SA's mining industry faces a number of challenges that require determined and systematic resolution, Deputy Mineral Resources Minister Godfrey Oliphant said.]]> |||
Johannesburg - South Africa's mining industry faces a number of challenges that require determined and systematic resolution, Deputy Mineral Resources Minister Godfrey Oliphant said on Thursday.
“Importantly, our success will depend largely on the degree to which all the stakeholders participate in finding effective solutions and commit to re-establishing the industry's reputation and restoring its growth path,” Oliphant said.
In a speech prepared for delivery at Kumba stakeholder day, Oliphant said there were a number of issues within the industry that required both political and technical leadership.
These included the need to boost exploration and prospecting investment, workforce health and safety, rehabilitating the environmental legacy, illegal mining, and benefication and revitalisation of mining regions.
“Preceding all these pressing items is a far more strategic issue, the No1 on my list, namely the need to revive the reputation of our mining industry and its global branding,” Oliphant said.
The events of the past couple of years, in particular the prolonged strike in the platinum sector earlier this year, seriously damaged the reputation of South Africa's mining industry and its governance structures.
While it was tempting to blame certain sector players, it was of national interest all key players instead focused on their collective responsibility to safeguard the industry, its sustainability and its global competitiveness.
“The urgent rehabilitation of the industry's branding and its comparative positioning remain the topmost priority,” the deputy minister said.
“To this end, we should certainly learn from our own lessons of experience and that of the others.”
Structural issues in the industry needed a collective and effective resolution.
“In fact, there is a real risk that if matters are left to uncoordinated socio-political and financial markets, the industry will evolve along the trajectory of capital intensification and resource under-utilisation,” he said.
The result would be a steady contraction in the sector's employment level and other social benefits.
“It is clear that the prosperity of the nation, in many of our regions and our social welfare are greatly affected by the developments in the mining sector,” Oliphant said.
“This is particularly so if we consider the vast opportunities and the great potential that the mining sector has to offer.”
Careful analysis of South Africa's modern economic history would show the sector has had a pivotal role in the modernisation of the South African economy.
“Much of our country's industrialisation has been and remains due to our resourceful and robust mineral sector endowment,” Oliphant said.
“It is therefore a national imperative that we focus on the ways and means of unlocking the inherent potential of the sector at the same time that we deal with the outstanding structural issues facing the industry.”
South Africa's rand weakened against the dollar, falling to a 7-month low after respected Reserve Bank Governor Gill Marcus said she would not renew her contract when her five-year term ends in November.]]> |||
Johannesburg - South Africa's rand weakened against the dollar on Thursday, falling to a 7-month low after respected Reserve Bank Governor Gill Marcus said she would not renew her contract when her five-year term ends in November.
Government bonds weakened alongside the currency, pushing yields higher, after Marcus left the benchmark repo rate unchanged at 5.75 percent at the bank's penultimate policy meeting of the year.
She cited a weak growth outlook as the basis for her decision.
The yield on the benchmark 2026 government bond rose to a session high of 8.245 percent, and closed 5 basis points higher on the day at 8.24 percent.
The rand fell to 11.1095/dollar after Marcus's announcement, its softest level since late February, before clawing back to 11.0675 by 17:48 SA time, down 0.3 percent from its previous close.
“Dollar-rand moved higher as a knee-jerk response, reflecting the esteem in which Governor Marcus is held by the markets, and investors' belief in her anti-inflation credibility,” Standard Bank analyst Razia Khan said.
The appointment of an insider as successor would be the most rand-friendly option, Khan added.
Marcus, who has guided Africa's most advanced economy through five years of post-financial crisis turbulence, gave no clues about her successor but said President Jacob Zuma would be able to draw on a “strong talent pool” at the bank. - Reuters]]>
South African stocks ended higher, led by Naspers after a broker upgrade while banks extended gains for the third straight session.]]> |||
Johannesburg - South African stocks ended higher on Thursday, led by Naspers after a broker upgrade while banks extended gains for the third straight session.
Naspers topped the gainers' list on the blue-chip index after brokerage house UBS raised its rating on the e-commerce and media firm to 'buy' from 'neutral'.
