A digital copy of the Business News 24 (18 July edition). Zimbabwe's premier business news free sheet published by the Zimpapers Newspapers Group (1980) Limited and available every week day from 1530hrs to give a summary of the day's business news.
News Update as @ 1530 hours, Friday 18 July 2014 Feedback: [email protected]Email: [email protected]BH24 Reporter The country’s largest platinum pro- ducer, Zimplats, says it has downscaled production by nearly 50 percent at one of its four mines following a major underground collapse. The miner currently has 4 operational mines producing 4,2 million tonnes of ore per annum and Bimha, the affected mine, has a production capacity of 2 million metric tonnes per year. In a statement, Zimplats chief execu- tive Alex Mhembere said the collapse would take off about 45 000 tonnes of platinum matte from the mine’s pro- duction. “As a result, production from the Bimha Mine has been downscaled by 50 per- cent equating to 45 000 ounces of platinum in matte production. Prelimi- nary estimates indicate that it will take 50 months (2 on twin decline devel- opment) to reach full production of 8 fleets and 50 months to reconnect to current declines (FY19),” he said. He said the collapse, which was trig- gered by the accelerated deterioration of ground conditions associated with the Mutambara Shear that trans- gresses through half the mining area, led to the decision to abandon and per- manently close half of the mining foot- print area where major falls of ground had occurred. Mhembere also said the fault was first identified in 2011 and a number of ini- tiatives to address regional ground sta- bility and employee safety taken. “A team of company experts supported by internationally renowned senior experts and consultants have been engaged to conduct detailed investiga- tions and to make recommendations on the appropriate remedial action to return the mine to full production. Two of the eight fleets that were deployed at the Bimha Mine will be reallocated to redeveloping the declines to open up the bottom road- ways. The remaining six fleets will be absorbed either within Bimha or the other mines,” he added. Mhembere said no casualties were recorded in the incident and all statu- tory notifications had been completed with all emergency systems put on high alert. • Zimplats faces major production cut after mine collapse Zimplats
The country’s largest platinum pro-ducer, Zimplats, says it has downscaled production by nearly 50 percent at one of its four mines following a major underground collapse.
The miner currently has 4 operational mines producing 4,2 million tonnes of ore per annum and Bimha, the affected mine, has a production capacity of 2 million metric tonnes per year.
In a statement, Zimplats chief execu-tive Alex Mhembere said the collapse would take off about 45 000 tonnes of platinum matte from the mine’s pro-duction.
“As a result, production from the Bimha Mine has been downscaled by 50 per-cent equating to 45 000 ounces of platinum in matte production. Prelimi-
nary estimates indicate that it will take 50 months (2 on twin decline devel-opment) to reach full production of 8 fleets and 50 months to reconnect to current declines (FY19),” he said.
He said the collapse, which was trig-gered by the accelerated deterioration of ground conditions associated with the Mutambara Shear that trans-gresses through half the mining area, led to the decision to abandon and per-manently close half of the mining foot-print area where major falls of ground had occurred.
Mhembere also said the fault was first identified in 2011 and a number of ini-tiatives to address regional ground sta-bility and employee safety taken.
“A team of company experts supported by internationally renowned senior
experts and consultants have been engaged to conduct detailed investiga-tions and to make recommendations on the appropriate remedial action to return the mine to full production.
Two of the eight fleets that were deployed at the Bimha Mine will be reallocated to redeveloping the declines to open up the bottom road-
ways. The remaining six fleets will be absorbed either within Bimha or the other mines,” he added.
Mhembere said no casualties were recorded in the incident and all statu-tory notifications had been completed with all emergency systems put on high alert. •
Zimplats faces major production cut after mine collapse
Zimplats
BH24
3 NEWS
BH24 Reporter
Tobacco farming contractors should be compelled to use infrastructure at existing auction floors, Boka Tobacco CEO Rudo Boka has said.
Boka told the Parliamentary Portfolio Committee on Lands, Agriculture and Mechanisation earlier this week that the Government should legislate on the matter.
"If contractors can offer inputs for pro-duction, surely come time for tobacco sales they should have adequate facilities to deal with the farmers. You find that of the 6 000 odd farmers we receive at Boka, half are selling to other floors but they come to Boka to sleep, and eat.
