logistics

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 34

Steel price increase reminder! As of 1st May 2021 steel prices on flat product in South Africa will be increasing by R2,250 ton as announced by ArcelorMittal earlier this month, the biggest single increase the country has seen, taking the grand total of increases this year to R6000,00 ton.

Thankfully there has been no increase notices from the other steel mills within South Africa.

Introducing Thungela Resources, Anglo American PLC will be separating its South African coal mines into a new business this year.

Anglo American has been mulling an exit from thermal coal for over a year now and constantly reiterated that separating its South African business was the most likely outcome.

The new business, known as Thungela Resources Ltd is expected to be listed in Johannesburg and London in June. Investors will receive one Thungela share for every ten Anglo American shares.

The world’s biggest miners have been looking to exit thermal coal mining as investors say they don’t want exposure to the fuel and pollution. Anglo American PLC has already dramatically reduced its production in recent years, cutting output by more than half.

Implats Q3 production rises, South Africa’s Impala Platinum’s third quarter group output rose by 4% to 5.59 million tonnes at managed operations, with higher volumes reported at Impala Rustenburg, Impala Canada and Marula.

High prices for metals mined by Implats such as platinum, palladium and rhodium gave the mining company a lifeline despite the impact of the COVID-19 pandemic.

The platinum miner said group production in the nine months to March 31 rose by 11% to 17.38 million tonnes, the miner also noted the benefits from the inclusion of Impala Canada, which was bought in 2019, for the full reporting period.

Border updates, last week, transporters working the North-South Corridor into the Copperbelt and back were advised that there were holdups being experienced at Chirundu Border Post between Zambia and Zimbabwe.

The queue was roughly around 7kms long with around a 2-3 day waiting period for when trucks could move, there was no real confirmation as to why the border had a hold up, as it stands, its business as usual at the Chirundu border.

Staying in Zambia, there is some good news looming, with the leaking of the anticipated Kazangula bridge being opened. An inside source has told the Transit Assistance Bureau that a date has been proposed for the long-awaited opening of the Kazungula Bridge being May 10.

Although it seems too close to be true, being less than two weeks away, transporters are becoming quite excited by the announcement made by Transist.

The long-delayed structure, which was completed last September may finally be opened after being closed to traffic while public sector concerns were delaying the process and Zambia’s perennial cash flow issues impeded its ability to pay its share of fees to the contractors.

As of today, transporters entering Botswana via Pioneer Border Post from South Africa have been advised that health authorities in Gaborone have reinstated the PCR test.

The testing measures at the border has been tightened because drivers have been diverting their journeys to Pioneer because of not having to furnish PCR results.

The news has had an immediate effect in cross-border transport circles, with hauliers saying PCR costs which are roughly $46 and regular transits in and out of landlocked Botswana are going to hit them hard.

The pandemic has affected all forms of transport over the past year whether it be road, sea, air or rail transport and it seems that the struggle will continue for some time as ocean freight costs as well as air freight has surged with no positive outlook at the moment, in some countries such as America, it is noted that cargo can sit up to a month before it can be moved to the ports for transport.

Iron ore demand drives global steel prices, steel prices are spiking from Asia to North America, and iron ore’s relentless march towards a record is accelerating, as bets on a global economic recovery fuel frenzied demand. 

The outside world is finally catching up with the Asian markets as a global rebound drives a powerful wave of buying that cannot be matched by production.

The manufacturing and construction sectors are ramping up production as governments have pledged to splurge on infrastructure as they set their eyes on post covid growth.

Prices for hot-rolled coil are up three times the “normal” price in North America and they continue to soar in Europe. In China, steel is at its most expensive since 2008.

It is expected that worldwide steel demand will grow 5.8% this year to exceed pre-pandemic levels, China’s consumption which contributes to about half of the global total will keep growing from record levels, whilst the rest of the world rebounds strongly. It is noted that demand outside of China in April has been higher than that of previous years.

Iron ore is enjoying a near record level as spot prices are less than $1 away from their peak of $194/tonne. China’s steelmakers keep output rates at more than a billion tonnes a year to supply consumption to the ever-demanding economy, Beijing has set a goal of reducing steel production this year however that could prove difficult with consumption as strong as it currently is.

