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”