Transnet Freight Rail News Briefs Page 1 of 7 COMMODITY NEWSBRIEFS: 27 JULY 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]DISCLAIMER The information contained in this publication is for general information purposes only. The information is provided by Transnet Freight Rail, a division of Transnet Limited, and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the publication, or the information, products, services, or related graphics contained in the publication for any purpose. Any reliance you place on such information is therefore strictly at your own risk. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of profits arising out of, or in connection with, the use of this publication. This publication may refer to other publications which are not under the control of Transnet Freight Rail. We have no control over the nature, content and availability of those other publications. The inclusion of any other publications or other website links does not imply a recommendation or endorse the views expressed within them. Every effort is made to keep the content of the publication correct and complete. However, Transnet Freight Rail takes no responsibility for, and will not be liable for information in the publication being incorrect or incomplete. Transnet Freight Rail also does not guarantee the availability of the publication at any specific intervals AUTOMOTIVE NUMSA MULLS STRIKE TO JUMPSTART STALLED MOTOR COUNCIL (Business Day, 27/7/2015) Seven months after the lapse of an administrative agreement within the Motor Industries Bargaining Council, the largest union in the sector, the National Union of Metalworkers SA (Numsa), has raised the prospect of industrial action to break a deadlock in the council. Trade unions in the motor industry are concerned that centralised bargaining could collapse in the sector, as parties in the council agree still fail to agree over constitutional changes that have prompted the lapse of agreements regulating the industry. Underscoring the adversarial nature of SA’s bargaining system, the entrance of the National Employers Association of SA to the motor industries council last year was seen as an opportunity to revise its constitution, spurring debate over relative power in the council. Subsequently, agreements regulating safety payments, maternity, pension and provident funds have lapsed. The expiry of the administrative deal means employers are no longer required to pay council levies, which fund its administration. Salary deductions for union fees must now be paid directly to unions rather than through the council, while the collection of contributions to pension and provident funds is not happening. Numsa deputy general secretary Karl Cloete said last week the union’s leadership had “endorsed mobilisation for strike action against these saboteurs” — putting the blame on employer body, the Retail Motor Industry Organisation (RMI). The union also accused the Department of Labour of going “on the offensive” by failing to agree to extend and ratify arrangements. FAST MOVING CONSUMER GOODS BLACK SPOT DISEASE BEDEVILS SA’S CITRUS EXPORTS TO THE EU (Business Report, 27/7/2015) Citrus growers in South Africa, the world’s second-biggest exporter of the fruits, wanted to resume shipments to Spain once the risk of trading bans stemming from black spot disease eased, a farmers’ lobby group said. South Africa said in March that it would avoid sending fruits to Spanish ports to avert a possible Europe-wide ban, after officials there refused South African producers permission to inspect testing facilities. The nation had to halt exports to the region last year after EU authorities intercepted 16 shipments affected with black spot disease. “Of course we would like to go back,” Deon Joubert, the Citrus Growers’ Association’s (CGA) EU envoy, said last week. “We would like to normalise things as soon as possible.” The EU accounted for about 43 percent of the nation’s citrus exports, generating about R4 billion a year, Joubert said. Black spot is a fungus that affects some South African produce, causing blemishes on the peel of the fruit. The growers’ group is disputing findings by the European Food Safety Authority that the disease can survive transport and storage and become established
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Transnet Freight Rail News Briefs Page 1 of 7
COMMODITY NEWSBRIEFS: 27 JULY 2015 Please note that these articles are available in electronic format and can be requested and delivered via e-Mail.
