Steel Prices on the rise, steel prices in South Africa continue to increase, after back to back increases in July and August, the industry is bracing itself for a further whopping increase of around 10% in September. The continued load shedding is also a massive contributor to the demise of the South African steel industry. Continuous load shedding is creating constant interruptions in the manufacturing process and bringing the steel industry to its knees.
The steel industry continues to fight off cheap imports, the lack of local scrap metal and no backing from the government is not helping either.
Dark days ahead, As of 13th August Eskom once again implemented stage 2 load shedding in South Africa, however research institutes are warning that this could be the worst year yet.
Researchers at the Council for Scientific and Industrial Research have said that 2020 is shaping up to be worse than 2019 in terms of load shedding, unless key decisions are made to stem the country’s ongoing energy crisis.
This is despite initial hopes that the early phase of the country’s Covid-19 lockdown might grant the beleaguered state-owned power utility a reprieve – and despite Eskom CEO Andre de Ruyter expressing a hope, in January, that load shedding might be limited to just three days over the winter period.
Wright, a power and energy specialist, said SA had experienced its worst year of load shedding on record in 2019, with 1352 GW/h of cuts over 530 hours.
He said load shedding for 2020 was projected to reach 1383 GW hours. The lion’s share of the rolling blackouts will likely to be implemented at stage 2.
“In terms of intensity, 2020 is now the most intensive load shedding year,” Wright said.
Wright notes the 2019 Integrated Resource Plan indicated a shortage of energy supply until planned new-build capacity comes online.
By 2022, the energy shortfall is expected to reach 4500 GW/h, at a cost of R60 billion to R120 billion to the economy.
Wright warned that load shedding is expected to continue for two or three more years, depending on whether key decisions were made to address the country’s ongoing energy troubles.
Level 2 arrives, there was some rejoice and positivity in South Africa over the weekend as President Cyril Ramaphosa announced Level 2 of the Risk Strategy Assessment would come into effect as of Midnight Monday 17 August. The tobacco and alcohol industry is now allowed to operate which will slowly boost the economy to some point, however it may be a little too late for the alcohol industry.
Addressing an economic fallout webinar prior to the second booze ban, SAB entrepreneurship manager Barbara Copelovici said the two-month-long ban “had a massive impact on our supply chain.
“We tried to get a lot of smaller suppliers to work with us but unfortunately it created some sort of dependency.”
The ban, she stressed, had totally scrapped if not halved the income of SAB’s rural value chain distribution network.
“The destructive snowball effect on the entire ecosystem,” Copelovici spoke of back then, is now anticipated to be far worse once SAB has taken stock of the negative externalities of the Covid-19 lockdown.
Hard facts of what could’ve been prevented had the second ban not been foisted on the liquor trade by an inflexible government acting on public health service advice that increasingly seems ill advised, were recently revealed when it emerged that the first six weeks of the lockdown alone had resulted in a tax loss of R15.4 billion.
A further R13 billion was recently mentioned as being lost to the fiscus, 118,000 jobs are also at stake.
Truck shortages, there is currently a shortage of trucks in and around Southern Africa, the cause of this is possibly being linked to the impact of slow clearance at the various border posts within the Southern and Central African districts. Last week there were little to no trucks available for going north, however this week it seems to be the opposite as all the South Bound trucks are stuck whilst northbound is flowing.
Curfew prevents clearing, as long as Zimbabwe’s Covid-19 dawn-to-dusk curfew is in place the Beitbridge border it seems will remain a headache for hauliers, especially for transporters and truck drivers going north.
The 6pm-6am infection-containment strategy instituted by Zimbabwe has had a major impact on human resource efficiencies at the border and has left industry bodies like the Fesarta hard pressed to find solutions for the notoriously congested crossing.
Weeks have passed and the border is still a choke point for cargo moving from South Africa to is northly neighbouring countries resulting in massive queues south of the border which have been recorded up to 60kms at a stage.
This past long weekend again proved the importance of having personnel who fulfil certain functions working 24/7 when delays occurred due to the lack of a stamping officer on the Zimbabwean side.
Its been said that in Africa, the “stamp” rules.
Also, last week there was an announcement now that all personnel entering offices at the Beitbridge border post will have to present a valid negative COVID test, this included clearing agents, runners and officials has put a lot of stress on clearing agents and an increase in operating costs.
On a positive note, it seems that the corrupt officials have disappeared from the area and drivers are no longer being extorted for bribes in order to proceed to the border ahead of their fellow truckers.
This is welcoming news as last week things almost flared up over night when honest truckers decided to block the pathways of queue-jumpers.
Following up from last weeks’ update, Kasumbalesa in DRC and the Trans-Kalahari Corridor in Botswana seem to be running as smooth as possible as well Chirundu in Zambia.
Cape Town Port back to business, Mpumi Dweba-Kwetana who is the manager for the Port of Cape Town, has informed the freight industry that operations at the port have returned to normal following an extended period of backlogs created by personnel disruption caused by Covid-19.
A statement released by Transnet National Ports Authority (TNPA) yesterday said the port had reduced vessel waiting time at anchorage and berthing delays, clearing the serious backlog of queued vessels and terminal congestion that had been experienced due to the lockdown, Covid-19, and operational challenges.
However, recovery at the Multi-purpose Terminal is lagging behind the Cape Town Container Terminal where vessel delays are a day at the most. The MPT is expected to announce its recovery plan at the stakeholder sessions in due course.
Ups and downs of the mines, Botswana’s diamond sales have been greatly affected by the COVID-19 pandemic that has seen sales volumes drop by two thirds, this, according to a publication, was caused by low demand which was also exacerbated by travel restrictions which grounded many operations.
Stats show a worrying trend as Botswana’s borders remain closed since March 2020 as a COVID-19 containment measures. It is reported that exports of diamonds from Debswana, a joint venture between Botswana and De Beers stood at US$293 million in the second quarter of 2020 from US$916 million in the previous quarter.
No exports were recorded in the month of May with only US$20 million recorded in June.
Further south, South African gold miners, Harmony Gold Mining Company managed to achieve up to 75% of planned production during the last quarter of its financial year to June 30.
However, year-on-year, total gold production was 15% lower at 1.2-million ounces, mainly as a result of the impact of the Covid-19 national lockdown and phased recovery in South Africa.
Year-on-year, the average underground recovered grade of Harmony’s South African assets was 2.5% lower at 5.45 g/t, compared with 5.59 g/t in the 2019 financial year. This was mainly a result of the impact of ongoing remedial actions to address geological challenges and seismicity at Kusasalethu.
Harmony notes that gold prices have rallied to an all-time high following the global economic fallout from Covid-19 and ongoing geopolitical uncertainty supporting its safe haven status with investors.
The average gold price received for the year under review was 25% higher, at R735 569/kg, compared with R586 653/kg in the prior financial year.
The Gold Miners estimate that the operating free cash flow margin for the year under review may double, from 7% in the 2019 financial year, to about 13% to 15%.
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