"We have facilities that are under-uti-lised, that under certain arrangements can be used by everyone. I would appeal to the legislative body to say that before other facilities are opened we should look at how current floors' capacity are maximised in terms of their capacity utilisation," she said. Tobacco production in Zimbabwe is fast
moving towards the contract system with 70 percent of the current crop having been produced through that system.
This means that the three auction floors are competing for 30 percent of total production. And the Boka Tobacco boss has said legislation will also stop forms of "slavery" that could be taking place within the current contract sys-tem.
"From the auction side the legislation is very thorough. Contracting right now is more a issue of does one have offshore money, I don't think there is anything else beyond that," said Boka. She said legislation will act as a protection mechanism for the farmers.
"What is the measure for one to be accepted? Normally with the rural folk they go to contractors wanting to plant a hectare of tobacco, for instance. Are they really being given inputs adequate for the full hectare?
That maybe the case, but each case varies. Some merchants say my con-tract is specific to coal for the curing ele-
ment of it. Are the contractors good for our small-scale farmers? I think it will go to the legislation which will be put in place to ensure that there is protection to these growers. What defines a con-tract? What is the minimum expected in a contract between a tobacco farmer and a merchanting company?
Are we going to have classes of con-tracts because , for example at Boka we do not contract more than two
hectares, our focus is on smallholders farmers....
"Have the farmers really been told at what cost the inputs they are receiving are coming at, and with what expected return besides the physical tobacco. That side of things is not necessarily very clear. It will really go to the craft-ing of legislation," she told Parliamen-tarians. •
Law should compel contractors to use auction floors: Boka
BH24
By Rumbidzayi Zinyuke
Zimbabwe’s mechanisation policy needs to take into consideration the needs of the small holder farmers so that they can contribute meaningfully and competitively to agricultural pro-duction, a recent study has revealed.
The Agro-Industries/Food and Bev-erages value chain diagnostic study, conducted by the Zimbabwe Eco-nomic Policy Analysis and Research
Unit sought to provide evidence- based recommendations for imple-mentation by policy makers, and the relevant stakeholders.
The study showed that small scale farmers can have the capacity to grow the agriculture sector equipped with the knowledge and technology.
“Use of small-scale processing sys-tems which have both relatively low barriers to entry, particularly in terms
of capital requirements, and are well suited for aggregating small and highly dispersed produce volumes that characterize smallholder produc-tion systems is recommended.
Government needs to promote the acquisition and development of tech-nology to improve the performance of indigenous resettled farmers so that they spearhead the sustaina-ble development of competitive and commercially oriented agricultural businesses,” the report said.
According to Zeparu, this can be achieved in part through the estab-lishment of processing services enter-prises that hire out equipment to the farmers on a cost recovery basis.
The study also showed that there is very little to no value addition by the farmers, and their produce therefore attracts a lower price on the market.
Value addition is one of the four anchors of the ZimAsset. Zimbabwe however lacks the necessary equip-ment to encourage value addition.
“Policy needs to encourage value addition through scrapping of duty on processing equipment and the estab-lishment of community-based pro-cessing industries,” said the report.
The report said greater cooperation is needed between R&D and industry for process improvement and adapta-tion of latest technologies to improve efficiencies and competitiveness.
It said lack of cooperation leads to industry seeking research and devel-opment services from other coun-tries.
It also concluded that Zimbabwe has many regulations, some of which are hindering competitiveness.
“An example is the policy on Genet-ically Modified Organisms (GMO) which needs to be reviewed to accommodate the use of high yielding GM maize varieties. The Government needs to review regulations with the view to relax those regulations that are affecting competitiveness and industry’s capacity utilisation,” it was noted. •
5 NEWS
Mechanisation policy should consider small holder farmers: Zeparu
BH24 Reporter
The country’s national export pro-motion agency, ZimTrade, is set to host its annual exporters’ conference which seeks to foster effective trade networking and dialogue among stakeholders.
The event, which will be held jointly with the Exporter of The Year Awards Gala Dinner, will be held at the Meikles hotel on September 30.
Zimtrade said this year’s conference seeks to share best practice in the export business, facilitate the formu-lation of strategic business partner-
ships which can positively impact on employment creation and socio-eco-nomic growth as well as serve as a trade policy lobby platform that seeks to enhance the interface between exporters and key Government policy making structures.