Its shares climbed 4.8 percent to 1,340 rand, the biggest daily percentage gain since July.
Banks featured among the gainers, continuing a recovery from a three week-low last week.
Nedbank picked up 1.7 percent to 229.49 rand and FirstRand added 1.3 percent to 44.72 rand.
“There is a little bit of bargain hunting that has come back into the banking sector again,” said Ferdi Heyneke, a trader at Afrifocus Securities.
Traders were largely unfazed by the South African central bank's decision to leave rates unchanged and a subsequent announcement that its governor would step down.
The blue-chip JSE Top-40 index was up 0.9 percent at 46,226 and the broader All-share index gained 0.7 percent to 51,547.
On the downside, gold shares dropped as the price of bullion sank to its lowest in more than eight months.
Harmony fell 3.4 percent to 26.80 rand and larger rival Gold Fields dropped 1.9 percent to 46.68.
Trade was robust, with 294 million shares changing hands, well above last year's daily average of 176 million, and 145 companies gaining while 143 dropped. - Reuters]]>
US stocks were rising, with the S&P 500 hitting a record high a day after the US Federal Reserve renewed its commitment to keeping interest rates low.]]> |||
New York - US stocks were rising in late morning trading on Thursday, with the S&P 500 hitting a record high a day after the US Federal Reserve renewed its commitment to keeping interest rates low.
The Fed said Wednesday at the conclusion of a two-day policy meeting it would keep interest rates near zero for a “considerable time,” language supportive of equities which some had expected to be dropped from the statement.
However, the central bank's outlook included forecasts for higher-than-expected rates in 2015 and 2016, which helped financial stocks lead gains on Wall Street.
US housing starts and permits fell in August, but upward revisions to the prior month's data suggested the housing market continued to gradually improve. Separate data showing a sharp drop in the number of Americans filing new claims for unemployment benefits last week suggested the slowdown in job growth last month was probably an aberration.
“Data says the US economy continues to chug along,” said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco.
He said the Fed statement was giving support to Wall Street and relative valuations could continue to push money towards US stocks.
“Right now the best-looking asset class is equities.”
The Dow Jones industrial average was rising 89.04 points, or 0.52 percent, to 17,245.89, the S&P 500 was gaining 8.59 points, or 0.43 percent, to 2,010.16 and the Nasdaq Composite was adding 24.17 points, or 0.53 percent, to 4,586.36.
The S&P hit a high of 2,011.79.
The largest percentage gainer on the New York Stock Exchange was Penn West Petroleum, rising 9.27 percent, while the largest percentage decliner was USEC Inc, down 20.76 percent.
Among the most active stocks on the NYSE were Bank of America, up 1.50 percent to $17.02; Rite Aid, down 17.02 percent to $5.51, after it cut its full-year profit forecast for a second time this year; and GE, up 0.92 percent to $26.29.
On the Nasdaq, Yahoo, down 1.7 percent to $41.89; Vivus Inc, up 16.2 percent to $4.51; and Apple, up 0.5 percent to $102.06, were among the most actively traded.
Vivus rose after an erectile-dysfunction drug it co-developed was approved by the US Food and Drug Administration.
Advancing issues were outnumbering declining ones on the NYSE by 1,895 to 1,034, for a 1.83-to-1 ratio on the upside; on the Nasdaq, 1,695 issues were rising and 883 falling for a 1.92-to-1 ratio favouring advancers.
The benchmark S&P 500 index was posting 44 new 52-week highs and 7 new lows; the Nasdaq Composite was recording 58 new highs and 35 new lows. - Reuters]]>
Investors are starting to price the risk of Russia's credit rating falling to junk if Western sanctions and Moscow's response plunge the economy into recession and deplete its $450 billion (R5 trillion) reserves.]]> |||
London - Investors are starting to price the risk of Russia's credit rating falling to junk if Western sanctions and Moscow's response plunge the economy into recession and deplete its $450 billion (R5 trillion) reserves.
Being investment grade - at least BBB minus from Standard & Poor's and Fitch or Baa3 from Moody's - allows a borrower to tap a far wider pool of investors, and losing that ranking would be likely to cause big outflows from Russian markets.
