Steel shortages continue! The steel shortage in South Africa continues with rumours spreading that by mid year the sector should start to see an increase in steel levels as Mittal’s furnaces start to reach full capacity.
There is yet another steel price increase looming for the month of March totalling 8 consecutive steel increases over the past year into 2021 excluding December 2020.
ArcelorMittal SA announced last week that it will ramp up the production at its Vereeniging operation from half to full capacity, which is a direct response to a sudden increase in demand within South Africa and African overland markets.
The billet produced at the Vereeniging mill will be used for specialty input material to its Gauteng operations and various other mills across the country. It is expected to reduce the production demand from the Newcastle operation, which in turn will ensure more steel can be supplied to its long steel customers.
There is a base tariff protection on flat and long steel imports into South Africa of 10% and certain flat products are also subject to safeguard duty of 8%, which results in overall protection of 18% on certain grades.
Now with the hospitals requiring oxygen for COVID patients, this has thrown a spanner into the works for the steel sector, oxygen is in such short supply in South Africa that some companies are paying 30 times the usual going rate to keep critical equipment going and projects on track.
Companies with critical equipment that require oxygen were stretching what they have and rationing where necessary, in one case paying R4,000 for a bottle, compared to a usual price of R140.
Both Afrox and Air Liquide issued for majeure notices to customers in the face of what they said was a clear ethical and moral duty to prioritise supplies.
Industrial users have accepted that need, but say they hope to talk to suppliers about future supply crunches.
Livingstone closure sparks outcry, there’s been an uproar from opposition ranks of cross-border transporters ever since Zambia’s Road Development Agency decided to prevent road hauliers from using the Livingstone-Vic Falls border with Zimbabwe from March 1, as decision that has been on the cards for some time.
The reason for this decision is that the Zambian government feels that due to the bridge being a single lane carriage-way it’s affecting tourism in a negative way as most of the vehicles crossing are for road freight, which has been on the increase.
Essentially it means logistic operators into the Copperbelt in Zambia and the Democratic Republic of the Congo will have to cross the Zambezi at Kazungula, a treacherous ferry transit which is sparking concern from transporters as there has been cases in the past where trucks have slipped off the ferry due to safety measures not being followed. The decision is also particularly bad for hauliers based in Zimbabwe sending shipments to the Copperbelt.
The secret of Kazangula, months after the much-hyped Kazungula Bridge across Zambia’s touch-point with Botswana, Zimbabwe and Namibia’s Caprivi Strip was finalised, transporters are nowhere near knowing when the bridge will be handed over to the respective road authorities for use.
Word on the ground has been that the opening could be any day now, since the bridge’s lights were turned on in September last year, as if to signal that southern African logistics could be in for an early Christmas surprise but still to now, there is no concrete evidence as to when the bridge will be open for use.
There has been speculation that the necessary bilateral agreements between Botswana and Zambia haven’t been signed yet.
Its time the bridge is opened now especially since the announcement of the closure of Livingstone-Vic falls, this will aid in goods moving smoothly both north and south as well as faster turnaround times as transporters won’t have to deal with the ferry system.
Vedanta denied halt of KCM split, A Zambian court on Monday dismissed a motion by miner Vedanta Resources’ seeking to stop a state-appointed provisional liquidator from splitting up its Konkola Copper Mines (KCM) unit and selling the assets.
Vedanta has been in an ongoing dispute with the Zambian government since May 2019, when the Zambian government, which owns 20% of KCM through state mining investment firm ZCCM-IH, handed control of the mine to a liquidator.
Vedanta said the plan to split KCM is illegal, and would result in a substantial loss in revenue for Zambia.
In an announcement in December, President Edgar Lungu said KCM would be split into two subsidiary companies, KCM SmelterCo Ltd and Konkola Mineral Resources Ltd, which would be effective 1 February 2021.
While the split was delayed by Vedanta’s injunction order, it is noted that the two entities are expected to begin to operate soon.
