NUMSA strike, devastating blow to the industry! The national steel strike in South Africa, which has been ongoing now since the 5th of October is showing its true ugly face as the steel sector and downstream industries are the feeling the blow.
Since last week Tuesday, majority of companies within the sector are unable to produce or deliver material which in turn is having a hard knock-on effect to downstream players and other industries involved.
Since the start of the strike up until earlier this week Tuesday, BMW has advised that they have lost production on 700 cars, in one week, that is a tremendous loss, loss in wages has accumulated over 100million rand at this stage and continues to climb as there is a no work no pay clause due to the covid-19 pandemic.
Companies are being forced to shut their doors due to intimidation and violence from striking workers, there have been reports on companies being burnt and innocent people being badly beaten.
The strike is likely to lead to job cuts, further hammering an industry that’s been in decline for several years which in turn threatens to derail the potential recovery of South Africa’s economy from the coronavirus pandemic, which triggered the biggest annual contraction since 1994, and worsen an employment crisis. The joblessness rate rose to a record 34.4% in the second quarter.
On Tuesday, NUMSA rejected another wage offer as it stands firm on the 8% demand, however there is speculation that they may give in sooner rather than later.
Border updates, chaos ensues at Beitbridge border post as the 10km queue remains in place. The backlog at the border has been present over the last two weeks with no real light at the end of the tunnel.
Border officials are suspected of allowing as many trucks as possible into the Zimbabwean border control zone at Beitbridge, upsetting the go-live chances of concession company Zimborders unblocking bottlenecking on its first day of operating new facilities at the congested crossing earlier this week.
Trucks had been allowed to park in each and every conceivable space north of the Limpopo, numbers of trucks entered the border post the night before go-live, officials had even pushed trucks into the old parking area which sent the border into absolute chaos the following morning before Zimborders started charging processing tariffs from 8am this past Monday morning.
Adding to the mess that Zimborders will have to untangle is the temporary expectation that drivers will have to pay border tariffs in cash until electronic payment facilities are switched on later this month.
The tariffs are as follows:
24-ton Triaxle – $175
34-ton Link – $175
Abnormal Loads – $300
The above charges all exclude VAT, VAT should be reclaimed, provided the transporter is registered in Zim.
For the time being, foreign-registered operators cannot reclaim their VAT, although this had been taken up with the relevant authorities.
As it stands as of today, there is currently a 20km queue south of the border.
Things aren’t much better east as the Groblersbrug/Kazangula passage is facing challenges itself, transporters are shaking their heads in disbelief and frustration over what’s happening on the cross-border road freight line from South Africa through Botswana into Zambia.
The newly built Kazangula bridge is finding itself troubled with a lesser bridge across the Limpopo River further south where truck traffic is building up much faster than expected at the Martins Drift-Groblersburg crossing, which has become frustrating of late for long-distance hauliers serving the Copperbelt region.
Transporters cannot expect any relief by opting for this route rather than the conventional north-south way through the already overburdened Beitbridge Border Post which is a 200 kilometre shorter trip, but unfortunately, the single-lane Limpopo bridge, coupled with stringent covid-testing requirements, is choking traffic flow towards Kazungula.
Sometimes drivers waiting in the queue to cross into Botswana are already Covid-cleared, but because PCR results are only valid for three days and often, drivers have to be retested by the time they finally cross the Limpopo.
At least the queue in South Africa had shrunk to three kilometres earlier this week.
Airfreight expecting growth in revenue, The International Air Transport Association has noted that they predict a healthy future for airfreight, expecting that demand will exceed pre-covid levels by 8% while revenues are expected to rise to a record $175 billion and in 2022 demand is expected to exceed pre-pandemic levels by 13%, with revenues expected to rise to $169bn.
The is all thanks to favourable indicators such as inventory levels and manufacturing output. World trade is anticipated to grow at 9.5% this year and 5.6% in 2022, e-commerce continues to climb at a double-digit rate, and demand for high-value specialised cargo such as healthcare goods and vaccines are on the rise.
Although this is good news, it does not come without complications as pandemic restrictions have led to severe global supply-chain congestion and created hardships for aircrew crossing international borders. Resourcing and capacity, handling and facility space and logistics will be an issue.
August port volumes the lowest in three years, Transnet’s ransomware attack in August had a greater impact on volumes than the July protests which closed the port of Durban for several days.
According to Transnet statistics, it was the slowest August in three years, with 2020 volumes surpassing it.