Moody's, which rates Russia Baa1 or three notches above junk, said this week that the latest sanctions were credit negative.
Fitch has a negative outlook on its BBB rating, two notches above junk, while S&P rates Russia BBB-minus with a negative outlook.
But investors are already treating Russia as being as risky as junk.
Bond market investors typically use CDS to insure against non-payment of debt, but they are also often used as a proxy to gauge how risky an entity is, which is why there is a close relationship between credit ratings and CDS.
The higher the CDS spread, the riskier the credit is deemed to be.
Russian CDS are higher than those of Indonesia, Brazil and Turkey, whose ratings, while investment grade, are lower.
“Russian CDS are extremely cheap compared to its ratings; that points to a move by the ratings agencies,” said Ishitaa Sharma, an emerging markets strategist at Citi.
“We think the agencies are going to do the catch-up now.”
For instance, Russian five-year CDS trade at around 250 basis points, according to Markit, or more than 100 bps above Brazil's, even though it is rated slightly higher.
That means it costs $250,000 a year to hedge $10 million worth of exposure to Russia for five years.
The cost for Brazil is $138,000.
The contrast is even more startling with Hungary, whose CDS trade at around 150 bps despite its junk BB/Ba1/BB plus ratings.
With public debt levels of 10 percent of annual output, half a trillion dollars in currency reserves and a current account surplus, Russia, arguably, does not deserve to be rated junk.
But David Hauner, head of fixed income and economics for Emerging Europe, Middle East and Africa at Bank of America/Merrill Lynch, said ratings were also determined by the direction of the economy and debt levels.
“If you look at the balance sheet alone, Russia's rating should be even higher,” Hauner said.
“The key is the uncertainty coming from a deteriorating business climate and the risk of more sanctions. So while a downgrade to junk may not be vindicated by current numbers, the agencies might fear the uncertainty would justify it,” he added.
Implications could be huge.
JPMorgan calculated earlier this year that a one-notch ratings downgrade causes a roughly 20 percent increase in borrowing costs.
A fall into junk will fuel outflows from funds that can only invest in investment grade securities, and the ejection of Russia from the investment grade portion of benchmark bond indexes such as JPMorgan's GBI-EM or EMBI Global.
“A downgrade to junk would have material impact in terms of flows. The implications are bigger than for a normal downgrade; it increases the hurdle rate for investments,” Hauner said, referring to the minimum rate of return required by an investor. - Reuters]]>
The dollar hit a more than six-year peak against the yen on data showing US jobless claims fell more than expected last week.]]> |||
New York - The dollar hit a more than six-year peak against the yen on Thursday on data showing US jobless claims fell more than expected last week, while global equity markets rallied after the Federal Reserve again pledged to keep interest rates low.
The dollar index, a gauge of the greenback's value against six currencies, climbed to its strongest in more than four years, supported by the Federal Reserve's interest rate forecasts that were higher than those projected in June.
Markets eyed a widening policy split between the United States and other rich nations that in the future will push US rates higher, strengthening the dollar.
Some strategists were surprised at the extent of the dollar's rally and felt investors have put too much credence in the rate forecasts, instead of what Fed officials said.
“The dollar will be in a consolidation phase in the short term after yesterday's sharp gains,” said Greg Moore, senior currency strategist at RBC Capital Markets in Toronto.
“Even Janet Yellen yesterday was reluctant to commit to any rate scenario,” he said.
The dollar rose as high as 108.96, the strongest since August 2008, and last traded at 108.67, up 0.28 percent.
The euro rebounded, rising 0.37 percent to $1.2912.
Wall Street rallied, with both the benchmark S&P 500 and Dow setting new intraday highs.
The Dow Jones industrial average was up 92.26 points, or 0.54 percent, at 17,249.11.
The Standard & Poor's 500 Index was up 9.13 points, or 0.46 percent, at 2,010.70.
The Nasdaq Composite Index was up 25.08 points, or 0.55 percent, at 4,587.26.
In Europe, the FTSEurofirst 300 index of top regional shares rose 0.89 percent to 1,397.43.
MSCI's all-country world index rose 0.24 percent to 428.51.
US Treasury debt prices turned down, with investors driving some shorter-maturity yields to highs not seen since May 2011 after the Fed on Wednesday raised its forecasts for some interest rates.
