Trade Winds Volume 62

Jan 29, 2024 Posted by: Abeyla Exports Trade Winds

 

As we reach the end of January, in what has been a very eventful start to 2024, we share the biggest news from across Africa and around the world affecting trade and commerce:

Red Sea unrest continues.  

In the past 30 days, 517 container ships have been rerouted around the Cape as the Red Sea turmoil continues to require our pragmatism in finding solutions to minimize disruptions for our clients. Longer sailing times are causing delays, as well as availability of space, and higher container prices. We are doing everything we can to minimize the impact and ensure our clients continue to experience the on-time delivery we pride ourselves on. However, inflation and energy price fluctuations are becoming significantly worrisome across the economy, and the impact on imports is directly affecting consumers and businesses alike across Africa.

Our African ports are struggling to keep up with increased demand and congestion. Refueling in South Africa is also proving to be a major challenge. Shipping companies are now desperately looking for solutions, including exploring the possibility of stopovers in Mauritius and Namibia. To discuss any concerns you may have, please reach out to us.

Expect Import delays over Chinese New Year

A reminder that the Chinese New Year starts on Saturday, February 10 and ends on Saturday, February 24. During this time, the country shuts down to enjoy the celebrations, impacting on import lead times. Please factor in this delay when placing your orders with us. We wish all of our Chinese clients an auspicious New Year and prosperous Year of the Dragon!

South Africa

Standardization could reduce impact of unstable power supply in mining. 

As loadshedding continues to hurt the South African mining sector and impact manufacturing and the economy as the whole, we are working more closely than ever to find solutions.

Transnet’s ongoing issues, coupled with a severe decline in infrastructural stability, means the mining industry has lost some R150 billion (approx. US$ 7 billion) in export value in the past 12 months. The whole economy suffers as a result.

Mining operations cannot rely on Eskom and are investing heavily in diesel generators or alternative energy such as solar plants. But these solutions are very costly, making mining an expensive exercise in South Africa. This result? Investors lose confidence and seek opportunities elsewhere.

We see a potential solution in standardization – using international best practice standards. For example, where the capital investments of solar or renewable energy are aligned with the Paris Accord striving for net zero. Standards also help identify significant energy use assets, which then can be tailored to reduce consumption while optimizing production.

More Import duties will harm the steel industry. 

The higher import duties on imported steel products in South Africa – introduced last month – will hurt the whole industry.

According to our sources, they protect ArcelorMittal South Africa (AMSA), despite including specs for certain products they do not manufacture. This means the producers of these products will be squeezed out. Import duties hurt competition as they create upward pressure on pricing – meaning all industries suffer, ultimately leading to the decline of the steel industry as a whole.

Zambia 

Major investment into Kansanshi mine

First Quantum Minerals, which has an 80% ownership stake, is investing US$1.25 billion in the ‘S3 Expansion’ at the Kansanshi copper and gold mine in Solwezi. In completing the expansion by mid-2025, it aims to boost production so the mine can reclaim its peak production levels and bolster employment in the region.

Mozambique 

Significant investment into Maputo’s largest port 

The Maputo-Matola port is growing fast as it caters to demand from Mozambique’s growing economy and exports from neighbouring South Africa. Miners of coal, chrome and magnetite (a type of iron ore) have been sending increased volumes by truck to Maputo as delays and complications at Transnet have cost billions of dollars in lost revenue. The government has approved an extended deal for DP World, Grindrod and other operators to manage the port, as well as a $2 billion expansion that will boost capacity and divert trade from South Africa.

Democratic Republic of Congo

Re-negotiation of major minerals-for-infrastructure deal 

The Congolese government is re-negotiating a US$7 billion renewed financing deal of minerals-for-infrastructure with China. Dissatisfied with the results (and lack of benefit for the DRC) from the existing US$6.2 billion contract, President Tshisekedi wants a significant overhaul. The original 2008 deal pledged $3 billion of infrastructure investment in exchange for copper and cobalt from the Sicomines mine. However, the government says it has fallen significantly short.