NUMSA

Trade Winds bimonthly update volume 44

NUMSA strike to go ahead, At a CCMA facilitated Dispute between NUMSA and other unions earlier this week, NUMSA exercised its right to call for the issuing of a certificate of non-resolution.

With NUMSA having declared it’s dispute against all the employer organisations on the 29 July, and SEIFSA and the Associations having countered with its dispute against NUMSA on 2 August, NUMSA is within its right to call for the certificate.

We will monitor the situation and circulate any information received but the feeling is that we must prepare for the worst-case scenario.

Some striking has been noted at various steel merchants around Johannesburg which in turn will lead to some disruptions in steel supply.

Border updates, Beitbridge is once again the centre of attention as delays continue, this time with various contributing factors. SARS’s systems have gone down.

Trade flows through the routinely congested transit have been a nightmare of late, with processing delays on the Zimbabwean side of the crossing slowing traffic to a trickle.

Now, with SARS also experiencing issues, the queue south of the border is expected to worsen and transporters are advised to make the necessary preparations for a long wait.

The question also remains as to why trucks working the north-south line through the Southern African Development Community should be checked and charged by Zimbabwean authorities as often as they are at the two primary transits on this route – Beitbridge down south and Chirundu in the north.

At the Limpopo River crossing, alleged over-inspection is resulting in a queue stretching for kilometres south of the border, although processing is affected because of physical constraints caused by construction work, it still doesn’t explain why the Vehicle Inspection Department is inspecting cargo already weighed immediately south of the border.

Transport carrying SA’s GDP, South Africa’s transport sector grew 6.9% in the year’s second quarter, becoming the biggest sector to add to the 1.2% economic expansion announced earlier this month by Statistics South Africa.

The mining sector, sustained by a growing demand for raw minerals by global manufacturers, grew 4%.

The South African economy recorded its fourth consecutive quarter of growth, expanding by 1.2% in the second quarter of 2021.

The economic impact of the wave of severe economic disruption, protest action and violence in KwaZulu-Natal and Gauteng, which took place in July, will only reflect in the third quarter GDP results, due for release in December.

Solar Power to reduce reliance on Eskom, The generation of solar power by top-performing gold mining company Pan African Resources is expected to lower reliance on power utility Eskom by up to 30%.

Pan African’s focus is to function off the national electricity grid during daytime hours at the moment as power storage options appeared to be very expensive at the moment.

The group’s focus now is solar and making sure it works. Ten megawatts will be the first plant and by early next year it would have proven itself.

Pan African produced 12.4% more gold over the last 12 months and reported a 36% increase in operating profit to $128 million.

Container rates continue to soar, container rates have more than quadrupled since the beginning of this year as shippers across the globe drive prices to levels well beyond the previous peak recorded 16 years ago.

The peak from 2005 is a whopping 128% lower than the level to which the current rates have increased.

To make matters worse for freight forwarders battling to keep up, the 128% increase is expected to curve upwards into 2022.

There is some hope as some freight liners such as CMA CGM have announced that freight rates will be paused till early next year as well as German shipping major Hapag-Lloyd confirmed that it had put a hold on freight rate increases on certain routes and would continue to do so for the time being.

Port congestion and severe capacity shortfalls have put shipping lines in the driver’s seat as rates skyrocketed. However, with lines under increasing pressure from shippers and regulators, perhaps this is the start of a cooling of rate rises.

Copper and Iron Ore prices drop, Iron ore price fell on Thursday after China reported a drop in the country’s steel production in August. The price of the commodity dropped by 7%.

China’s production was in excess of 83 million tonnes of crude steel in August, a 13% drop from the same period a year ago which is the lowest recorded level since March 2020. China’s efforts to cut emissions is the leading cause in the drop.

The price of copper is another commodity that felt a price drop as China has decided to release copper, aluminium and zinc from its state reserves, in an effort to overcome the gap between supply and demand.

China, being the world’s number one metal’s consumer had released 420,000 tonnes of the metals so far this year through batches where the public could bid on prices that sat slightly lower than the market value.

Copper was trading around $9,438 per tonne on Thursday.

The market now awaits the expected tapering of stimulus in next week’s US Federal Reserve meeting.

Zambian government to restore sanity, Zambia’s newly appointed mines minister, Paul Kabuswe, said on Tuesday that government will ensure that there is stability and predictability in the mining sector as well as calming any fears of mining royalties being increased.

Zambia, being Africa’s second-largest copper producer, which defaulted on its sovereign debt last year, has benefited from an increase in copper prices to record highs.

Zambia’s policy on Mopani Copper Mines KCM, two critical operations will be overseen by new President Mr. Hichilema. Zambia took on $1.5 billion in debt to buy Mopani from Glencore in January this year and they are still seeking a new investor for it. The previous administration was looking for an investor to fund the mine’s expansion, which they are hoping would boost output from 34,000 tonnes of copper a year to 150,000 tonnes.

President Hichilema’s market-friendly stance will hopefully attract new investment into Zambia’s mining sector which in turn will help boost the country’s copper production at a favourable time whilst copper nears record-highs.