Yields on two-year notes touched a high of 0.597 percent before settling back to 0.5767 percent on a 1/32 price decline.
That level was last seen in May 2011.
Yields on benchmark 10-year Treasury notes were up to 2.6308 percent on a price decline of 9/32.
The number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting a sharp slowdown in job growth last month was probably an aberration.
While other US data on Thursday showed some weakness in home building and factory activity, the underlying trend remained supportive of solid economic growth.
Oil traded lower, pressured by ample supply and concern over a weakening of demand growth in major consumer nations, as well
as by the dollar's rise.
A stronger dollar makes dollar-priced commodities such as oil more expensive for buyers using other currencies but tends to weigh on oil prices.
Brent was down 95 cents at $98.02 a barrel, while US crude was down 43 cents at $93.99 a day after dropping on government data that showed US crude inventories rose 3.7 million barrels last week. - Reuters]]>
Gil Marcus has indicated that she would like to see an internal replacement take her place as Reserve Bank governor.]]> |||
Johannesburg - South African Reserve Bank Governor Gill Marcus will step down at the end of her term on November 8 after guiding Africa's most advanced economy through five years of post-financial crisis turbulence.
The rand fell to 11.1095 against the dollar, its lowest since February.
Marcus said President Jacob Zuma would be able to draw on a “strong talent pool” in the bank, suggesting she would prefer an internal replacement.
Following are analyst comments about possible replacements for the respected Marcus:
MANDLA MALEKA, TREASURY ECONOMIST, ESKOM
“She mentioned that the committee has got some strong candidates. If anything, a candidate to take over from her will be from the three current deputy governors.
“I have got the feeling - though not very strong - that it may be Lesetja (Kganyago) considering that he may have some political clout as compared to Daniel (Mminele).
“Both of them are equally capable but what will stand Lesetja in good stead is he was once the fiscal manager of the country.”
RAZIA KHAN, HEAD OF AFRICA RESEARCH, STANDARD CHARTERED:
“What happens next will very much depend on the successor that is announced.
“In previous instances, both with Governor Mboweni and Governor Marcus, a successor was announced some time before the term of the sitting Governor was due to end.
“That there has been no announcement yet raises the likelihood that a successor will emerge from within the SARB, although it is not necessarily a given.
“For markets, this might be the more rand-friendly response. As much as the independence of the institution - enshrined by South Africa's constitution - is well-recognised, this would still be the more benign outcome.”
PETER ATTARD-MONTALTO, EMERGING MARKET ECONOMIST, NOMURA:
“I'm gutted. It's a very sad day. And she is going for a range of reasons to do with politics, race etc.
“If it is Lesetja it will be policy continuity and a 'non-event'.
The other alternative is Daniel, who would be similar but does not have the same political ties.
“Someone external would be a risk. She has very big shoes to fill in the depth of analysis and clarity she has brought to the MPC statements.”
HUGO PIENAAR, BUREAU FOR ECONOMIC RESEARCH:
“There are very capable people on that MPC, people like Lesetja, who of course has a Treasury background as a former director-general there. And Daniel Mminele has been at the Reserve Bank for a very long period.
“They are suitable candidates within the Bank to step into the Governor's boots.” - Reuters]]>
President Jacob Zuma has extended his gratitude to outgoing SA Reserve Bank Governor Gill Marcus.]]> |||
Johannesburg - President Jacob Zuma on Thursday extended his gratitude to outgoing SA Reserve Bank Governor Gill Marcus.
“We wish to thank the governor for her excellent service and leadership,” Zuma said in a statement.
“She has steered the bank during the difficult periods of the global economic and financial recession and ensured the achievement and maintenance of stability.”
Zuma said government valued Marcus's contribution immensely and wished her all the best in her future endeavours.
Marcus will step down on November 8, at the end of her five-year term.
She made the announcement in Pretoria on Thursday after a briefing on the monetary policy committee's repo rate decision.
“This is my last MPC,” Marcus said.
