional reporting by Barbara Lewis in London; Editing by Ed Cropley/Robin Pomeroy/Susan Fenton)

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Spotify enters into the South African market

13 March 2018 Comments (0) Actualites, Africa, Business, Economy, Entertainment and Lifestyle, Technology

JOHANNESBURG (Reuters) – Global music streaming provider Spotify launched its services in South Africa on Tuesday, marking its entry into Africa, where there is a rapid uptake of smartphones and improving telecommunications infrastructure.

The Swedish company, launched in 2008 and available in more than 60 countries, is the biggest music streaming company in the world and counts services from Apple Inc, Amazon.com Inc and Alphabet Inc’s Google Play as its main rivals.

The South Africa launch comes as Spotify prepares for a direct listing of its shares on the New York Stock Exchange, which will allow investors and employees to sell shares without the company raising new capital or hiring Wall Street banks to underwrite the issue.

“We believe South Africa is a wonderful country to start in,” Spotify Managing Director in Middle East and Africa Claudius Boller told Reuters on the sidelines of the launch.

“We looked at the technology landscape, we looked at the maturity and actually South Africa is seen globally as a very important music market.”

Spotify also has aspirations to branch out into the rest of Africa, Boller said, without committing to timelines or geographies.

An increase in connectivity across South Africa, helped by higher investment in infrastructure, as well as a growing uptake in credit cards and bank accounts has drawn global video and music streaming providers.

Its music streaming market is dominated by players such as Apple Music, Google Play, France’s Deezer and Simfy Africa, with only a few local operators such as mobile phone operator’s MTN and Cell C with MTN Music+ and Black.

Internet and entertainment firm Naspers also recently launched music streaming platform Joox, from China’s Tencent, in which it holds a 33 percent stake.

In its filing to list its shares, Spotify said its operating loss widened to 378 million euros ($465.32 million) in 2017 from 349 million euros.

($1 = 0.8123 euros)

 

(Reporting by Nqobile Dludla; editing by Jason Neely and Pritha Sarkar)

 

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Barclays Africa lifts profit, looks to Nigeria for growth

1 March 2018 Comments (0) Actualites, Africa, Business, Economy, Leaders, Politics

By Ed Stoddard

(Reuters) – Barclays Africa Group, South Africa’s No.2 lender by market value, plans to extend its reach throughout the continent, it said on Thursday after posting annual profit up nearly 4 percent.

Chief Executive Maria Ramos said the bank, which is changing its name back to South African brand Absa after its split from former parent Barclays, aims to enter Nigeria as it seeks to lift its share of the African market to 12 percent from 6 percent over the medium term.

Finance Director Jason Quinn told Reuters that Nigeria has been in its sights for some time.

“We would have to think carefully about how and when to enter the Nigerian market and that is what we are going to start doing,” he said.

“We have to decide how we enter, whether we acquire or build.”

The bank had earlier reported normalised diluted headline earnings per share — the primary measure of profit in South Africa, stripping out one-off items — up 3.9 pct at 1,837.7 cents for the year to Dec. 31, helped by a 20 percent drop in credit impairments.

Net interest income, a gauge of lending profitability, rose by 1 percent to 42.32 billion rand ($3.56 billion), while its net interest margin was unchanged at 4.95 percent.

Growth in the United States was the positive surprise in the second half, even as Europe, Japan and China grew at or above consensus expectations, the bank said.

This more than made up for slow economic expansion in its main markets, which account for about 80 percent of group income.

Barclays Africa and its rivals have struggled to increase lending as slowing economic growth in many African markets tempers demand from corporate clients while retail clients in its home South African market feel the squeeze from rising interest rates.

However, confidence in its domestic market has been buoyed by the Cyril Ramaphosa’s elevation to the South African presidency last month, pledging to revitalise the economy.

Barclays Africa said it expects growth in loans and deposits to improve in 2018 and forecast stronger loan growth from the rest of Africa. It also forecast stronger loan growth in corporate and investment banking in South Africa.

($1 = 11.9025 rand)

(Additional reporting by Tiisetso Motsoeneng in Johannesburg and Esha Vaish in Bengaluru; Editing by Stephen Coates and David Goodman)

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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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