In August 2021 a total of 330 109 TEUs was handled, compared to 354 015 in 2020, and 447 072 the year before that and 652 vessels were worked in August 2021, compared to 801 in August 2020 and 835 in August 2019.
In addition to a stuttering economy, riots and now elections, shipping volumes in South Africa are also being affected by global supply chain disruptions. At the end of August, over 40 container ships were waiting to berth outside the ports of Los Angeles and Long Beach alone, with 90% of those arriving at a port having to wait at anchorage before a berth became available.
Shipping lines are focusing on high-revenue routes at the expense of Africa, with capacity in Africa having fallen by 6.5% year-on-year.
Some traffic is also being lost to ports in neighbouring countries as news from Dar es Salaam is that volumes are up following investment in port infrastructure, systems and people and a number of lines have introduced new services.
Namport has reported a 15% growth in container volumes year-on-year.
Supply chain disruptions should be expected for the next two years at least. The global supply chain was in crisis at the beginning of the pandemic, and it is expected that there may be an easing in 2023.
Earlier this week, Moody Analytics warned that the disruptions will get worse before they get better, citing delays at key US ports, as well as the national labour shortage.
The agency went on to say that there are “dark clouds ahead” for the global supply chain as there is no clear solution to work out issues between subsections of the supply chain around the world, the alarming shortage of truck drivers in particular has been identified as the weakest link in the supply chain causing equipment shortages as shipping yards are left swamped with excess containers.
The supply-chain crisis has caused major shortages of everything from foods to electronics, cars, furniture, and general household goods. Automakers have slashed production goals on more than one occasion, whilst major clothing companies like Nike have warned that products will be harder to find over the holiday season due to the bottlenecks.
Analysts at RBC Capital Markets have agreed with Moody’s concerns. Earlier this month, the bank analysed the 22 most influential ports around the world and gauged how long it takes for cargo ships to enter and unload.
They found that 77% of ports have experienced above-average wait times this year. Of the 22 ports, ports in Los Angeles and Long Beach had the most inefficient wait times of any other top port in the world with turnaround times for a container nearly doubling in 2021 as compared to averages seen pre-pandemic.
Turnaround times increased from just over 3 days to around 6 days which is almost five days longer than several ports in Asia which operate 24/7. The white house has announced that the the Southern California ports would move toward 24/7 operations in a move to reduce waiting times.
Copper price climbs again, The global energy crisis that has led to power shortages and factory shutdowns did not stop copper prices from climbing to their highest levels since the beginning of August.
On Wednesday this week, copper futures for December delivery erased earlier losses to trade at $4.499/lb for a gain of 4.0%.
The rebound in copper prices comes amid short-term concerns surrounding China and its debt riddled property sector, plus the ongoing economic threat posed by the covid-19 delta variant.
However, Citigroup has warned that prices could fall another 10%, with demand shrinking over the next three months.
Possible mining tax changes coming to Zambia, President Hakainde Hichilema earlier this week mentioned changes to Zambia’s mining taxation policies must not be frowned upon.
Zambian mining companies have long complained about what they call “double taxation” because since 2019 mineral royalty payments are not treated as a deductible expense when calculating corporate income tax.
Although President Hichilema did not provide details on the potential tax changes, he did express his concern that policies and laws for mining should be “appropriate and attractive”.
Finance Minister Situmbeko Musokotwane will present Zambia’s new budget on October 29 where further details will be released.
Zimbabwe temporarily lifts ban on coal exports, Zimbabwe has allowed the export of 200,000 tonnes of excess power coal because of limited intake at its biggest coal-fired power plant, which is affected by frequent breakdowns.
Zimbabwe’s six major coal miners have a standing arrangement to supply 300,000 tonnes of coal to Hwange Power Station on a monthly basis but constant breakdowns of ageing equipment has resulted in the plant taking in less coal.
The coal will be exported to other countries in Southern Africa but producers could look beyond the region if port facilities are available.
The Hwange plant has a design capacity of 920 megawatts but is currently producing 410 MW. The power station is being expanded by China’s Sino Hydro to add another 600 MW capacity.
Moz president urges terrorists to surrender, President Filipe Nyusi last week, urged the ISIS-linked terrorists operating in parts of the northern province of Cabo Delgado to turn themselves over to the authorities.
Speaking to reporters in Maputo, immediately after laying a wreath at the Monument to the Mozambican Heroes, to mark the 29th anniversary of the 1992 peace agreement between the government and the Renamo rebels, President Nyusi stressed that the terrorists “have nowhere to go”.
The terrorists are being relentlessly pursued by the Mozambican and Rwandan security forces and their allies and have been driven out of their main bases.
