Trade Winds Volume 61

Jan 15, 2024 Posted by: Abeyla Exports Trade Winds

 

Welcome to the first issue of 2024 where we share the significant industry developments from around the world impacting our economy. 

After a challenging and eventful 2023, we are optimistic and energized about the green shoots of opportunity we see growing across Africa, especially in Zambia and Botswana where significant foreign investments are boosting the economy. We are also closely watching Zimbabwe as its major steel plant nears completion. We see continued opportunities in helping African countries advance their green agendas, including in renewable energy and decarbonisation.

We are hopeful that various proposed interventions in South Africa will stabilize the economy and re-attract foreign investment. Its mining industry remains precarious with various mines facing unrest – 2024 will be a pivotal year for creating stability to kick-start the economy. All eyes are on the proposed restructuring of Eskom, the country’s state power utility, as mismanagement has had a negative impact on business across all sectors.

Overall, we believe 2024 is going to be a great year for our continent! On behalf of all of us at Abeyla Exports, we wish you a prosperous 2024 and look forward to providing the reliable service and best prices on which you’ve come to rely. Please reach out to us with your enquiries!                                                 

 Zambia:

$1.1billion Investment into Mopani Copper Mine  

The investment, by Abu Dhabi’s IRH, will secure a 51% stake in Mopani, the state owned ZCCM. Zambia had been seeking a new investor for Mopani since it took control of the assets from Glencore in 2021 for $1.5 billion. The aim is to ramp up production, requiring a $300 million boost to expand production (to 200,000 metric tons of copper) in the next three years.

$145M Investment into Renewable Energy 

To bolster Africa’s decarbonisation efforts, Affirma Capital, Norfund, and KLP have invested $145M in Zambia’s Copperbelt Energy Corporation (CEC). CEC is a key power provider of renewables and transmission in Zambia and the DRC. Affirma’s continued investment in CEC since 2014 highlights its confidence in the company’s growth potential – and the country’s.

Zimbabwe:

Significant Economic Boost Expected as state-of-the-art Steel Plant nears Completion

The country’s largest integrated steel plant – located in the Midlands – is almost complete. Through its local subsidiary, Dinson Iron and Steel Company (Disco), China’s Tsingshan Holding Group is constructing the integrated plant. It is expected to make Zimbabwe a major regional player in steel production and is one of Zimbabwe’s largest investments by a private investor. This is significant news for the economy, with optimism that the steel plant will bring the country back to its former glory of being a steel producer, rather than having to import steel and iron products, which it has done since the state-run Zisco closed in 2008, as well as create jobs and boost the economy.

Gold Production Declines Amid Economic Challenges 

Continued power cuts and currency instability caused Zimbabwe’s gold production to drop by a quarter to 30 tons in 2023. Once a top African gold producer, the country faces ongoing economic challenges. Most gold comes from small-scale miners, with major contributors being Kuvimba Mining House and Caledonia Mining Corporation.

Local currency falls

Zimbabwe’s currency remains one of the world’s most unstable, with the black market unofficially trading at Z$14,900 to the US dollar (the official rate is Z$7,867). A range of factors are causing the slide, including the end of tobacco sales and a softening of global commodity prices. Commodities contribute 85% of Zimbabwe’s foreign exchange.

Botswana: 

London targets Copper and Lithium

London-listed Aterian has bought a 90% stake in Atlantis Metals, securing four Botswana Mineral Licences covering 3,516 km2. Targeting copper and lithium, the acquisition complements Aterian’s strategy to focus on critical metals in stable regions. This strategy includes lithium mining in Rwanda.

DRC: 

CMOC Overtakes Glencore as Top Cobalt Producer 

Surpassing Glencore, Hong-Kong based CMOC Group reported a 170% increase in cobalt production in 2023, reaching 55,526 tons. The increased production – resulting from the new Kisanfu mine – contributed to a 30% drop in cobalt prices amid an oversupply.

South Africa: 

Mining: Layoffs and Unrest  

  • Gold One International plans to lay off 401 workers at its Modder East mine after ongoing underground protests. An additional 140 workers face suspension pending disciplinary hearings. The National Union of Mineworkers (NUM) will represent the workers.
  • Impala Platinum (Implats) will rescind the suspension notices given to 38 employees accused of leading a sit-in protest underground at the Bafokeng North and South shafts in December. Following union (NUM) intervention, workers will have the opportunity to defend and mitigate their actions.

Mining: Cost Cutting

  • Amidst volatile market conditions, Anglo American is targeting $1 bn in cost cuts to reduce production by about 4%. It forecasts $1.8 bn in capital expenditure cuts between 2023 and 2026. It plans to stabilize its operational and financial performance and increase resilience to ongoing economic and geopolitical volatility, as well as the current cyclical weakness in platinum group metals (PGM) and diamonds.

Labour Unions

  • Labour unions could disrupt plans to sell a stake in Durban’s port to an international company. The port would be operated by Filipino billionaire Enrique Razon’s International Container Terminal Services Incorp. The Unions are demanding no job cuts for the duration of the 25 year contract amongst other assurances but have yet to receive any response from stakeholders.

Power Supply

  • South Africa’s embattled national power utility, Eskom, is continuing plans to establish three separate companies housing Generation, Transmission and Distribution under Eskom Holdings. The Board of this new transmission company was announced last week, with Sasol executive Priscillah Mabelane set to preside.

Legislation around State Enterprises 

  • South Africa’s minister of public enterprises will soon introduce a bill in parliament to establish a government firm that will own and manage at least 13 of the country’s state-owned companies such as Air Traffic & Navigation Services, Airports Co, Broadband Infranco, Denel, SAA, SA Nuclear Energy Corp etc. The hope is that this will halt the spread of mismanagement and corruption and resurrect the entities.

Logistics Summary 

Port Delays and Surcharges Impact Operations

Despite recent showdowns, a recovery in port activity is expected in 8-12 weeks.

Red Seas and EU Fees:
Additional surcharges apply due to Red Sea conflicts and a new US$35 per TEU EU sustainability fee.

Durban – 31 anchored vessels cause 11-15 day berthing delays, affecting container collections.

Port Elizabeth / Coega – Weather delays and operational issues may require rerouting some cargo.

Cape Town – Weather and equipment issues cause 3-5 day delays.

February 2024 Fuel Forecast 

Diesel Set for a Dip, Petrol Prices Vary

The Central Energy Fund predicts a rise in petrol 93 prices by 3 cents but a drop by 4 cents for petrol 95. Diesel prices are anticipated to decrease by 18-25 cents. The final rates will be confirmed by February 6.

Global News: 

China’s worst deflation streak in 14 years 

International shipments declined 4.6% in 2023, dragging down the value of exports and making goods cheaper for foreign consumers. Consumer prices marked their longest streak of declines since 2009.

“Unity is strength, division is weakness.” Swahili proverb