The information contained in this publication is for general information purposes only. The information is provided by Transnet Freight Rail, a division of Transnet Limited, and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the publication, or the information, products, services, or related graphics contained in the publication for any purpose. Any reliance you place on such information is therefore strictly at your own risk. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of profits arising out of, or in connection with, the use of this publication. This publication may refer to other publications which are not under the control of Transnet Freight Rail. We have no control over the nature, content and availability of those other publications. The inclusion of any other publications or other website links does not imply a recommendation or endorse the views expressed within them. Every effort is made to keep the content of the publication correct and complete. However, Transnet Freight Rail takes no responsibility for, and will not be liable for information in the publication being incorrect or incomplete. Transnet Freight Rail also does not guarantee the availability of the publication at any specific intervals
AUTOMOTIVE NUMSA MULLS STRIKE TO JUMPSTART STALLED MOTOR COUNCIL (Business Day, 27/7/2015) Seven months after the lapse of an administrative agreement within the Motor Industries Bargaining Council, the largest union in the sector, the National Union of Metalworkers SA (Numsa), has raised the prospect of industrial action to break a deadlock in the council. Trade unions in the motor industry are concerned that centralised bargaining could collapse in the sector, as parties in the council agree still fail to agree over constitutional changes that have prompted the lapse of agreements regulating the industry. Underscoring the adversarial nature of SA’s bargaining system, the entrance of the National Employers Association of SA to the motor industries council last year was seen as an opportunity to revise its constitution, spurring debate over relative power in the council. Subsequently, agreements regulating safety payments, maternity, pension and provident funds have lapsed. The expiry of the administrative deal means employers are no longer required to pay council levies, which fund its administration. Salary deductions for union fees must now be paid directly to unions rather than through the council, while the collection of contributions to pension and provident funds is not happening. Numsa deputy general secretary Karl Cloete said last week the union’s leadership had “endorsed mobilisation for strike action against these saboteurs” — putting the blame on employer body, the Retail Motor Industry Organisation (RMI). The union also accused the Department of Labour of going “on the offensive” by failing to agree to extend and ratify arrangements. FAST MOVING CONSUMER GOODS BLACK SPOT DISEASE BEDEVILS SA’S CITRUS EXPORTS TO THE EU (Business Report, 27/7/2015) Citrus growers in South Africa, the world’s second-biggest exporter of the fruits, wanted to resume shipments to Spain once the risk of trading bans stemming from black spot disease eased, a farmers’ lobby group said. South Africa said in March that it would avoid sending fruits to Spanish ports to avert a possible Europe-wide ban, after officials there refused South African producers permission to inspect testing facilities. The nation had to halt exports to the region last year after EU authorities intercepted 16 shipments affected with black spot disease. “Of course we would like to go back,” Deon Joubert, the Citrus Growers’ Association’s (CGA) EU envoy, said last week. “We would like to normalise things as soon as possible.” The EU accounted for about 43 percent of the nation’s citrus exports, generating about R4 billion a year, Joubert said. Black spot is a fungus that affects some South African produce, causing blemishes on the peel of the fruit. The growers’ group is disputing findings by the European Food Safety Authority that the disease can survive transport and storage and become established
in EU regions. Justin Chadwick, the chief executive of the CGA, said in March that Spanish refusal to allow producers to inspect testing methodology raised a “red flag regarding the risk of sending any of the fruit to those ports”. South Africa is the largest citrus shipper after Spain, according to the growers’ group. Turkey ranks third, Egypt fourth and China fifth. IRON ANGLO’S CUTIFANI REBUKES HIS RIVALS (Business Report, 27/7/2015) AngloAmerican chief executive Mark Cutifani rebuked rival mining companies for deepening a global iron ore glut that had driven the price down by 45 percent in a year. “We have an over-supplied market, that’s clear as a bell,” Cutifani said on Friday after reporting a 30 percent decline in underlying earnings. “That’s clearly had an effect on price. We are responding. In the end, you’ll have to ask others how they intend to respond.” The world’s biggest producers of iron ore, one of the key profit drivers for companies including BHP Billiton, Rio Tinto and Vale, have been criticised for continuing to expand output amid weakening prices. The commodity price rout to a 13-year low would worsen in the second half as demand waned and supplies for key raw materials like iron ore expanded, Cutifani said. Production cuts at Anglo’s platinum, diamond and coal businesses show the company was responding to slowing demand and trying