Tanzanian assets revived, Barrick Gold reported last week that it had successfully revived its North Mara and Bulyanhulu gold mines in Tanzania with North Mara having significant improvements and underground production being restarted at Bulyanhulu.
Both mines produced close to the top of their production guidance in 2020 under Barrick’s first full year. The Tanzanian operations delivered a combined output of 462,472 ounces for the year.
During the fourth quarter, North Mara posted a record throughput while Bulyanhulu recommenced processing of underground ore, Bulyanhulu is scheduled to be in full production during the first half of 2021.
Barrick assumed control of these assets after re-acquiring Acacia Mining in September 2019. The company is now managing the mines.
Barrick is currently optimizing a 10-year plan to make the combined North Mara and Bulyanhulu mines its seventh tier-one asset by bringing them into the lower half of the industry’s cost curve. At the same time, the company continues to work on improving relations with its host communities.
Zimbabwe scraps indigenisation law, last week miners in Zimbabwe were worrying over an amendment to ownership laws that seemingly reintroduce the country’s controversial laws which were previously scrapped in 2018. The change in laws back then paved the way for foreign owned entities to rightfully hold up to 100% ownership of a mine.
However, the wording of this amendment was unequivocally flawed, leaving it very much open to interpretation. In a joint statement issued by the ministries of finance and mines it was claimed that “last weeks’ notice may have caused some misconception to some inventors and other stakeholders in the mining sector”
Coincidentally, whilst this has captivated the attention of many, it has come to light that the Zimbabwean government has granted mining entity Great Dyke Investments a five-year tax exemption. In a notice, deemed to have come into effect from 1 January 2020, it is stated that “the receipts and accruals of Great Dyke Investments (Private) Limited, as per the Special Mining Lease Agreement signed between the Government of Zimbabwe and Great Dyke Investments (Private) Limited are approved”.
Nigeria to aid Mozambique in terrorism fight, Nigeria has offered to support Mozambique in its fight against Islamist insurgents in the gas-rich northern province of Cabo Delgado. Nigeria joins a list of numerous African and international countries offering aid to the terrorism rife region.
More than 2,000 people have been killed and more than 500,000 others displaced in the violence, according to the International Committee of the Red Cross.
It is said that Nigeria is ready to share its experience of fighting Islamist militants and provide support to Mozambique. But observers will question whether it’s best placed to offer advice, given the continued insecurity in Nigeria.
Mozambican President Filipe Nyusi urged the defence and security forces to fight hard against terrorists in the province of Cabo Delgado and against the Renamo Military Junta in central Mozambique.
Nyusi also urged those who have joined terrorist organizations and armed rebel groups to surrender, disarm, demobilize and reintegrate into the society.
Happy New Year! Abeyla Exports would like to wish our Chinese customers a happy new year with many blessings for the year ahead!
“Knowledge without wisdom is like water in the sand”
Border Mayhem, despite efforts being made at Beitbridge border post to reduce heavy congestion, things are just not going their way especially since the curfew that was recently placed in Zimbabwe only allows the once 24hour operation to operate on a 12-hour shift. It has been almost two weeks now since the curfew was placed and cargo continues to build up both north and south of the border.
“One of the issues we’re experiencing at the moment is the runners that can’t cross the border,”
“Before the six-to-six night curfew was implemented, runners from Zim would cross the border and collect all the necessary monies for road tolls required to carry on north. These include things like coupons to get through Chirundu.
Unfortunately, because of the curfew, the runners can’t come through anymore and money can only be collected once drivers are on the Zim-side.
Another issue that adds to this is that the Zimbabwe Revenue Authority’s Documents Processing Centre is closed during the curfew.
However, there is some relief as authorities south of the border have been checking trucks in the queue and directing the drivers with incomplete documentation to move their cargo into the various trucking yards thus allowing drivers with correct documentation to proceed to the border.
