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MIXING AND FIXING

By: Martin Creamer     10th July 2015 Both former African National Congress MP Professor Ben Turok and former Eskom adviser Mike Rossouw last week urged government and business to create policies together to end South Africa’s current economic stagflation crisis. Turok lamented South Africa’s policy doldrums and Rossouw its complex... 

MIXING AND FIXING

SOME REPRIEVE

By: Darlene Creamer     10th July 2015 South Africans breathed a sigh of relief on June 29 when the National Energy Regulator of South Africa Nersa rejected Eskom’s application for a further 2015/16 tariff hike in addition to the 12.69% already granted for the year. However, the door has been left open for another approach, so we... 

SOME REPRIEVE

MINING AT THE EDGE 

By: Martin Creamer     3rd July 2015 Several mining companies running into negative margins have already reported their positions to the South African government in compliance with Section 52 of the Minerals and Petroleum Resources Development Act, which deems mining companies to have entered dangerous territory when margins fall... 

MINING AT THE EDGE

UNHAPPY TREND

By: Darlene Creamer     3rd July 2015 Whether justified or not, the trend of suspending State-owned company (SoC) executives is nevertheless unsettling. The latest SoC afflicted is embattled oil company PetroSA, where it was finally confirmed that CEO Nosizwe Nokwe-Macamo and CFO Lindiwe Bakoro had been placed on “precautionary... 

UNHAPPY TREND

HUNGRY DRAGON

By: Martin Creamer     26th June 2015 The Chinese dragon is reportedly still keen to devour more of the stressed assets sprawled across South Africa’s headgear country. Proposals by Chinese investors to buy marginal South African precious metal and mineral assets are popping up regularly but few are more visible currently than... 

HUNGRY DRAGON

REPUTATIONAL DAMAGE

By: Darlene Creamer     26th June 2015 South Africa’s reputation as a beacon of hope for the world has been on the wane for some time. But the country arguably reached a new low in the eyes of the international community this month in it’s handling of President Omar al-Bashir visit. Why was he allowed to come in the first place? Why... 

REPUTATIONAL DAMAGE

TIGHTROPE WALKING

By: Martin Creamer     19th June 2015 Global mining’s tough 2014 fight is poised to escalate this year as companies struggle worldwide to emerge from depressed markets, says PwC Africa mining head Michal Kotze. CEOs walking a tightrope cutting costs to match low prices. Aggravating the situation are government intervention, industry... 

TIGHTROPE WALKING

FIFA-FICATION

By: Darlene Creamer     19th June 2015 The news flow surrounding FIFA and South Africa’s 2010 World Cup bid has been depressing to say the least. It has gone some way to undermine the warm feelings most South Africans still have towards the event, which some still contend was one of the best-run in the history of footfall. 

FIFA-FICATION

LET IT FLOW THROUGH

By: Martin Creamer     12th June 2015 Strong calls were made on Wednesday for South Africa to come into line with Canada and Australia by introducing effective incentives for its junior miners as a way of spurring mineral exploration. Bakgatla-Ba-Kgafela Investment Holdings CEO Noah Greenhill urged that a collective go to Treasury to... 

LET IT FLOW THROUGH

CONFIDENCE SAPPING 

By: Darlene Creamer     12th June 2015 The executive’s handling of the entire Nkandla debacle has been poor from the start. But it arguably reached a now low last month when Police Minister Nathi Nhleko presented an entirely unbelievable spin on the non-security components of the upgrade. The entire confidence-sapping scandal has not... 

CONFIDENCE SAPPING

CUTTING’S THE NEW PROFIT:

By: Martin Creamer     5th June 2015 With cost cutting now baked into numbers, the main drivers of relative profitability in the iron-ore sector will be foreign exchange lifts, freight, premiums and discounts for grade and quality. So says London mining analyst firm Liberum Capital, which says that these variables will determine the... 

CUTTING’S THE NEW PROFIT:

ENERGY SAPPING

By: Darlene Creamer     5th June 2015 While South Africa was enduring more than 20 days of consecutive load-shedding in May, Africa’s largest economy was experiencing an economically debilitating fuel crisis. The Nigerian crisis arose over a disagreement between government and fuel wholesalers on payment for the differential between... 

ENERGY SAPPING

CHARTER DUST-UP

By: Martin Creamer     29th May 2015 The government is insisting that the mining industry has failed to comply with the Mining Charter’s black ownership requirement, despite the Chamber of Mines proving that its members – who make up 90% of the industry – have more than complied. Rather than celebrating the achievement, the... 