Zimbabwe seeking investors, Zimbabwe will seek to raise $200 million in a debut domestic U.S. dollar bond sale on its stock exchange in Victoria Falls that trades exclusively in foreign currency, according to Finance Minister Mthuli Ncube.

Earlier this month, Bloomberg reported that the bond sale would be for $100 million. In August, Ncube said a debt offering could help meet the cost of a $3.5 billion compensation bill the country is facing after it reached an agreement with White farmers evicted from their land two decades ago.

The so-called “Zimbabwe Global Investor Roadshow” has seen Ncube travel to South Africa and Dubai to court foreign investment. In New York, Ncube will also meet with officials from the International Monetary Fund and the World Bank, ahead of an IMF visit to Zimbabwe that’s expected next month.

Zim looking for additional power to ease 12-hour cuts, Zimbabwe is looking to Mozambique and Zambia to supply it with more electricity as it tries to fill a power shortfall that’s led to 12 hour power cuts.

Government is currently in discussion with Mozambique trying to secure an additional 180 megawatts from their newly commissioned power plants as well as attaining an extra 100 megawatts from Zambia.

The current electricity cuts are due to rehabilitation work at the Kariba South hydropower plant, constraints at its coal-fired Hwange plant as well as limited power imports, according to the Zimbabwe Electricity Supply Authority.

On a lighter note; a Zimbabwean artist has brought new life to obsolete Mugabe-era banknotes and turned them into striking paintings.  A 100 trillion Zimbabwe dollar has finally found value thanks to the artistic talent of Prudence Chimutuwah.  Prudence explained that she wants people to heal from the damage caused during the days of hyper-inflation and see the bank notes in a new joyful light!  Her figures are mainly painted in blue, which she described as “a symbol of strength and dominance”.

Happy weekend ahead!

Upcoming Public Holidays:
24th September 2021 – Heritage Day (RSA)

“Life is like riding a bicycle. To keep your balance, you must keep moving.”

Trade Winds bimonthly update volume 41

Fuel hikes continue to hammer the consumer, back-to-back fuel increases have begun to show its ugly face as manufacturing costs are starting to climb as well as the base price of PVC and HDPE has increased as they raw material is directly affected by fuel price changes.

Border updates, no current delays or issues have been reported at the various borders within Southern and Central Africa.

Potential steel strike on the cards! A dispute over salary increases for workers in SA’s engineering and steel industry has been declared by the National Union of Metalworkers of SA. The union is now threatening strike action in the industry, which could be disastrous for an economy that took a R50-billion hit due to the recent social unrest. 

A general strike in the public sector, which could have shut down state hospitals, schools, and police stations, has been averted but possible industrial action might be in the offing in SA’s engineering and steel industry. 

A strike in the engineering and steel industry, which contributes about 10% to SA’s overall economic activity, could further harm an economy that is still reeling from Covid-19 related lockdowns and the recent week of anarchy. 

The National Union of Metalworkers of SA (NUMSA), which claims to have more than 339,000 members, has trashed the government’s offer for public servants, calling it an “insult” because public sector unions were pushing for an increase of at least 8%. 

NUMSA is also seeing red in the engineering and steel industry as the union has threatened to go on a “mother of all strikes” for higher pay. NUMSA has demanded a salary increase of 8% for workers in the engineering and steel industry for one year with an adjustment of consumer inflation plus 2% for the following two years. This works out to salary increases of just over 6% because the SA Reserve Bank expects inflation to average 4.2% and 4.5% in 2022 and 2023 respectively. 

Employers in the engineering and steel industry are not entertaining NUMSA’s salary adjustment demands as they have tabled a 4.4% increase for 2021, an inflation plus 0.5% increase in 2022, and inflation plus 1% increase in 2023. Using the Reserve Bank’s inflation forecast, the offer of employers works out to salary increases of about 4.7% in 2022 and 5.5% in 2023.

The employers are represented by industry bodies including the Steel and Engineering Industries Federation of SA, the South African Engineers’ and Founders’ Association, and others. 

NUMSA has rejected the offer by the employers and declared a dispute on Thursday 29 July at the Metals and Engineering Industries Bargaining Council. NUMSA wants the employers to reconsider their salary adjustment offer, failing that, the union will “serve employers with a 48-hour notice for an indefinite national strike.”

The union has implored other workers in the automotive industry, component supplies, tyre sector, mining, aviation, and all ports to join the possible strike in solidarity. This would be a disaster for the economy, which suffered a R50-billion hit in its output due to the recent street violence and looting that also blocked key supply chains in the broader manufacturing industry from operating.

This past Monday, SEIFSA, who employ about 190,000 workers in the engineering and steel industry, declared a counter dispute against NUMSA at the bargaining council over the union’s refusal to accept the offer by employers. The counter dispute will ensure that employers have the right to implement a lockout of workers if they were to go on a strike. In other words, workers represented by NUMSA could be excluded from their workplaces until the dispute is resolved. 

It is noted that SEIFSA has approached the bargaining council and has scheduled a special meeting on Tuesday 10 August between all parties in order to decide on how best to progress the deadlock.

