Trade Winds update volume 54
Increase, increase, increase…
Steel prices have risen across the board in the region of 2.8% as of 1 March 2023, plastic, rubber, and PVC prices have followed suit with prices increasing at around 20% since the start of the year. This coupled with the continuous energy crisis and wage increases has resulted in a rising in cost of labour as well. Whilst we try to mitigate any rise in input costs as much as possible, we do unfortunately have pass over any increases beyond our control.
We expect this trend to continue in the coming months and urge you to plan accordingly.
ArcelorMittal SA sees drop in income.
ArcelorMittal SA (AMSA), South Africa’s largest steel producer, saw its shares drop 15% last month after announcing a decline in in earning due to lower prices, weaker demand and rising coal and transportation costs.
The company, has released its annual financial results, noting a decline in the region of 60% in headline earnings per share for the year ending December, whilst steel prices were on the decline, raw material costs have risen, with imported coal prices up 117% in the past year.
The company also cited logistical challenges, including a shortage of trucking options due to a shift towards using trucks to transport coal instead of Transnet’s rail network. Despite these challenges, AMSA has released a decarbonization roadmap with a goal of reducing carbon intensity by 25% by 2030 and 86% by 2050.
Energy crisis in South Africa,
South Africa has experienced constant load shedding since September 2022 and has suffered through rolling blackouts, usually at high levels, every day of 2023 so far with a let off on Christmas day last year.
While social groups and political parties have approached the courts in a bid to bring the outages to a stop, Eskom and former CEO Andre de Ruyter, have warned that interfering with the load shedding schedules would likely lead to a grid collapse and total blackout. Some political parties and Unions have approached the constitutional court in a bid to stop the 18.6% increase granted by Nersa, however former CEO Andre de Ruyter has cited that if the increase is blocked, a total blackout could occur which depending on the status of the grid at that moment in time could take up to seven weeks to restore power to the country.
Currently the country sits at stage 4 & stage 5 loadshedding with 4000mw & 5000mw shed from the grid respectively. Businesses and citizens have had to seek alternative power arrangements with the likes of generators and solar systems which carry hefty running and installation costs.
Eskom has noted that load shedding is expected to stay for at least the next 18 months, but as corruption runs rife through the ailing power utility and no practical solutions in sight, as it stands through the eyes of the person on the ground, load shedding looks to be a permanent feature of Eskom with the every day worry of a total collapse looming.
South Africa has also been placed under a State of Disaster. The Department of Cooperative Governance and Traditional Affairs has gazetted new regulations under the national state of disaster to fast-track new generation builds and unlock resources to try and mitigate the impact of load shedding.
It is estimated that South Africa is losing up to R1 Billion ($51 Million) a day as businesses struggle to keep the lights on. President Cyril Ramaphosa is expected to announce a minster of electricity in the coming days.
Potential Mopani takeover on the cards,
Sibanye-Stillwater CEO, Neal Froneman, is interested in acquiring Mopani Copper Mines in a bid to secure metals key to green energy.
The mine would give Johannesburg-based Sibanye a springboard into Africa’s second-largest copper producer, after the company pulled out of Brazilian deals last year which involved Santa Rita nickel and Serrote copper mines. Mopani Copper Mine is not the only Zambian interest to the company as the CEO has mentioned that there are a few interests within the country.
Froneman has said that a deal could be finalised by the middle of this year, the deal is not as straight forward as there are still some monies owed to previous holders, Glencore.
Based off of Sibanye-Stillwater’s track record in turning around SA based Lonmin Mine and experience in deep level mining, the deal could be a win-win situation for both Mopani and Sibanye-Stillwater.
Zambia, UAE to build Solar Plant,
A $2 Billion Dollar agreement has been signed between Zambia and the United Arab Emirates (UAE) to build solar power plants in the Southern Africa country which will increase the country’s energy generation by more than half, adding 2,000 megawatts to the grid in phases, phase 1 is to start with 500 megawatts.
President Hichilema has said that the project is cash injection and not loan, benefitting the people of Zambia by becoming shareholding partners through Zesco.
The country has been experiencing rolling blackouts lasting as long as 12 hours a day after water levels in the Kariba Dam used by the nation and neighbouring Zimbabwe to generate hydropower declined drastically.
Lithium, Zimbabwe’s next precious metal,
The race has been on for Zimbabwe’s lithium deposits by multinationals over the past five years. Exploration projects that kicked off since then are now at advanced stages of implementation, and Zimbabwe is slowly turning into Africa’s largest producers of the mineral.
Lithium ore has been discovered in various regions such as Mutoko, Mberengwa, Buhera and Goromonzi, where mines have already been established, most of them, Chinese owned.
Although the precious metal is found in abundance in Zimbabwe, neighbouring countries such as Botswana and Namibia, have also found Lithium deposits and geologists insist the mineral is still largely unexplored in the region.
Zimbabwe can leverage its position as a leading lithium ore producer to advance its technologies for economic development and government has banned the export raw unprocessed lithium.
Finance minister Mthuli Ncube has defended the ban citing that government saw beneficiation as critical for sustainable economic growth and employment creation with the idea in mind by luring investors to invest in the country by building lithium processing plants or even battery manufacturing plants.
Lithium is a mineral of the future, especially in terms of renewable energies as lithium batteries are used in electric cars such as Tesla, lithium batteries are also used with solar power and have a much longer life span that that of lead and gel batteries, also resulting in less waste pollution.
Kasumbalesa border post a mess
Long distance hauliers traveling the hinterland corridors into the Copperbelt seem to have no respite from what is seen, currently, as the worst cross-border transit in the Southern African Development Community, the Kasumbalesa Border Post into the Democratic Republic of the Congo.
Truck drivers reportedly sit up to 10 days south of the notorious choke point, in queues ranging to 100kms, border officials made attempts to reduce the congestion by allowing drivers with precleared cargo documentation to leapfrog ahead of uncleared trucks, however this backfired as tempers flared and resulted in longer queues. The SADC Truck Drivers’ Association has lobbied the Zambian government of Hakainde Hichilema to intervene militarily.
Zambian President Hakainde Hichilema and DRC President Felix Tshisekedi discussed the border problem late last month whilst attending the African Union summit in Addis Ababa, Ethiopia and it has been reported that both Presidents have noted and agreed to solve the issues.
The DRC and Zambia last year agreed to open the border posts 24 hours a day to allow for faster processing, but drivers say, so far, customs officers are only working 10 hours a day.
It is estimated that both Zambia and the DRC are losing more than half a million dollars per month from the border delays.
Please note all DRC loads are currently being routed either via Sakania border post or Mokambo border post.
Upcoming Public Holidays:
8th March 2023 – International Women’s Day (Zambia)
13th March 2023 – Youth Day (Zambia)
“It is better to fail in originality than to succeed in imitation”