CHARTER DUST-UP

CLEAR AS MUD

By: Darlene Creamer     29th May 2015 Recent statements made by government and African National Congress leaders regarding possible private investment into struggling State-owned power utility Eskom were confusing to say the least – possibly deliberately so. But the bottom line is that government has a limited ability to inject... 

CLEAR AS MUD

PEDESTAL PRESSURE

By: Martin Creamer     22nd May 2015 The global iron-ore giants are coming under pressure that could see them move slightly off their esteemed credit rating pedestals. Credit rating agency Standard & Poor’s warned earlier this month that it might lower the A+ credit rating that the august BHP Billiton has cherished for so long. The... 

PEDESTAL PRESSURE

HANDSHAKE REPUBLIC

By: Darlene Creamer     22nd May 2015 Recent high-profile settlements and resignations at the South African Revenue Service, South African Airways and the Hawks have led to some commentators questioning whether South Africa might not becoming a ‘golden handshake republic’. Such settlements may bring immediate stability, but their... 

HANDSHAKE REPUBLIC

IRON-ORE ECONOMICS 101

By: Martin Creamer     15th May 2015 Australian iron-ore mining company head Andrew Forrest has launched a scathing attack on two of the world’s biggest iron-ore producers, Rio Tinto and BHP Billiton, accusing them of forgeting that the iron-ore they are extracting is a national patrimony that should not be squandered. Being... 

IRON-ORE ECONOMICS 101

NOT IN A GOOD SPACE

By: Darlene Creamer     15th May 2015 South Africa experienced its worst spate of load-shedding since 2008 in April and the early statistical releases in May suggest that the country’s electricity constraint is really starting to hurt. It was also leading contributor to yet another unhappy downgrade, to 2%, of the country’s 2015... 

NOT IN A GOOD SPACE

IRON-ORE AND SINGAPORE

By: Martin Creamer     8th May 2015 Australia’s tax commissioner Chris Jordan has accused multinationals including iron-ore majors Rio Tinto and BHP Billiton of giving inaccurate evidence to the Senate inquiry into corporate tax avoidance. Jordan said Rio Tinto's paying 5% tax or $44-million in 2014 on profit of $719-million might... 

IRON-ORE AND SINGAPORE

REAL PAIN

By: Darlene Creamer     8th May 2015 The recent trading update by aluminium-products manufacturer Hulamin gave worrying insight in the real financial costs of load shedding. First quarter output, the company said, had been impacted by electricity curtailments, with interim earnings set to fall by more than 20% as a consequence.... 

REAL PAIN

SOUTH32 CLOCK TICKING

By: Martin Creamer     1st May 2015 With only five days to go before the shareholders of BHP Billiton vote on the South32 demerger, commodity price and other circumstances have changed complexion of this plan, which spins off BHP Billiton’s aluminium, coal and manganese assets in South Africa. BHP Billiton’s board last month... 

SOUTH32 CLOCK TICKING

PLEASANT SURPRISE

By: Darlene Creamer     1st May 2015 Energy Minister Tina Joemat-Pettersson surprised on the upside last month in unveiling South Africa’s plans for the introduction of independent power producers. Besides an accelerated and expanded renewable-energy programme, she also gave a far clearer outline for the introduction of private coal... 

PLEASANT SURPRISE

COMING UNSTUCK

By: Martin Creamer     24th April 2015 The alacrity that diversified major Glencore displayed in closing its coal trading office in Singapore and relocating it to Australia put it in a good light at the Senate tax inquiry in Australia. In sharp contrast, stronewalling and shilly-shallying skittled the reputations of both by BHP... 

COMING UNSTUCK

UGLY & UNACCEPTABLE 

By: Darlene Creamer     24th April 2015 The violent attacks on foreign nationals in Durban provided an ugly reminder of the xenophobia that still lurks deep within the South African psyche. Overcoming this image-damaging scourge will require responsible and progressive-minded leadership of the highest order. Sadly, there is currently... 

UGLY & UNACCEPTABLE

AUSTRALIAN PROTECTIONISM

By: Darlene Creamer     17th April 2015 Australia’s treasurer has reportedly told business representatives he would not allow Glencore to merge with Rio Tinto over concerns about losing tax revenue. Glencore has since indicated its willingness to close its Singapore sales office and consolidate the business in Australia, amid media... 

AUSTRALIAN PROTECTIONISM

ROADS CRUNCH

By: Darlene Creamer     17th April 2015 Uncertainty over South Africa’s approach to funding the newly improved Gauteng highway network can be seen every time Sanral attempts to raise debt on the capital markets. At some point (hopefully sooner rather than later), resolution has to be found to the current impasse. The longer it is left,... 