There is hope that Mozambique’s giant liquefied natural gas project run by Total Energies in the north of the country will be revived.
Reopening of the LNG project will be a major boost for the logistics sector in Mozambique, which has invested heavily in preparing for the much-delayed start of construction, work came to a standstill in April 2020 when Total Energies withdrew all its staff after Islamist insurgents attacked the northern town of Palma.
Production was due to start in 2024. At the time of its withdrawal, Total said it would be at least a year before it returned, and that it was looking at guarantees for the safety of its personnel and infrastructure.
The Jacaranda’s are now in full bloom transforming many of our streets and parks into places of magnificent beauty with brilliant blues and purples heralding the change of Season.
Upcoming Public Holidays:
18th October 2021 – Zambian National Day of Prayer (ZAM)
25th October 2021 – Zambian Independence Day (ZAM)
“If you don’t like something change it; if you can’t change it, change the way you think about it”
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.”
Zambia elects a new president, President Elect Mr Hichilema defeated main rival President Edgar Lungu, by almost a million votes.
This was President Elect Mr Hichilema’s sixth attempt at winning the presidency and his official inauguration is on Tuesday 24th August at National Heroes Stadium.
H.H. has already refused the expensive Lexus presidential vehicle and continues to drive around in his Nissan Infinite living his message to the people of Zambia, that all Zambians matter and the presidency is not about self-glorification; it is to serve and make Zambians proud again! Already he has met with the Director Generals of the Financial Intelligence Centre, Anti-Corruption Commission and Drug Enforcement Commission to ensure Zambia moves in the right direction free of political interference, corruption and with proper accountability.
Our congratulations go out to all people of Zambia for demonstrating the power of true democracy and we look forward to witnessing a very positive term in office for HH that will bring upliftment, prosperity and pride to all Zambians.
Zambian Copper producers standing by to start expansion projects worth $2 billion once industry has reached an agreement with HH on royalties which has been on hold since 2019 when tax changes were implemented. Specifically mining royalty taxes were increased to 5.5-10% from 4-6% and was not deductible from Corporate Income Tax.
NUMSA picketing “premature” The National Union of Metalworkers of South Africa has served notice that it intends to start picketing following failed wage negotiations with the Steel and Engineering Industries Federation of Southern Africa (SEIFSA).
The federation says it views this notice as “premature” in that picketing may only be embarked on in support of a protected strike or in opposition to a lock-out.
To date, SEIFSA reports, neither party or parties have served strike and/or lock-out action on the other and negotiations aimed at breaking the deadlock are ongoing.
The federation advisedthat it is has various meetings with all the trade unions this week and next week, under the supervision of the Bargaining Council.
SEIFSA first made a wage offer at the Bargaining Council late last month, during which other unions indicated a willingness to accept the offer. The federation suggested that workers receive a 4.4% increase this year, a consumer price inflation plus 0.5% increase in 2022 and a 1% increase in 2023.
SEIFSA says centralised collective bargaining is more necessary than ever before to ensure the survival and recovery of the industry.
NUMSA believes the special phase-in dispensation, which introduces a new entry rate ranging between R20 and R29 an hour, will allow employers who have not been paying the minimum rate of R49 an hour to continue doing so for 15 years.
We wait to see the outcome of these talks and can only hope that all parties come to an agreement as the industry and the country itself cannot afford such a catastrophic event.
Border updates, The Democratic Republic of Congo has doubled back on proposed legislation designed to prevent foreign-registered transporters from carrying DRC minerals out of the country.
A declaration signed on July 29 by the minister of transport and ways of communication announced plans to restrict the carriage of export minerals solely to vehicles registered in the DRC which was due to come into force on the day.
However, in an about-turn, DRC President Félix Tshisekedi has asked the minister to revisit the legislation in light of its anti-competitive nature.
While investigations are under way, the legislation is not going ahead and will most likely be overturned, currently foreign transporters can still pick up loads.
These include the provisions of the COMESA treaty, which calls for the promotion of competition, the elimination of measures that stand in the way of the free movement of people and goods and the reduction of non-physical barriers, particularly legal and regulatory ones.
Transnet recovery on track, Transnet Port Terminals’ recovery plan is making good progress after the cyberattack last month that paralysed its Navis cargo processing system, bringing the utility’s ports and railways network to a complete standstill.
Customer interfaces had largely returned to normal.
Looking into the recovery status from port to port, the Durban Container Terminals, Pier 1 and Pier 2, where the import volume pressure was most evident, had done well despite much time being lost due to weather delays this past week.