“Since its revival in 2012, the Export-
ers’ Conference has successfully ral-lied attention from the local export community, Government sector, development cooperation partners and trade support institutions.
“Building on this momentum, the 2014 Event seeks to deepen the trade policy debate in order to gen-erate practical solutions that sustain export business viability and compet-itiveness,” said Zimtrade.
Business executives, policy makers and representatives of trade facili-tation institutions from around the world are expected to grace the event. •
Zimbabwe Stock Exchange listed clothing giant, Edgars Stores Limited and Eagles Insurance have unveiled the Edgars Hospital Cash Insurance plan for its Zimbabwe customers.
“This is an insurance product that guarantees the Edgars Club member of cash pay-out after a certain period of hospitalisation,” Edgars Stores
marketing executive Rumbidzai Dzimba.
The plan pays out $100 to adults and $50 to children for each day that they are hospitalised after 48 hours in hospital and a maximum payout per claim is $3 000 per event and $6 000 per year.
Dzimba also said that Edgars was reinforcing its position in the market as the leading clothing retail giant by offering value to customers through this programme.
Edgars Stores Limited has 28 stores countrywide and it is a limited com-pany incorporated and domiciled in Zimbabwe whose shares are publicly
traded. Their core business is the retailing of clothing, footwear, textiles and accessories.
The Zimbabwe clothing giant was founded by Sydney Press, with the first Edgars store opening in second largest city of Bulawayo in 1946 and the company went public in 1974. ―VenturesAfrica •
The International Monetary Fund has backed the Reserve Bank of Zim-babwe's earlier decision to extend the $100 million re-capitalisation deadline to 2020, but has cautioned against the continued operation of struggling banks.
"The RBZ’s decision to allow more time to meet the increase in the minimum capital requirements is justified, as the June 2014 deadline for reaching a minimum capital of
US$100 million was looming with most banks being far below that level. "In the period ahead, the RBZ will need to closely monitor observance of the interim milestones for progress towards the December 2020 mini-mum capital requirements.
The AFTRADES interbank liquidity facility is a worthwhile policy experi-ment and offers potential for improv-ing the operations of the interbank market without significant fiscal risks," said the IMF in its latest 2014 Article IV Consultation Staff Report.
However, despite Finance Minister Patrick Chinamasa recently saying the few struggling banks would have no, or negligible effect, on the over-all standing of the banking sector, the International Monetary Fund has urged the Government to shut down the banks.
Five banks were on the Reserve bank of Zimbabwe's 'troubled banks watch-list' (including Capital Bank which relinquished its operating licence early last month).
The IMF said the struggling banks could still have a serious impact on the rest of the local banking sector and should stop trading.
"To address deteriorating asset qual-ity and restore confidence, serious consideration should be given to clos-ing troubled banks (if non-systemic), or at least ring-fencing them, for example, by restricting their ability to take new deposits from the public," said the IMF.
The struggling banks jointly accounted for around 15 percent of total banking sector assets and 10 percent of deposits as at the close of last year. •
AdM-DI156506-
BH24
10 NEWS
Murowa diamond mine increased out-put by 21 percent in the second quar-ter to 83 000 carats compared to the same period last year, Rio Tinto, the company’s owner, reported on Friday.
It said production stood at 83 000 car-ats in the quarter, up from 69 000 car-ats in the same period last year.
Murowa, located near Zvishavane in the Midlands province, is a partnership between Rio Tinto and Rio Zim, each controlling 78 percent and 22 percent respectively. It is one of eight diamond mining in Zimbabwe.
In its operations review, Rio Tinto said combined output for the first half of 2014 at Murowa was also higher than that mined in the first half of last year.
“First half carats recovered at Murowa were four percent higher than the first half of 2013 due to improved through-put and processing previously stock-piled material,” it said.
Rio Tinto said output for the first half of 2014 reached 152 000 carats com-pared to 147 000 carats last year. Ore processed in the second quarter rose to 135 000 tonnes from 122 000 tonnes in the same period the previous year.
Zimbabwe is a notable diamond pro-ducer in the world with a huge resource base spanning about 70 000 hectares in the Marange diamond fields.