Top miners are enjoying their takings as Iron ore prices have bolstered their earnings even though they continue to struggle to supply enough of the raw material.

On the Stainless Steel front, the Chinese government has cancelled all tax refunds for Stainless Steel sheet, plate, pipe and fittings thus increasing production cost by roughly 13%.

Zimbabwe gold output down, Zimbabwe’s gold production fell 30% to 3.98 tonnes in the first quarter of this year, while export earnings from the yellow metal also declined.

The Reserve Bank of Zimbabwe did not give a reason for the decline, but small-scale miners who produce half of the mineral blamed the abnormal rainfall during this period which in turn resulted in shafts being flooded.

The Reserve Bank said the nation, which faces constant shortages of foreign currency earned $200 million from gold exports in the first quarter which is down from $226 million during the same period last year.

Total gold output tumbled nearly a third to 19 tonnes last year after small-scale producers diverted the metal to illegal private dealers who pay more than the central bank.

Zambia assures investors of better policies, Zambia’s president Edgar Lungu assured mining investors, in a speech this past Thursday, that his country will develop a more simplified tax administration system to facilitate them.

Zambia’s mining tax regime has been a thorny issue since the privatization of mines in the early 1990s. He said the he expects the mining investors to take advantage of the improved copper price of close to $9,000 a ton to up production and create jobs which in turn should fulfil the investors social responsibilities to benefit the locals.

Zambia is Africa’s second highest copper producer and is hoping to increase its production from the current 800,000 tons per annum to a million tons per annum.

The key to achieve this goal will be through a continued working relationship with investors such as First Quantum Minerals, which runs the country’s biggest mining operation at Kalumbila, northwest of the country.

Jubilee’s Project Roan delivers its first copper concentrate, the successful delivery of copper concentrate from Project Roan to the fully operational Sable Refinery is the first major step in the company’s commitment to achieve the targeted production of 25,000 tons per annum of copper within the next four years and taking a leading role in the processing of surface tailings in Zambia.

Project Roan is the first of three copper processing facilities that Jubilee target to implement to achieve this goal. Completion of Phase 1 on schedule demonstrates the team’s ability to deliver on their goals in a new jurisdiction.

The targeted significant ramp up of copper operations in Zambia is expected to further improve on Jubilee’s recently published record interim results for the six-month period to 31 December 2020, generating long term, quality earnings.

The company is confident that the completion of Phase 2 of Project Roan will be on time during Q3 2021, which will further increase the copper concentrate being delivered to the Sable Refinery. 

Kamoa Copper launches corporate identity, Kamoa Copper will operate the Joint Ventures mines in the high-grade Kolwezi copper district of Lualaba, in the Democratic Republic of Congo.

Ivanhoe Mines and Zijin Mining each own 39.6% of Kamoa Copper, while the DRC government owns the balance.

The Kamoa-Kakula project which is operated by Kamoa Copper, is expected to begin producing copper in July and through its phased expansions, will become one of the world’s largest copper producers.

According to a progress update issued by Ivanhoe in April, Kamoa Copper shattered all previous records in March, mining 400,000 tons of ore grading 5.36% copper, including 100,000 tons of ore grading 8.7% copper from the centre of the Kakula mine.

The company’s first phase of its 3.8-million-tonne-a-year mining and milling operation is 92% complete and the commissioning of its concentrator plant is under way.

Troika summit in Mozambique postponed, The Southern African Development Community has postponed an Extraordinary Troika Summit of the Organ on Politics, Defence and Security due to the unavailability of heads of states.

The leaders of SADC agreed to the postponement as SADC Organ chairperson, Botswana president Dr Mokgweetsi Masisi is currently in quarantine and incoming chairperson South Africa president Cyril Ramaphosa has been testifying at the Zondo Commission on South Africa.

The meeting, which was expected to take place this past Thursday in Maputo, is now expected to take place at a later date.

When the heads of state met on April 8, they, among other things, mulled over measures to address terrorism in Mozambique after the continued attacks by the Islamist insurgents in Cabo Delgado where dozens of civilians were killed and many others displaced.

SADC leaders directed an immediate fact-finding mission to assess and investigate the situation on the ground in Mozambique before and form of response is actioned.

“Seeing is different than being told”