to combat oversupply across its markets, he said. Anglo’s Kumba Iron Ore, Africa’s largest producer, scrapped its dividend last week for the first time since it started trading in 2006 as profit slumped 61 percent. After more than a decade of surging Chinese demand that catapulted prices to record levels, iron ore has collapsed, declining 47 percent last year as a global glut deepened. The price slide has eroded profits for the three biggest exporters, which supply almost half of the world’s demand, sparking criticism in Australia from such rivals as Fortescue Metals Group. It has also put smaller high-cost rivals like London Mining and African Minerals out of business. Cutifani estimated the glut in iron ore at 100 million tons to 200 million tons. Morgan Stanley forecast a 58.1 million-ton surplus this year. CHEMICALS BITUMEN SHORTAGE STALLS JOBURG ROAD PROJECTS (Engineering News, 27/7/2015) The Johannesburg Roads Agency (JRA) has announced delays to several of its roadworks programmes across Johannesburg owing to a shortage of bitumen countrywide. The agency said on Friday that the resurfacing of roads and the patching of potholes in the city would be temporarily halted as a result of a shortage of the oil-based, semiliquid substance, which was used in the production of the asphalt mix for road surface construction. This was the direct result of the shutdown of local refineries for maintenance, JRA acting MD Mpho Kau said in a statement. “[Petrochemicals groups] Total and Engen are the only refineries that have confirmed that operations will resume in early August. The JRA asphalt plant has, therefore, stopped production and operations are expected to resume from August 10. COAL UNCOVERING ESKOM'S TOP COAL SUPPLIERS (News24, 27/7/2015) Nonkululeko Nyembezi-Heita, chair of the JSE and former CEO of ArcelorMittal SA, is the major mover and shaker in the fragmented world of South Africa’s emerging coal mining companies. Since early last year, she has been at the head of Ichor Coal, a Netherlands-registered, German-listed and now Johannesburg-based group trying to cobble together a 20 million-ton-a-year coal group largely focused on Eskom contracts. At 20 million tonnes a year, the relatively obscure Ichor Coal could soon rival the likes of Exxaro as Eskom’s biggest supplier. Most of that was spent on buying assets from the little-known Mbuyelo Group, founded by Rirhandzu Owner Siweya. The spree has rapidly made Ichor the golden thread between a large chunk of Eskom’s coal supplier list. Before 1994, Eskom’s coal supplier list comprised established mining companies, supplying Eskom on cost-plus and fixed-price contracts. In the midst of the load shedding crisis, Eskom started sourcing new coal suppliers and, starting in 2009, a flurry of medium- and short-term contracts were signed – some of these contracts went to established players, but many were signed with smaller mines and so-called value-adding traders. City Press this week received the latest list of Eskom coal contracts after an application in terms of the Promotion of Access to Information Act. Half of the 33 contracts are with the five major companies and make up 80% or so of annual purchases by volume: Exxaro, Anglo American, BHP Billiton (South32) and Glencore. The list also confirms that the Gupta family-owned company Tegeta Exploration and Resources received a contract to start supplying Eskom in April. Of the 16 smaller medium-term contracts that Eskom issued between 2009 and 2015, 11 are tied to the three interlinked coal investors:
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Siweya, Mojalefa Landlord Mbethe and Pius Mokgokong. Until recently, Eskom was the poor cousin of the coal market, with far better prices available in the export market and all producers jockeying for the limited allocations at the Richards Bay Coal Terminal. The preference for exports had become a major concern for government, leading to proposals to declare coal strategic and force discounted local sales. This dynamic has now completely reversed because of plummeting international coal prices. The World Bank forecasts that coal prices will stay below their 2014 levels until about 2023. NON-FERROUS METALS LONMIN TO SHUT, IDLE HIGH-COST OPERATIONS (Mining Weekly, 27/7/2015) As platinum prices fall to decades-low levels, Lonmin is shaking up its business strategy to ride out the storm with minimal damage – a move that would impact 6 000 employees and cut up to 20% of production as shafts are shuttered. The platinum price plunged by 14.4% from $1 126/oz in March to $964/oz in July, pushing the London- and Johannesburg-listed platinum producer’s earnings before interest, taxes, depreciation and amortisation (Ebitda) into negative territory. The planned closure of the Hossy and Newman shafts and the placement of the W1, E1 and 1B shaft on care and maintenance would cut Lonmin’s normalised yearly platinum output by some 100 000 oz over the next two financial years. During the third quarter of the year, platinum sales increased to 231 778 oz – a 206 039 oz rise on the 25 740 oz delivered in the comparative period the year before. Total platinum-group metals (PGMs) sales for the three months to June 30, reached 437 160 oz, compared with the 79 691 oz sold in the three months to June 2014. During the period under review, Lonmin’s total PGM output was 450 885 oz, while refined platinum production reached 241 170 oz. CURRENCIES AND PRICES
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