It has potential to supply 25 percent of global demand and has also been tipped to become the third largest pro-
ducer by the end of this decade.
But its potential had been for a long time stifled by the inclusion of the Zimbabwe Mining Development Corpo-ration (ZMDC) on the EU sanctions list, a situation which hindered the country from exporting to lucrative European
markets.
Since the ZMDC’s removal from the EU sanctions list last year, the country has conducted two auctions In Antwerp, Belgium.
The first sale, conducted last Decem-ber, covered 279 723 carats and grossed $10, 7 million while the sec-ond auction done in February this year grossed $70 million.
Zimbabwe also held its first sale of rough diamonds at the Dubai Dia-mond Exchange between March 23 and 30 this year while plans are also in place to sell on the Shanghai Diamond Exchange.
Ultimately, Zimbabwe plans to estab-lish its own diamond exchange. ― New Ziana •
Murowa increases production
BH24
The equities market has closed the week on a high after bucking a four-day run of losses, bumping a mar-ginal 0.24 percent in today's trades.
The industrial index added 0.44 points to close at 185.93 points on the back of positive performance in selected heavyweights.
Seed producer Seedco moved up 2.91 cents to close at 78.01 cents, TSL gained 2.60 cents to 26.60 cents and Star Africa was 0.30 cents solid to trade at 1.10 cents.
On the downside, Natfoods retreated by 11 cents to close at 200 cents while CAFCA and giant telecoms
Econet both traded 0.50 cents lower to close at 22.50 cents and 74 cents respectively. ZPI lost 0.05 cents to 0.80 cents.
Due to the extended run of losses during the week, the industrial index lost 0.85 points (or 0.46 percent) on a week-on-week basis.
The mining index also closed the week higher, up 0.81 points (or 1.42 percent) to close 57.83 points on improved trades in Falgold, which added a cent to close at 3 cents.
Bindura, Hwange and Riozim main-tained previous trading levels. On a week-on-week basis, the mining index gained 2.66 points (or 4.82 percent). ― BH24 Reporter •
12 ZSE REVIEW
Equities buck losing trend to close week on high
SPECIALISTS IN DRIVESHAFTS AND PROPSHAFTS, STEERING RACKS, BALL JOINTS, DRAGLINKS, TIE ROD ENDS, CV JOINTS, TRANSMISSIONS, UNIVERSAL JOINTS, FLANGES, BEARINGS,
BUSHES, YOKES, GENERAL ENGINEERING, BELL SPARES, AIR BRAKES AND PNUEMATICS, SUPPLY AND SERVICE EXCHANGE FOR COMPLETE AXLES, ENGINES AND GEARBOXES.
If Zimbabwean companies continue on the current path they are trending, the local economy will simply never reach its potential.
Local products are simply not compet-itive on the global market and this is partially due to the fact that the com-panies are operating in a high-cost environment.
But just as significant is that their products are not in line with inter-national standards as the firms have decided it is more cost-effective to cir-cumvent the Standards Association of Zimbabwe (SAZ).
This is obviously a terrible strategy as businesses operating in the 21st cen-tury face many challenges, top among them globalisation.
Local companies, even if they do not export, do not operate in a vacuum.
But for those that do, market experts say access to markets in a global mar-ket is now dictated by the ability to comply with international standards through Certification and industry best practices.
This is at a time when consumers all over the world are increasingly becom-
ing aware of their rights to expect and demand for quality and safe products.
To this extent, if any business enter-prise to remain competitive in a global market that is so sensitive on quality and safety of products, there is need to demonstrate that they are capable of consistently delivering products that meet customer as well as regulatory requirements.
This entails that the company inter-ested in being globally competitive should take a steps in this direction.
First, the firm should put in place an internal standards management sys-tem.
According to SAZ director general Eve Gadzikwa, an internal standards man-agement system is a proven frame-work for managing and continually improving an organisation's policies, procedures and processes thus pro-viding confidence in the products pro-duced.
Second, it is important that the company obtains certification by an accredited third party authority - such
as SAZ - to demonstrate to custom-ers, potential customers, competitors and regulatory authorities that the organisation uses industry best prac-tices necessary to meet market needs, be it the local or export market.
