Transnet Freight Rail News Briefs Page 1 of 7 COMMODITY NEWSBRIEFS: 9 APRIL 2015 Please note that these articles are available in electronic format and can be requested and delivered via e-Mail. (http://intra.spoornet.co.za) [email protected]INTERMODAL SHIPPING HAS SHED 600 JOBS THIS YEAR (Business Report, 9/4/2015) The government’s much-vaunted plan to grow South Africa’s shipping industry has hit a major snag, with hundreds of jobs recently being shed instead of created. Major role-players have laid the blame squarely at the door of the government, saying red tape was hindering progress and tying up R8 billion worth of orders. “We want jobs to be created, but jobs are being lost,” Prasheen Maharaj, the chief executive of Southern African Shipyards, said yesterday. Speaking at a panel discussion at the Maritime Transport Service Delivery Stakeholder Imbizo at the Hilton Hotel, Maharaj said shipping companies had shed 600 jobs this year. He said if the government expedited and streamlined its procurement processes, “we can immediately create jobs” and South Africa could see the biggest shipping boom in years. In August, the Daily News reported that Durban was poised to become a player in the global shipbuilding industry with a R1.4bn contract awarded to Southern African Shipyards to build nine tugboats, including one of the world’s most powerful tugs. The Transnet contract was seen as a boon for black empowerment as the company had a 60 percent black ownership. At yesterday’s imbizo, low oil prices were cited as another contributing factor in job losses. In another panel session, Mike Halls of the South African Institute of Marine Engineers and Naval Architects said ports needed to expand as ships were getting bigger, which increased the logistical needs of the ports. He also lamented the fact that a ship could be in dry dock for repair in South Africa for up to seven days. This cost about R473 924 a day and a long stay in a dry dock deterred the owners from wanting to return to the country, he said. COAL WILDCAT STRIKE GROUNDS ANGLO AMERICAN COAL (The Times, 9/4/2015) A spokesman for Anglo American said the strike started on Tuesday and was regarded by the company as a wildcat action because the workers had not gone through the proper channels before calling the stoppage at the mine east of Johannesburg. "We are continuing to talk with their regional leadership to settle the differences," said Moeketsi Mofokeng, a spokesman for Anglo American Coal, yesterday. The National Union of Mineworkers said its members were calling for the removal of the mine's general manager, whom it said had "made lots of changes without consulting" the union. The NUM said grievances with the manager included recruiting changes and safety issues related to loading procedures. It was not immediately clear how many workers are at the mine. GRAIN SA IMPORTS FIRST YELLOW CORN IN A YEAR (News24, 9/4/2015) South Africa imported the yellow variety for the first time in almost a year as a local drought curbs production. The continent’s largest producer of corn bought 21 137 metric tons from Argentina in the week ended April 3, the Pretoria-based South African Grain Information Service said in statement. The nation last imported this type, used mainly to feed animals, in the week to April 18, 2014. The white variety is used to make a staple food. South Africa, the world’s biggest producer of white corn after Mexico, is importing the yellow grain as the worst drought since 1992 destroyed crops in the two largest producing provinces. The government-convened Crop Estimates Committee predicts a total harvest of 9.67 million tons this year, the smallest since 2007. The nation will need to import 943 000 tons of yellow corn, worth about $147m at current international prices, in the year to March 2016, Grain SA, a farmers’ lobby group, said last month. “If the crop estimate stays the same and it is indeed what is produced, then we do not need to import any more than that,” Brink van Wyk, a trader at BVG, said on Wednesday.
Transcript
Transnet Freight Rail News Briefs Page 1 of 7
COMMODITY NEWSBRIEFS: 9 APRIL 2015 Please note that these articles are available in electronic format and can be requested and delivered via e-Mail.
