Trade Winds bimonthly update volume 28
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”