So if indeed local companies perceive certification as costly, this is because they are looking at the issue from a myopic perspective.
Because low certification amongst the local firms has a negative impact on market access and export figures and if Zimbabwe is to increase the contribution of exports to the GDP, more voluntary certifications must be undertaken by the SAZ.
It is no secret that the majority of firms in the country's productive sectors are struggling to survive due to low cap-italisation, depressed economic activ-ity, liquidity constraints and high cost build up.
But certification costs are not some have-if-you-want expenditure, they are absolutely necessary for business competitiveness. •
14 BH24 COMMENT
Global trade more competitive than ever
Telkom SA SOC Ltd, Africa's largest fixed-line operator, suspended plans to fire about half of its 19,000 employees pending a consultation process follow-ing opposition from the Solidarity labor union.
Telkom “agreed to further consul-tation with organized labor through an external, independent facilitator regarding the company’s restructuring
and retrenchment process,” the Preto-ria-based company said yesterday in a statement. “Telkom has agreed to this process to ensure that all stakeholder views are considered and factored into the restructuring process.”
Telkom is targeting cost cuts of 5 billion rand ($465 million) through job elimi-nations to restore the part state-owned business after a decline in fixed-line use
contributed to sliding sales. On July 8, Solidarity said it would file documents to a Johannesburg labor court to pre-vent Telkom from making race a crite-ria in firing workers.
“Telkom undertook to suspend its cur-rent restructuring and retrenchment process,” Solidarity said in an e-mailed statement.
The agreement includes halting the process of using race when determin-ing job cuts, according to Solidarity, which has close ties with the predom-inantly white Afrikaans community. South African companies have to com-ply with legislation seeking to address racial inequalities that stem from apartheid rule, which ended in 1994. ― Bloomberg •
15 REGIONAL NEWS
Telkom suspends plan to cut staff pending further consultation
Rand eases as strike talks fail
The currency of Africa’s second largest economy weakened against the dollar on Wednesday, as a strike by 220,000 workers in South Africa’s metals sec-tor entered its third week and looked unlikely to be resolved soon.
The rand slipped 0.2 percent from its close in New York to R10.7300 at 07:55.
The local unit made modest gains against the US currency in the previous session buoyed by strong demand for government bonds, before retreating
towards R10.75, a recent resistance level.
“Technically the rand is still within the longer term bull trend. However yes-terday’s move back below R10.6500 should delay the expected move to R10.96 to R11.00,” Standard Bank dealer Warrick Butler said in market note.
Last Tuesday, employers in the met-als and engineering sector withdrew their offer of a 10 percent annual wage increase after National Union of Met-
alworkers of South Africa (Numsa) maintained its demand for increases of between 12 percent and 15 percent.
The strike has disrupted the supply of components to automobile makers, pushing Toyota, GM and Ford to halt production at their assembly plants.
In fixed income, government bonds were broadly flat with the paper due in 2015, and the paper maturing in 2026 both adding 1.5 basis points to yields of 6.67 percent and 8.27 percent, respec-tively. ― BusinessDay •
BH24
17 DIARY OF EVENTS
The black arrow indicate level of load shedding across the country.
POWER GENERATION STATSGen Station
14 July 2014
Energy
(Megawatts)
Hwange 421 MW
Kariba 750 MW
Harare 45 MW
Munyati 29 MW
Bulawayo 0 MW
Imports 0 MW
Total 1245 MW
23 -25 July - Mine Entra, Place: Zimbabwe Inter-national Exhibition Centre, Bulawayo
24 July - OK Zimbabwe Thirteenth Annual Gen-eral Meeting Place: OKMart Functions Room, First Floor, OKMart, 30 Chiremba Road, Hillside, Time:
15:00 hours.
1 August - Sixteenth Annual General Meeting of the members of Econet Wireless Zimbabwe Limited, Place: Econet Park, 2 Old Mutare Road, Msasa, Harare, Time; 10.00am
Quote of the day — "In lIfe, as In a football game, the prIn-cIple to follow Is: hIt the lIne hard." -theodore roosevelt
Globalshareholder.com
BH24
Asian shares sagged on Friday and a drop in Treasury bond yields put pres-sure on the dollar after the downing of a Malaysian Airlines passenger plane over Ukraine sent investors scurrying into defensive assets.
