Spring is here,
With the arrival of spring and the approach of the year-end season, we want to express our gratitude to our valued customers and partners.
Your steadfast support throughout the first three quarters of 2023 has been truly remarkable. This year has presented us all with a series of challenges, both positive and negative. However, we have remained resilient, united, and have continued to grow together.
As we move forward, let us keep in mind that “spring is the time of plans and projects,” and we look forward to embracing the opportunities that lie ahead.
Mutaka park gets much needed intervention,
The Democratic Republic of the Congo has taken immediate action to alleviate severe congestion at a truck park by discontinuing cargo scanning operations at Mutaka. This decisive step, confirmed by the Federation of East and Southern African Road Transport Associations (Fesarta), follows extensive discussions involving MOG Consulting, a company representing Kinshasa authorities.
Mike Fitzmaurice, the CEO of Fesarta, pointed out that the cargo scanning process at Mutaka, situated in the heart of the DRC’s copper mining region between Kolwezi and Likasi, had been a significant cause of delays for cross-border carriers. Truckers were burdened with a $100 fee for cargo scanning and an additional $30 per day or fraction thereof for parking while awaiting their turn. This situation had led to a substantial backlog, resulting in considerable expenses for transporters compelled to pay for parking during extended waiting periods.
Before the park’s closure, cargo-scanning wait times stretched to approximately eight days, severely impacting the supply chain to and from the DRC, particularly along the vital Copperbelt route.
Fitzmaurice emphasized that the Congolese Government’s decision marks a significant step in the right direction for cross-border cargo operations. This progress is the result of recent productive discussions in Kinshasa between MOG Consulting and Fesarta.
He credited MOG Consulting for their instrumental role in facilitating dialogue with the Congolese Government regarding the Mutaka situation. During Fesarta’s visit to Kinshasa, a memorandum of understanding was signed, addressing various pressure points affecting road freight in the DRC, including the challenges at Mutaka.
Further fuel increases imminent,
There is potential for further increases in fuel prices in the coming months, as oil-producing nations have announced an extension of their voluntary oil production cuts until December 2023. Fuel prices shot up drastically from August to September which is of course having a detrimental effect on production and transport, with the latest September fuel price increase cross border hauliers have had to increase their rates on average of 6.2% for September.
August fuel prices:
95 Petrol (Inland): R22.83 95 Petrol (Coastal): R22.11
Diesel 0.005% (Inland): R20.52 Diesel 0.005% (Coastal): R19.81
September fuel prices:
95 Petrol (Inland): R24.54 95 Petrol (Coastal): R23.82
Diesel 0.005% (Inland): R23.28 Diesel 0.005% (Coastal): R22.59
Jorge Leon, Senior Vice President at Rystad Energy, highlighted the impact of these decisions on the global oil market and international fuel prices. Saudi Arabia, in particular, stated its intention to extend its voluntary cut of one million barrels per day (bpd) until the end of 2023, signalling a prioritization of oil prices over production volumes. Russia also extended its voluntary export cuts of 300,000 bpd until the year’s end.
These measures have significantly tightened the global oil market, leading to an anticipated rise in oil prices worldwide. The announcements surprised the oil markets, triggering a swift and strong reaction in prices.
Projections indicate global demand will outpace supply by approximately 2.7 million bpd in the further quarter of this year.
The impact of these production cuts on inflation and economic policies across the world is uncertain but potentially significant. Higher oil prices could increase the likelihood of further fiscal tightening, especially in the United States, as leaders seek to control inflation. In response, Western leaders may explore import adjustments or diplomatic discussions to mitigate the impact and manage inflation effectively.
Sept steel increase in effect,
Hot Rolled Coil prices increased R600/Ton effective 1 September affecting the prices on Pipe, Tube and all Flat Steel products. We expect this trend to continue in the coming months and once again, we urge you to plan accordingly.
Durban port delays continue,
Durban Port is grappling with a range of persistent challenges in its landside port operations. These issues stem from ongoing low labour productivity, equipment breakdowns, limitations on gantry operations, terminal congestion, and restricted access to NAVIS booking systems.
Furthermore, the situation has been exacerbated by certain shipping lines opting to bypass Durban Port. This decision leads to additional delays as vessels dock at alternative ports, necessitating the transshipment of containers.
These concerns have been brought to the attention of senior executives within Transnet. If the situation continues to worsen, there is a possibility that they may be elevated to the government for intervention.