INTERMODAL SHIPPING HAS SHED 600 JOBS THIS YEAR (Business Report, 9/4/2015) The government’s much-vaunted plan to grow South Africa’s shipping industry has hit a major snag, with hundreds of jobs recently being shed instead of created. Major role-players have laid the blame squarely at the door of the government, saying red tape was hindering progress and tying up R8 billion worth of orders. “We want jobs to be created, but jobs are being lost,” Prasheen Maharaj, the chief executive of Southern African Shipyards, said yesterday. Speaking at a panel discussion at the Maritime Transport Service Delivery Stakeholder Imbizo at the Hilton Hotel, Maharaj said shipping companies had shed 600 jobs this year. He said if the government expedited and streamlined its procurement processes, “we can immediately create jobs” and South Africa could see the biggest shipping boom in years. In August, the Daily News reported that Durban was poised to become a player in the global shipbuilding industry with a R1.4bn contract awarded to Southern African Shipyards to build nine tugboats, including one of the world’s most powerful tugs. The Transnet contract was seen as a boon for black empowerment as the company had a 60 percent black ownership. At yesterday’s imbizo, low oil prices were cited as another contributing factor in job losses. In another panel session, Mike Halls of the South African Institute of Marine Engineers and Naval Architects said ports needed to expand as ships were getting bigger, which increased the logistical needs of the ports. He also lamented the fact that a ship could be in dry dock for repair in South Africa for up to seven days. This cost about R473 924 a day and a long stay in a dry dock deterred the owners from wanting to return to the country, he said. COAL WILDCAT STRIKE GROUNDS ANGLO AMERICAN COAL (The Times, 9/4/2015) A spokesman for Anglo American said the strike started on Tuesday and was regarded by the company as a wildcat action because the workers had not gone through the proper channels before calling the stoppage at the mine east of Johannesburg. "We are continuing to talk with their regional leadership to settle the differences," said Moeketsi Mofokeng, a spokesman for Anglo American Coal, yesterday. The National Union of Mineworkers said its members were calling for the removal of the mine's general manager, whom it said had "made lots of changes without consulting" the union. The NUM said grievances with the manager included recruiting changes and safety issues related to loading procedures. It was not immediately clear how many workers are at the mine. GRAIN SA IMPORTS FIRST YELLOW CORN IN A YEAR (News24, 9/4/2015) South Africa imported the yellow variety for the first time in almost a year as a local drought curbs production. The continent’s largest producer of corn bought 21 137 metric tons from Argentina in the week ended April 3, the Pretoria-based South African Grain Information Service said in statement. The nation last imported this type, used mainly to feed animals, in the week to April 18, 2014. The white variety is used to make a staple food. South Africa, the world’s biggest producer of white corn after Mexico, is importing the yellow grain as the worst drought since 1992 destroyed crops in the two largest producing provinces. The government-convened Crop Estimates Committee predicts a total harvest of 9.67 million tons this year, the smallest since 2007. The nation will need to import 943 000 tons of yellow corn, worth about $147m at current international prices, in the year to March 2016, Grain SA, a farmers’ lobby group, said last month. “If the crop estimate stays the same and it is indeed what is produced, then we do not need to import any more than that,” Brink van Wyk, a trader at BVG, said on Wednesday.
CHROME & MANGANESE MANAGEMENT, NUM AGREE TO END MANGANESE STRIKE (Mining Weekly, 9/4/2015) The management and the local leadership of the National Union of Mineworkers (NUM) have reportedly jointly agreed to end the unprotected strike at the BHP Billiton-managed Hotazel manganese operations in the Northern Cape. BHP Billiton South Africa VP corporate affairs Lulu Letlape said in a media statement that the agreement meant that all employees were due to have reported for duty by today, Wednesday, April 8. Letlape stated that management of the Hotazel manganese operations and NUM expected the mines to be fully operational from the morning shift and that both parties had agreed to engage further on the issues under discussion. Mineworkers, who began the strike on March 27, were urged to return to work last week in compliance with a court order, which had declared the stayaway illegal and unprotected. The stayaway followed prolonged engagement over claims arising from an employee share ownership scheme (Esop), which led to a one-off financial settlement to resolve the matter and the payout of three dividends to date, with a fourth due this month, under a new Esop. BHP Billiton, which is planning to demerge the Hotazel manganese mines into the new South32 spin-off company on which shareholders are scheduled to vote next month, committed itself to open engagement with NUM to ensure continuity of production following rulings in its favour by the statutory Council for Conciliation Mediation and Arbitration and the courts. The manganese business that has been earmarked to become part of South32 includes the Hotazel mines and Gemco in Australia, and smelters at Temco in Australia and Metalloys in South Africa. With those assets, South32 would be one of the largest