The terminals are still being impacted by delays in evacuation of imports. The terminals are feeling this congestion on the landside which is now creating delays on the waterside. Currently, as at August 16, Pier 1 had two vessels at anchorage awaiting a berth. Pier 2 had six vessels, with an average berthing delay of four days.
Cape Town port appears that recovery has been decidedly better. Transnet Port Terminal said that Cape Town Container Terminal had minimal delays, and a balanced yard.
The ports of Ngqura and Port Gqeberha are also recovering well.
Copper Price Bounces Back, the price of copper bounced back last week as worries about supplies from top producer Chile gathered pace.
BHP and the workers union at its Escondida copper mine said last week that they would extend government-mediated contract talks by a day in a last-ditch effort to stave off a strike. The world’s biggest copper mine accounts for about 4.5% of global copper supplies estimated at roughly 24 million tonnes this year.
Copper for delivery in September rose 1.9% from last weeks’ settlement price, touching $9,618 per tonne.
Meanwhile, concerns about Chinese demand and a firmer dollar tempered optimism for higher prices.
China’s January-to-July copper import volumes dropped by more than a tenth compared with the first seven months of 2020.
The biggest copper buyer in the world bought 3.219 million tonnes of copper from January to July, down 10.6% compared with the same period in 2020.
US legislation to regulate carriers shot down, The World Shipping Council has come out strongly against proposed US legislation designed to tighten regulation of carriers in order to address supply chain congestion resulting from record US consumer and business import demand, coupled with disruptions resulting from the Covid-19 pandemic.
A framework has been shared which the WSC believes is flawed, particularly the suggestion that ocean carriers are solely responsible for the current supply chain congestion.
The congestion is widespread, with every link in the supply chain being affected, from marine terminals to truckers, rail cars and warehouses are all under tremendous strain.
The WSC points out that what is “crystal clear” is that regulating only ocean carriers, or any other single class of supply chain provider is doomed to fail.
The bill would require ocean carriers, under the threat of penalty, to guarantee the performance of other parties over whom they have no control, for instance by putting the burden on ocean carriers to ensure chassis, trucks and rail cars are available from third party providers.
The WSC has accused the government of tilting the market in favour of shippers in commercial disputes.
The organisation further warns that the legislation, if enacted, would incentivise trade partners to enact similar protective legislative and regulatory frameworks in their countries.
Steel prices in USA have risen 215% since March 2020 which in turn has destroyed many American jobs and negatively impacting many industries. The increase to the import duty to 25% in 2018 implemented by Trump has been kept in place by the current Biden government and continues to cause no end of grief to industry at large.
USA Air Cargo screening continues to be a challenge for some packaging and products that is deemed unairworthy unless it can pass through security screening. The thought is that further down the line manufacturers can be accredited in some way and certify in other ways yet to be identified.
China’s port shutdown sparks worldwide fear, The Port of Los Angeles, which saw its volumes dip because of a June Covid outbreak at the Yantian port in China, is bracing for another potential decline because of the latest shutdown at the Ningbo-Zhoushan port in China, many companies chartering ships are already adding covid contract clauses as insurance, so they won’t have to pay for stranded ships.
The shutdown at Ningbo-Zhoushan is raising fears that ports around the world will soon face the same kind of outbreaks and Covid restrictions that slowed the flows of everything from perishable food to electronics last year as the pandemic took hold. Infections are threatening to spread at docks just as the world’s shipping system is already struggling to handle unprecedented demand with economies reopening and manufacturing picking up.
The port is actively negotiating with shipping companies, directing them to other terminals, and releasing information on a real-time data platform, it said. To minimize the impact, it’s also adjusting the operating time of other terminals to make sure clients can clear their shipment.
Rwanda to continue aiding Mozambique in fight against terrorism, earlier this week, the government of Rwanda indicated that it would continue to collaborate with the government of Mozambique as well as other partners in the next phases of stabilisation and development after Rwandan and Mozambican troops recently repulsed insurgents from key areas of the Cabo Delgado Province.
Joint forces captured Mocimboa da Praia earlier this month, a key Mozambican port city that had been the headquarters of the Islamic State-linked terrorist group in Cabo Delgado Province since 2015.
This strategic port city for Mozambique had been an important logistics point for the insurgents in addition to being the terrorists’ stronghold in the province.
After the insurgents’ main stronghold was captured, more than 90% of the province is now free where operations to wipe out the terrorists are now focused on smaller pocket areas.
“Smooth seas have never made skilled sailors”