Transnet Port Terminals (TPT) is also facing challenges in completing repairs to essential equipment required at Durban port’s Container Terminal Pier 2 due to difficulties in sourcing spare parts.
Lulamile Mtetweni, the manager of TPT Durban Container Terminals, explained that the current equipment issues primarily stem from the unavailability of critical spare parts needed as an interim solution while awaiting the arrival of a new fleet for the terminal. To address this situation, TPT is now exploring the possibility of leasing equipment from original equipment manufacturers, even if it involves second-hand equipment, to enhance equipment availability.
TPT is actively seeking bids from OEMs in the market for the supply of spare parts across all its terminals over a seven-year period through an open tender process set to conclude this month. The tender is expected to be awarded in October, with DCT Pier 2 being one of the beneficiaries.
Vedanta regains control over KCM,
On Tuesday, Zambia announced its decision to return control of Konkola Copper Mines (KCM) to Vedanta Resources, according to Mines Minister Paul Kabuswe. This resolution marks the end of a contentious dispute over ownership that began in 2019 when authorities in Zambia seized control of the mines.
Under the agreement, the Zambian government, which holds a 20% stake in KCM through ZCCM-IH, will permit Vedanta to regain control and operate KCM’s mines and smelter. Vedanta has reaffirmed its commitment to invest over $1.2 billion in increasing production and settling outstanding debts, as stated by Kabuswe.
To ensure that both parties’ commitments are legally binding, a shareholders’ agreement is being revised, with Kabuswe mentioning that the legal specifics of the agreement and the reinstatement of the KCM board will be finalized within the next three months.
Tensions had arisen between Zambia and Vedanta, owned by billionaire Anil Agarwal, when the government, under former President Edgar Lungu, took control of KCM assets and initiated liquidation proceedings in May 2019. This action was based on allegations that the Indian company had failed to meet investment plans to boost mining output.
The forced takeover had a severe impact on KCM operations and led to protracted legal battles, including Vedanta’s pursuit of arbitration in London to recover the copper assets.
The amicable agreement was reached as both parties decided to abandon their court challenges in favour of negotiations. This development could signal President Hakainde Hichilema’s efforts to reduce the government’s role in the mining sector, in line with his administration’s goals to triple copper production over the next decade.
Vedanta’s pledged $1 billion investment is expected to focus on advancing the Konkola Deep Mining Project, an underground operation that holds one of the world’s richest copper deposits but has suffered from a lack of investment.
In addition to the $1 billion investment commitment, Vedanta also announced that it would pay $250 million to local creditors, allocate $20 million to community projects, and raise workers’ salaries by 20%.
SA mining giants confident in bidding for Mopani,
Sibanye-Stillwater’s CEO, Neal Froneman, expressed optimism about the prospects of a successful bid for Zambia’s Mopani Copper after submitting a joint offer in partnership with a prominent Chinese copper company. Froneman believes that this collaboration can play a pivotal role in resolving the ongoing conflict between eastern and western interests in Zambia.
The decision from Mopani’s current owner, the state-owned ZCCM-IH, is expected in approximately two to three weeks. Once the successful bidder is determined, negotiations will commence on a long-term fiscal arrangement, royalties, and a stability agreement.
Froneman highlighted a competitive advantage, noting that Sibanye-Stillwater could serve as a bridge between eastern and western interests. Given China’s significant investments in Zambia, it would be challenging for the government to exclude them. Another advantage is Sibanye-Stillwater’s expertise in deep-level, labour-intensive mining and its experience in working with mining-centric communities, which differ substantially from those in the United States.
The bidding process has narrowed down to Sibanye-Stillwater and its partner, as well as China’s Zijin Mining.
If the bid proves successful, the partners intend to implement a capital reinvestment program for the asset, although Froneman emphasized that shareholders should not anticipate a substantial upfront capital expenditure.
Froneman also hinted at the possibility of investing in other African assets while maintaining the company’s strategic focus on minimizing political risk. He highlighted Africa’s potential, citing its wealth of critical minerals and under-explored opportunities. Zambia and Botswana were singled out as countries with favourable perceptions for investment.
Sibanye Still-water is also one of three South African mining giants that has entered the race to purchase Khoemacau copper mine in Botswana, whilst China’s Zijin Mining and Aluminium Corp of China have progressed to the second round of bidding for copper mine which is home to one of the largest copper deposits in Africa.
“It is often the small steps, not the giant leaps, that bring about the most lasting change.”