The shadow was expected to fall over the European opening as well, with financial spreadbetters predicting Brit-
ain's FTSE 100 would open down 0.5 percent, Germany's DAx as much as 0.7 percent lower and France's CAC 40 down 0.8 percent.
Some market participants felt European losses would be contained, however.
"Asian markets are off their lows and U.S. index futures seem to be paring
some of their losses so the initial sell-off could be short-lived," Jonathan Sudaria, a dealer at Capital Spreads, said in a note to clients.
World leaders demanded an inter-national investigation into the shoot-ing down of the airliner over eastern Ukraine. All 298 people on board were killed in a tragedy that could further
heighten tensions between Russia and the West. Russia's rouble-traded MICEx dropped 1.9 percent in the first minute after trading began.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 percent but was still poised to eke out a modest weekly gain.
Japan's Nikkei stock average tumbled 1 percent after dropping by as much as 1.7 percent earlier in the session. The Nikkei still managed a 0.3 percent rise on the week.
"This geopolitical concern can cloud such optimism in the mid-term," said Hiromitsu Kamata, head of the Jap-anese equity target department at Amundi Japan.
He said the plane disaster might be per-ceived as an isolated event for financial markets but also cautioned it had the potential to lead to greater turmoil.
Even before the news from Ukraine broke, market sentiment had been fragile after weak U.S. housing starts for June. ― Reuters •
23 INTERNATIONAL NEWS
Asian shares fall as Malaysian jet downing hits sentiment
By Nigel Gambanga
On Wednesday Telecel Zimbabwe launched a debit card for their mobile money users called the TeleCash Gold Card. This product had been in the pipeline for a while now, with Telecel having given some information on the card and what it would mean for sub-scribers at the launch of Telecash some months ago.
While the launch itself might not have fully expressed the potential impact of this product, the Telecash Gold Card is a huge leap in mobile money services locally.
Its value to financial services through mobile commerce is something that will sooner or later lead the other MNOs to emulate it. This of course will depend on thawed relations between guys like Econet and local bankers.
Looking at the Gold Card its greatest strength is undeniably the convenience it will create for retail payments made through mobile money. Anyone who has made a payment at retail outlet till points, or stood behind someone doing
so, will tell you how the payment pro-cess involving USSD codes can make a grocery run last longer than it should.
These frustrations are the reason behind the rise of mobile money apps like ZimCodes.
These apps are a great convenience no doubt, but a limited reach hampered by a limited smartphone penetration and local Android market share means the majority of mobile money users still have to key in USSD codes just to pay a merchant.
The Gold Card is bringing the simplicity of swiped payments to mobile money where the majority of Zimbabweans experience “formal” banking services. TeleCash’s subscriber total of 600 000 (sign-ups for the first 5 months of trad-ing by the way) is more than half of all formal bank accounts which numbered 853 000 a few months ago. This is a representation of how many people will benefit from added services to their mobile money wallet that acts as their account.
With the one product these guys are
bringing some of the functionality of formal banking to m-commerce.
While TeleCash’s competitors have had solutions that try to do the same thing (kudos to Textacash for ZimSwitch integration) the TeleCash effort has the advantage of digging into a huge potential market courtesy of its Telecel mobile communications brand.
Another Gold Card value proposition is the ability to access mobile money via all ZimSwitch ready ATMs. This spares a subscriber the challenge of hunting for a point to redeem money in their wallet and gives TeleCash an edge
in their perennial scramble for more agents.
If what Telecel has promised to deliver with this card in the near future is any-thing to go by, this product is going to have an even bigger impact on the market. The attempt at remittance ser-vices that Telecel is keen on channeling through TeleCash will turn the card into another tool for the redemption of dias-poran inflows.
The Gold Card service that most people are keen on, particularly the unbanked, will be enabled international payment facilities through VISA and MasterCard that the Telecel representatives said they were negotiating for right now.
Despite the string of complexities that come with inking such a deal, (RBZ regulation on externalisation of forex through mobile money is a big obsta-cle here) if Telecel pulls it off TeleCash it will have leapfrogged local banking services and mobile money providers.
In any case the new TeleCash debit card is worth its weight in gold. ― TechZim •