low-cost producers of manganese ore and a global producer of manganese alloy. The aim is for South32 to become a 12-asset, five-country, 24 000-employee group and locate a service centre in South Africa similar to one that delivers services to the 41-asset, 13-country and 50 000-employee BHP Billiton group. NON-FERROUS METALS ALCOA NOW SEES GLOBAL ALUMINUM SURPLUS OF 326 000 T IN 2015 (Mining Weekly, 9/4/2015) The world aluminium market will see a surplus of 326 000 tonnes in 2015, an executive at Alcoa said following a presentation of the company's first-quarter 2015 earnings on Wednesday. That surplus forecast differed sharply from the aluminium producer's January estimate of a 38 000 t deficit for 2015, largely driven by an increase in its estimate for output in top-producer China. "China continues to add capacity," Alcoa CFO William Oplinger said on the call. "Smelters have been reluctant to curtail as prices have recovered." Demand for aluminium remained strong, Oplinger said, noting that global inventories continue to fall and are currently at 66 days of consumption, just above their 30-year average of 61 days. This robust demand will limit the downside of the fall in regional premiums, he said. In recent years, financing deals that kept aluminium in storage drove those regional premiums to record levels even as futures prices on the London Metal Exchange fell. Premiums have begun to fall as those deals start to unwind after attracting regulatory and political scrutiny, though Oplinger noted that they are still at historically high levels and would be supported by strong demand. TRANSNET TFR FRAUD CASE COMPLICATES RATE DECISIONS (FTW, 10/4/2015) Transnet Freight Rail (TFR)executive Bheka Xaba has been suspended for more than a year as a criminal case of fraud and corruption against him is investigated. “This is not new,” a source said following a recent article in a Sunday newspaper that Xaba had appeared in the Pretoria Commercial Crimes court on charges of fraud and corruption. TFR, however, is remaining mum on the suspension of Xaba, who was widely regarded as one of the parastatal’s up and coming top executives. TFR spokesman, Sandile Simelane, acknowledged the suspension of Xaba to FTW and said a disciplinary process was currently under way but he would not elaborate on the case saying it was sub judice and he was therefore not at liberty to discuss any details. FTW has established the investigation against him was launched as far back as 2013. He was placed on suspension in December of that year. “This entire case has had some massive implications for industry because TFR has changed in its entirety the way it was operating around pricing. No more can one manager make a decision,” said a source. “They have put a governance process in place where all rate requests are referred to a pricing committee that adjudicates the matter and ultimately makes the decision. Motivations are requested from customers as to why the rate is being requested. They have put several control mechanisms in place as well that will ensure something like this does not happen again,” said the source. And while this has been welcomed by industry it also does, however, have an adverse affect as pricing discussions with TFR now take months.
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GENERAL ESKOM WOES DIM SA’S GROWTH BY 10% (Business Report, 9/4/2015) South Africa’s economy could have been 10 percent larger if power shortages had not stifled growth and investment and put the nation’s debt at risk of being cut to junk, economists’ estimates show. Eskom, which supplies about 95 percent of the country’s electricity, is rationing supply because it cannot meet demand from aging plants following years of underinvestment. Its chairman stepped down last month after losing the board’s support over a decision to suspend the chief executive and three other top managers, leaving it without permanent leadership. South Africa’s estimated economic expansion of 2 percent this year could have been at least 1 percentage point higher had it not been for the cuts, said Dawie Roodt, the chief economist at Efficient Group. Rolling blackouts have curbed mining and manufacturing, both knocked by strikes that limited 2014 growth to the slowest pace since a 2009 recession, and prompted rating downgrades. “If we’d had enough electricity since 2007 and it was not a limiting factor, the economy could have been about 10 percent bigger than it actually was by the end of 2014,” Roodt said last week. “That is more than R300 billion, or more than a million job opportunities.” Standard & Poor’s (S&P) rates South African debt one level above junk and below the assessments of Fitch Ratings and Moody’s Investors Service. S&P cut its evaluation in June, while Fitch lowered the outlook on its reading to negative that month. “The woes of Eskom are putting huge strain on the creditworthiness of the sovereign” rating, Nicholas Spiro, the managing director of Spiro Sovereign Strategy, said last week. A report today will probably show manufacturing production shrank 1.5 percent in February. CURRENCIES AND PRICES
Dec 1 Buyer 1775.00 1853.00 5990.00 1950.00 12950.00 2183.00 1960.00
Dec 1 Seller 1785.00 1858.00 6000.00 1955.00 13050.00 2188.00 1970.00
Dec 2 Buyer 1912.00 5980.00 1973.00 12950.00 2175.00
Dec 2 Seller 1917.00 5990.00 1978.00 13050.00 2180.00
Dec 3 Buyer 1960.00 5955.00 1978.00 12935.00 2163.00
Dec 3 Seller 1965.00 5965.00 1983.00 13035.00 2168.00
(London Metal Exchange, 9/4/2015)
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