Transnet NAVIS system fully operational, Government has announced a breakthrough following Transnet’s IT security breach last week.

According to a statement from the Ministry of Public Enterprises, Transnet has managed to restore operations at the ports fully, which now enables the country’s supply chain and logistics system to resume normal operations.

The main system responsible for the container operations, the Navis N4 terminal operating system has been fully restored and customers are now able to access the customer links to facilitate imports and exports.

The shipping lines, accounting for 70% of the cargo moving across the ports, have given the assurance that South African ports will not be bypassed, and they will continue to work with Transnet during this recovery period.

Giant leaps with Manhize steel works in Zim, the recent US$1 billion investment into Zimbabwe’s new steel industry and surrounding sectors remain on course for production to start next year.

The ferrochrome smelters in Selous are ready to go, Hwange’s first coke battery is open with the second under construction and now the planning and layout work being done at Manhize where the iron ore will be mined and steel smelted and processed.

Manhize is situated in the south-west district of Chikomba, close to Chirumhanzu and Kadoma where all three areas are seeing the mines, steelworks as a hub for local development and job creation.

Although the giant Chinese investor is opening the mine, building the steel plant, and building the houses where its workers will live, it will not be running the shops, the service stations, the banks and all the other economic activity that the large workforces will require, so there is a lot of scope for Zimbabwean investors and businesses.

The huge investment has so many advantages, Zimbabwean industrialists get a primary raw material, a full range of steels and steel products on tap, while mature industrial nations might be talking about the post-industrial societies they are building, it is a fact that no country can move its industry forward without that heavy industrial base.

Manhize mills is planned to be the largest steel producer in Southern Africa, producing a wide range of steels and stainless steels. While the Zimbabwean mining sector, construction industry and others will be buying a share, much of the production will be exported. 

Chrome export banned in Zim, the exports of chrome ore have been banned with immediate effect and exports of chrome concentrates from July next year, as there are now enough smelters in the country to ensure that all exports are of ferrochrome ingots.

At the same time Cabinet has agreed to work with private investors to set up gold centres to assist small-scale miners produce more efficiently and will be welcoming a new investor in diamonds, Ashelroi Trading and Services, whose plans are to set up a cutting and polishing centre in Zimbabwe.

Gold centres are expected to be established in Makaha, Odzi, Mount Darwin, Shamva, Mazowe and Silobela

The three measures are all designed to boost production and the value of the products that are eventually exported.

The move on chrome, reversing a temporary policy of allowing ore exports, merges with the strategies outlined in the National Development Strategy 1 which wants mineral exports to be partially processed in Zimbabwe before export to add value.

Zimbabwe boasts the world’s second-largest chromium reserves after South Africa and the mineral is expected to boost the vision of attaining a US$12 billion mining industry by 2023.

Production at KCM plummets, Global copper prices have reached record highs in recent months trading at $10,460 per tonne at the end of May.

For a copper-based mining economy like Zambia this should be generating increased tax revenues, and subsequent social benefits, as companies maximise their production to take advantage of these high prices. Across the private sector this is happening, however at government-run mines this is unfortunately not the case.

Production at Konkola Copper Mines has collapsed since the government effectively took over control of the mine from Vedanta Resources in May 2019, with copper production falling by almost 70%. KCM was averaging 8,000 tonnes copper production per month, that figure has now plummeted to roughly 2,000 tonnes per month. Mine development has dropped significantly which is going to put thousands of jobs at risk and as well as the potential shutting down of the mining business.

In response the government has tried a number of desperate moves aimed at improving production rates and bolstering profit margins by slashing the 5% import duty on foreign concentrates as well as ordering ZESCO to supply electricity free of charge to allow KCM’s smelter to run.

Zambians are missing out on high copper prices, following a difficult period in 2020 when the commodity price crashed. Given that copper production is worth 10% of the country’s GDP, this is money that Zambians cannot afford to go without.

Vedanta, whom were previously in control of the mine, had been Zambia’s largest public employer and responsible for 1/5th of the country’s overall copper output.

Vedanta have promised an additional $1.5 billion in investment if the government hands them back control of the mine.

Botswana joins in sending troops to Mozambique, Botswana’s security cannot be attained without that of her neighbours, President Mokgweetsi Masisi last week Monday.

Speaking at a ceremony to send off members of the Botswana Defence Force to Mozambique as part of the Southern African Development Community’s standby force to help fight terrorism in Cabo Delgado, he said a deceptive enemy awaits them.

“As your commander in chief, I am alive to the fact that you will be facing a deceptive enemy which is likely to use asymmetric warfare, unconventional and underhand warfare tactics against yourselves and the population you will be protecting. As professionals, you stand for much more than they do and must avoid emulating them and sinking to their level,” he said.

The Botswana soldiers will join soldiers from South Africa as well as soldiers from Rwanda who were deployed early in July.

Upcoming Public Holidays:
9th August 2021 – National Women’s Day (RSA)
9th August 2021 – Heroes’ Day (Zimbabwe)
10th August 2021 – Defence Forces Day (Zimbabwe)

“When everything seems to be against you, remember that the airplane takes off against the wind, not with it”