It is also noted that trucks are being cleared faster on the Zim side as the officials are easing their expectations on how many trucks should be checked for smuggled goods.
Earlier in the week there were reported positive COVID cases and the border had to be closed for fumigation on Monday.
Following on from Beitbridge, a truck part at Zeerust on the Platinum Highway going onto the Trans-Kalahari Corridor in Botswana has been closed, originally it was said that this was due to a positive COVID case but upon further investigation the result of the closure came from municipal protest action being responsible for the issues that had an impact on the border.
Also, earlier this week, Kasumbalesa had closed its gates. This stems from political unrest in the DRC. Information received indicated that there was ongoing resistance to the political leadership of that province.
It is also noted that that solo journeys were discouraged because of the risk of armed assailants. In one case, assailants sporting assault rifles threatened a driver with his life and immobilised his truck by removing its batteries, which were thrown into roadside bushes.
Cape Town Port Gets the Nod, the middle of month deadline to clear the backlog seems to be well on course and the Western Cape Exporters’ Club (WCEC) had released information indicating that delays at the Cape Town Container Terminal (CTCT) are down to a day.
Based on a daily lockdown report issued by Transnet Port Terminals, the club said there were two vessels berthed at the CTCT – the MSC Shannon and the Santa Isabel with six teams of port staffers working the vessels.
It is recorded so far that 11,900 containers had been worked at the port last week although this number could have been higher if it wasn’t for a mechanical breakdown. Currently there is maintenance being done on the cranes.
The port has been battered over the past few weeks by heavy winds and massive swells but the waters are calm and the skies are clear which is great news.
More positive news coming from further north off the coast line, Durban Container Terminal took delivery of another 13 electric straddle carriers over the weekend.
According to a Transnet statement, the DCT Pier 2 now has a fleet of 15 new electric straddle carriers which are due to be commissioned and handed over to operations this month.
“The eighth-generation equipment arrived fully assembled with improved drive technology, starting reliability, maintainability, safety, usability, ergonomics as well as an ability for a computer application to read data from the control system via Ethernet – providing comprehensive detail on statistics, real-time performance data and operational reports,” according to Transnet.
Although there is a lot of positives in the industry so far there is however a dark cloud as the industry braces itself for massive additional charges after Transnet National Ports Authority (TNPA) asked for a whopping 19.74% tariff hike for the 2021/22 financial year.
This comes as the Ports Regulator of South Africa on Tuesday confirmed it had received the annual TNPA tariff application and that it had started a process of public consultation.
In its application for a nearly 20% tariff hike, TNPA stated that the South African economy had been challenged with slow economic growth, underinvestment, and increasing levels of unemployment for some time.
“The recent downgrades of South Africa’s sovereign credit rating to sub-investment grade by rating agencies has added to the woes of government burdened with rising debt levels, collapsing state-owned enterprises, and weak business confidence levels.
The Authority argued that it was viewed as a catalyst for economic growth and therefore more than ever needed to deliver on its mandate. To do so it required the 19.74% tariff hike.
Celebrating a milestone, August 24th calls for celebrations in Namibia as The Port of Walvis Bay will celebrate the opening of their new container terminal which was commissioned last year.
The NCT has recorded throughput of 115 146 s (TEU) in eight months of operation, and anticipates an upward growth trajectory despite the effects of Covid-19.
Another milestone for the port was its record-breaking 46 berth moves per hour on the Maersk Lunz earlier this year.
Gold Price Reaches New High, Gold advanced to a fresh record high on Wednesday – pushing towards the $2,050/oz mark after breaking through $2,000/oz on Tuesday on the back of a weakening dollar, falling US Treasury yields and expectations of more stimulus measures for the pandemic-ravaged global economy.
Bullion is up nearly 35% so far this year and is one of the best-performing assets in 2020. The precious metal is benefiting from heightened uncertainty around the long-term effects of the global health crisis, as more investors turn to safe-haven assets and an alternative store of value in a low-yield environment.
