Tradewinds Volume 59
A significant surge in inflation sparks worries about potential interest rate changes.
In September, South Africa saw annual consumer price inflation rise to 5.4%, up from 4.8% in August, in line with economists’ expectations. The increase was driven by factors like higher food prices and increased costs for housing, utilities, and transportation.
This surge in inflation is concerning for interest rates, already at a 14-year high. The Reserve Bank’s Monetary Policy Review highlighted growing inflation risks due to factors such as rising oil prices and elevated inflation expectations. Ongoing conflicts in the Middle East add to oil price volatility, which could further impact inflation.
Given these uncertainties, the Monetary Policy Committee could consider raising interest rates. Economists expect any rate cut to occur in January or March, with the next interest rate decision scheduled for November 23. Sasol has notified its customers of an upcoming PVC price increase, which is aligned with prevailing market dynamics. This increase, amounting to 14.6%, will take effect in November 2023 and is influenced by multiple factors such as currency exchange rates, global oil prices, and other relevant considerations.”
Port Delays
Global shipping continues to face unprecedented delays, causing disruptions in various South African ports. Durban, in particular, is experiencing significant delays due to a combination of factors, including non-operational terminal equipment, low productivity, and unfavourable weather conditions. Approximately 45 vessels are sitting idle, making Durban one of the most congested ports globally. Expect delays of about 15-20 days for vessel berthing and an additional +/- 6 days for vessel discharging.
Port Elizabeth/Coega is seeing somewhat better conditions, but berthing slowdowns persist due to adverse weather and equipment shortages. Delays of around 12 days are possible, affecting cargo destined for East London as well.
Cape Town is also grappling with high congestion, with numerous vessels at anchor and berth. Delays of 6-8 days at anchor, 4 days for vessel operations, and 2 days for container collection are anticipated. In total, there could be a minimum of 10-12 days delay. Factors like low productivity, equipment downtime, and adverse weather conditions contribute to these delays and potential omissions.
Ramaphosa and Mnangagwa Conduct Cross-Border Inspection at New Zimbabwe Customs Post in Beitbridge
South African President Cyril Ramaphosa and Zimbabwean President Emmerson Mnangagwa conducted a joint border inspection on the 5th of October at the Beitbridge border post. They emphasized the importance of efficient border infrastructure to facilitate trade and the movement of people. Zimbabwe’s newer and larger border management facility was lauded by Ramaphosa, highlighting its potential to boost trade.
Mnangagwa didn’t directly address questions about the Zimbabwean Extension Permit in South Africa but spoke about their mutual visit to the border area.
The inspection aimed to improve border operations, but locals expressed skepticism, pointing out the challenges of smuggling and road conditions in the area.
UK Commits R20 Million to Identify Viable African Critical Minerals Processing Opportunities
The UK is providing R20 million for a study led by Boston Consulting Group to identify investment opportunities in processing critical minerals in African countries. This study, to be completed by year-end, will focus on countries including South Africa, Zambia, and the Democratic Republic of Congo. It aims to uncover promising opportunities, address project constraints, and offer recommendations for advancement.
The British High Commissioner to South Africa, Antony Phillipson, announced this commitment at the Critical Minerals Africa conference, emphasizing the importance of cooperation between South Africa and the UK in the critical minerals sector. Demand for critical minerals is expected to triple by 2030, particularly minerals like lithium for electric vehicles.
This announcement comes ahead of the second UK-hosted African Investment Summit in April 2024, building on the success of the 2020 Summit, which saw R150 billion in new investments.
The study will begin in late October, with results expected to be communicated early in the new year, potentially leading to further opportunities in the critical minerals sector.
Africa Seeks to Harness Global Demand for Critical Minerals for Development
At the Critical Minerals Africa conference in Cape Town, African Mining Ministers expressed a resolute commitment to exploit the increasing global demand for vital metals and minerals in clean energy systems to boost their economies. They stressed the importance of local beneficiation and value-adding industries.
Malawi’s Mining Minister, Monica Chang’anamuno, emphasized the need to keep raw materials within Africa and collaborate with neighbouring nations. South Sudan’s Mines Minister, Martin Gama Abucha, echoed this sentiment, focusing on job creation and resource value addition.
Tanzania is actively establishing refineries for key metals and minerals, with a keen focus on partnerships to develop downstream sectors and promote African countries as manufacturers of finished products.
In Zimbabwe, a lithium salt processing plant is part of the Mines-to-Energy industrial park project, set to begin operations in 2025 with an annual production capacity of 135,000 tons. Regional cooperation is seen as vital for countries without their own refining facilities.
The Mining Ministers are optimistic about the future of critical minerals in Africa, highlighting the importance of collaboration in driving the continent’s development.
Rio Tinto Signals a Resumption of Record Iron Ore Production
Rio Tinto is planning to boost iron ore production at its Gudai-Darri mine in Western Australia by 16% to reach 50 million metric tons per year, with an estimated cost of $70 million. Analysts expect this target to be achieved by 2025. The expansion will incorporate more autonomous technology.
Rio Tinto anticipates iron ore shipments from its Pilbara region to reach between 323 million and 338 million tons in 2024, potentially matching its 2018 record before further growth toward a medium-term target of 340 million to 360 million tons per year.
The company is moving ahead with the development of Rhodes Ridge, Australia’s largest iron ore deposit, which holds significant potential and could help bridge the free cash flow gap with competitors in the medium to long term.
South African Metals Group Secures Joint Venture for Copper and Cobalt Slag Project with Mopani in Zambia
A South African metals processing company, Jubilee Metals Group, has announced a joint venture (JV) with a Southern African mining company, Mopani Copper Mines of Zambia, to develop the Mufulira slag project. This project will involve processing 13 million tonnes of historical slag, containing approximately 0.7% copper and 0.27% cobalt, alongside current slag arisings.
Jubilee Metals Group will exclusively design, implement, and operate the new processing facility, with the first right to fund the project’s implementation. This initiative aligns with Zambia’s goal to achieve three million tonnes of copper output annually.
Jubilee Metals Group, known for its expertise in extracting metals from waste materials, already has a substantial portfolio in South Africa and Zambia, covering various commodities such as platinum group metals, chrome, copper, and cobalt.
The Mufulira slag project is a strategic addition to Jubilee’s portfolio, contributing valuable metal content. The company plans to implement the project in two phases, with a focus on the rapid processing of initial slag material and a subsequent review of more complex slags.
Jubilee Metals Group’s collaboration with Mopani is seen as a positive step toward sustainable waste recovery and metal extraction.
Reminder – Factory Shutdown
The annual factory shutdown period is rapidly approaching, scheduled from December 15th,2023 to January 8th 2024, and with Christmas just around the corner, it’s crucial not to procrastinate on your orders. Factories are getting ready for their yearly shutdown, so taking swift action is recommended.
Go Boks!
As Saturday approaches, the entire nation is eagerly anticipating the Springboks’ match against England. This game holds the promise of South Africa securing their second World Cup victory.
GO BOKS!