Zuma's office said he would announce the new governor in due course. - Sapa]]>
Pioneer Foods will offer investors one Quantum Foods Holdings share for every Pioneer security as its poultry company prepares an initial public offering.]]> |||
Johannesburg - Pioneer Foods, a South African cereals and fruit-juice producer, will offer investors one Quantum Foods Holdings share for every Pioneer security as its poultry company prepares an initial public offering.
“The board of directors of Pioneer Foods has resolved to proceed with the unbundling,” Paarl, South Africa-based Pioneer said in a statement today.
Pioneer’s Class A investors, who get 30 percent of their dividends with the rest used to settle debt following a black-economic empowerment transaction in 2006, will get 0.3 Quantum shares for each unit held, it said.
The listing of Quantum, which sells Nulaid eggs, Nova Feeds and Tydstroom fresh and frozen chicken packs, is planned for October 6.
Pioneer is spinning off Quantum to focus on branded consumer goods amid a slowing South African economy where consumers are struggling with rising inflation and unemployment.
Rhodes Food Group Holdings, a producer of prepared meals, said this week it plans to raise as much as 1.35 billion rand in a share sale next month,
Quantum doesn’t intend to raise capital before the shares start trading, the company said in a separate statement today.
After the listing Quantum wants to expand in Africa, have the opportunity to develop strategic partnerships and get direct access to capital markets, it said. - Bloomberg News]]>
Belgian authorities seized Zimbabwean diamonds awaiting an auction in Antwerp following a court order giving a South African mining company the right to be compensated for a lost concession.]]> |||
Johannesburg - Belgian authorities seized Zimbabwean diamonds awaiting an auction in Antwerp following a court order giving a South African mining company the right to be compensated for a lost concession.
About 500,000 ounces worth roughly $45 million (R497 million) and belonging to companies with Zimbabwean state shareholdings were seized on September 12 following an attachment order obtained by Amari Holdings to enforce a ruling in a Paris-based court of arbitration, Amari said in an e-mailed reply to questions.
The dispute will be adjudicated by a judge in Zambia tomorrow, Zimbabwean Mines Minister Walter Chidakwa said yesterday in Parliament.
He questioned why Amari was able to attach the diamonds even though the dispute was with the state-owned Zimbabwe Mining Development Corporation.
“Those companies therefore cannot be punished for the sins of ZMDC,” Chidakwa said.
“I think at law you cannot say because ZMDC is the shareholder of a certain legal entity then you punish that entity. In Belgium you can go to a court and seek an order even without a response of those you are seeking an order against.”
The dispute stems from Amari’s departure from Zimbabwe in 2010, when the government cancelled its right to operate its Serui platinum concession on the Great Dyke, a range of hills that runs down the centre of the country, after the company had spent millions of dollars exploring it and identifying an economically viable resource of 18 million ounces of platinum group metals, the company said.
Amari’s project “did not succeed because of many reasons including non-performance,” Chidakwa said.
The cancellation was unwarranted, according to Amari.
The Antwerp World Diamond Centre in March said it wants to sell 12 million carats of diamonds from Zimbabwe this year.
Zimbabwe conducted two auctions in Antwerp, in December and in February, earning $10.5 million from sales of 279,723 carats and $70 million from 959,931 carats, according to the country’s Ministry of Mines.
Zimbabwe will hold its first domestic diamond auction in November, according to Chidakwa.
The European Union lifted sanctions against diamonds from the Marange field in Zimbabwe’s east a year ago, making the international sale of gems an increasingly important source of revenue for the cash-strapped government.
Zimbabwe mined about 16.9 million carats last year, according to the Ministry of Mines.
Impala Platinum, Aquarius Platinum and Anglo American Platinum are the only producers of the metal in Zimbabwe, which has the world’s second-largest deposits after South Africa.
President Robert Mugabe, 90, last year consolidated his grip on power with a July election win, ridding his Zimbabwe African National Union-Patriotic Front of its coalition with the main opposition Movement for Democratic Change.
The government is compelling foreign-owned miners and banks to cede control under its so-called indigenisation policy.
Zimbabwe had $9.9 billion in debt, which “remains as an albatross around our neck as a country, it inhibits the access to fresh capital, fresh money which we badly require,” Finance Minister Patrick Chinamasa on September 10. - Bloomberg News]]>