DRC suspends tax exemption, Democratic Republic of Congo is suspending the value-added tax (VAT) exemption on imports by mining companies in an effort to bolster state revenue, the budget minister said.
Jean-Baudouin Mayo told the finance minister to implement the government’s decision to suspend the exemption after cabinet agreed the move last week, according to a letter dated July 31.
Congo, Africa’s top copper producer, had exempted mining companies from paying VAT on imports since 2016 to help them during a commodity price downturn.
According to Louis Watum, president of Congo’s chamber of mines, mining firms had not been consulted before the government agreed to reimpose the tax, a move he said would hit cashflow.
“We want to make the government understand that if they begin to row back entirely on legal agreements, it will not help the business climate in our country,” he said.
Congo’s economy, which has been damaged by the coronavirus crisis that hammered the demand of copper and other forms commodities, is forecast to contract by 2.4% this year.
The International Monetary Fund has approved more than $731 million of disbursements in the past year to help the economy.
Congo’s foreign exchange reserves were just $836 million at the end of July, which is only enough to cover just over three weeks of imports, according to the central bank.
ArcelorMittal SA falls deeper, last week Africa’s steel giants released a statement advising that the company fell deeper into a half-year loss as demand for steel dropped due to COVID and output declined after operations were shut during lockdown.
ArcelorMittal SA said some parts of its business would remain idle until demand recovered which includes placing its melting operations at its Vereeniging works on care and maintenance from the third quarter. The company expects steel demand to be between 70% – 75% pre-lockdown levels for the foreseeable future.
Coming from a demanding 2019, the first half of 2020 proved to be a difficult time with the impact on business due to COVID. The steel producer which has long battled against cheap imports, rising costs and an embattled local economy, said last month it had begun talks to cut unspecified number of jobs as it tries to cut costs.
Job cuts are a sensitive topic in South Africa where unemployment currently stands at a record high of around 30%.
Now with the latest rumours of plate shortages looming due to lack of billets, the projected company losses will most likely take a bigger hit.
“We May Encounter Many Defeats But We Must Not Be Defeated”
Collapse of mining, COVID-19’s impact on the mining industry locally and abroad has been devastating, Zambia has recorded a drop of 30% in mining revenue between February and April 2020 whilst South Africa suffered a plunge of 50% in mining revenue due to the Hard-Lockdown during April.
One of Zimbabwe’s top gold mines has halted operations blaming the country’s foreign currency policies, which requires the mine to surrender 30% of its forex earnings at a rate of 25 to 1 USD while suppliers are selling at 80 to 1 USD. The mine believes that they are achieving less than 80% of their gold sales compared to the international market.
“The impact of this situation on the Company’s operations has been that the Company is no longer able to meet its operational expenditure requirements considering that the company is required to pay for electricity and fuel in USD along with almost all of its consumables and spares also being denominated in USD,”
“The company has therefore been forced to stop production of bullion due to its inability to buy essential consumables and spares and is actively considering placing all its gold mines under care and maintenance until a viable solution is found.” the mine has said.
Steel Giants Fined, ArcelorMittal Limited South Africa (AMSA) which is Africa’s largest steel producer has been fined R3.6million for exceeding the minimum hydrogen sulphide emission standards. AMSA’s steelworks which is located in the Vaal Triangle, an Airshed Priority Area that was declared a priority area in terms of the National Environmental Management, whom has concerns about the elevated pollution in these areas.
According to departments minister Barbara Creecy, the money received from the fine would be used to install air quality monitoring instruments.
AMSA is currently producing over 5million tonnes of steel per year, supplying South Africa with over 61% of its steel as well as exports to Southern Africa and further north.
Lubumbashi Lockdown, this is due to a spate of coronavirus infections, however the lockdown is not expected to have any effects on Kasumbalesa itself, transporters should expect delays although word is that this lockdown is only affecting private transport.
“To see what is right and not do it, is a lack of courage.”