ROADS CRUNCH

TAX TROUBLE FOR PROSPECTORS

By: Martin Creamer     10th April 2015 Insult has been added to the lack of incentives for prospecting companies by an alarming 3% add-back amendment to the transfer pricing legislation, which confronts foreign-funded prospecting companies with real tax cash costs. KPMG corporate tax head Muhammad Saloojee reports that the 3% add... 

TAX TROUBLE FOR PROSPECTORS

ECONOMIC FALLOUT

By: Darlene Creamer     10th April 2015 South African Reserve Bank Governor Lesetja Kganyago had this to say about the electricity situation, following the March meeting of the Monetary Policy Committee statement: “The outlook for the domestic economy remains overshadowed by the electricity supply constraint, which appears to have had... 

ECONOMIC FALLOUT

HAVING CAKE AND EATING IT TOO

By: Darlene Creamer     3rd April 2015 References to BHP Billiton’s proposed new South32 business as DudCo have disappeared from analyst coverage, a Fortune writer has noted. He puts the change down to the falling prices of iron-ore and oil, which remain with BHP Billiton, and the steadier prices of aluminum, manganese, nickel and... 

HAVING CAKE AND EATING IT TOO

HERE WE GO AGAIN

By: Darlene Creamer     3rd April 2015 Eskom has confirmed that it is preparing an application for a reopener of the third multiyear price determination (MYPD3), under which five yearly tariff increases of 8% have been officially approved. The cash-strapped utility, which originally sought yearly increases of 16%, is looking to hikes... 

HERE WE GO AGAIN

POWER PRICE PULL-OUT

By: Darlene Creamer     27th March 2015 POWER PRICE PULL-OUT – The decision of Assmang and its partner African Rainbow Mineral (ARM) to place its long-standing Machadodorp ferroalloys operation on care and maintenance at the end of April was largely the result of uncompetitive electricity tariffs, ARM CEO Mike Schmidt said at this... 

POWER PRICE PULL-OUT

WHAT CRISIS?

By: Darlene Creamer     27th March 2015 Eskom chairperson Zola Tsotsi explained away the situation at the troubled State-owned utility thus, after announcing the suspension of the newly appointed CEO and three other senior executives: “There is no crisis. I’ll say to you what the President said, that there is no crisis. I’ll tell you... 

WHAT CRISIS?

WIN BACK INVESTOR SUPPORT

By: Martin Creamer     20th March 2015 Mining was last week urged to win back lost investor support by making full use of modern tools that guide capital return with unprecedented accuracy. “Let's not focus on the fish eagles when you’re in the swamp and up to your armpits in crocodiles. Let's focus on the crocodiles,” was the comment... 

WIN BACK INVESTOR SUPPORT

CAPEX CUTS

By: Darlene Creamer     20th March 2015 Like so many other energy companies, South African energy and chemicals group Sasol has been forced to realign its business to the new oil price reality. It has outlined a R30-billion to R50-billion cash-conservation programme, with capital-expenditure (capex) cuts making up the lion’s share. The... 

CAPEX CUTS

COAL COMFORT

By: Martin Creamer     13th March 2015 Public enterprise Eskom wants coal for its power stations, public enterprise Transnet Freight Rail (TFR) wants coal for its trains and the Public Enterprises Department is in charge of both. Eskom has in the past called for coal to be declared strategic and TFR wants coal exporters to sign... 

COAL COMFORT

GROWTH WORRY

By: Darlene Creamer     13th March 2015 Finance Minister Nhlanhla Nene had little option but to walk the fiscal-consolidation talk when presenting his maiden Budget. However, too little emphasis was given to what could be done (outside of the Budget) to galvanise higher rates of growth, without which the problems of poverty,... 

GROWTH WORRY

SOUTH32 TO RESCUE

By: Martin Creamer     6th March 2015 Mining giant BHP Billiton managed to pull a free cash flow rabbit out of a depressed commodity price hat in the six months to December 31. But another rabbit will be needed in the second half and that company sees it coming in the form of South32, the demerged aluminium, coal, manganese, nickel... 

SOUTH32 TO RESCUE

POWER PLANS

By: Darlene Creamer     6th March 2015 Both the Western Cape and Gauteng have announced that they plan to raise non-Eskom electricity output. The two important economic centres realise that their growth ambitions will be seriously curtailed without reliable and affordable power. But to deliver it will be easier said that done. 

POWER PLANS
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