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South Africa’s mining and manufacturing sectors show slight growth

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Report shows positive growth in the mining and manufacturing industry as both sectors  show slight figures of recovery in third quarter


South Africa’s mining and manufacturing industry shows slight growth in production and sales, but could decline in the near future.

The October 2018, StatsSA report shows both sectors have had figures of recovery from the start of the first quarter.

The mining production overturned a three-month decline with a 0,5% year-on-year growth in the third quarter, with gold being the lowest contributor.

Senior economist, Elize Kruger from NKC African economics, says despite  growth in the mining sector there is nothing to be excited about.

Protest action that started on gold mines in mid-November added to the pressure that the sector has been under over the past months.

A protected wage strike at Sibanye-Stillwater’s gold operations started when The Association of Mineworkers & Construction Union (AMCU) made a demand of  R1,000 annual increases in wages for mine workers.

The National Union of Mineworkers, Solidarity and United Association of SouthAfrica on  the other hand accepted R700 in the first two years and R825 in the third for most of their members.

The Johanessburg based mine urged striking workers to return to work by December 15, 2018. 

“Novemember and December could be impacted by the strike action that we see in the gold mining industry. The fourth quarter data is likely to remain depressed despite the October numbers,” she says.

Gold is the largest negative contributor at -15,1% thus contributing -2,3%percentage points to the overall figures.

Furthermore, increases in electricity prices that will take effect early 2019, will tighten the pressure on the industry adding to headwins faced on a global scale.

“Alluminum sector is impacted by the US import tarrifs increases and the threat of electricity price increases in the order of 15% ,” says Kruger.

The 15% increase is a strategy put in place by the electricity public utility, Eskom, to settle financial constraints.

The request made to the National Energy Regulator of South  Africa will be effective for three years if approved.

The manufacturing industry grew by 3,0% with eight out of 10 sectors showing positive growth rates over the last three months.

According to Kruger, the strong levels of the rand exchange rate put in a helping hand in the manufacturing production and sales sector.

Economy

Ford and IBM among quartet in Congo cobalt blockchain project

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 Carmaker Ford (F.N), technology giant IBM (IBM.N), South Korean cathode maker LG Chem (051910.KS) and China’s Huayou Cobalt (603799.SS) have joined forces in the first blockchain project to monitor cobalt supplies from Democratic Republic of Congo.

The pilot, overseen by responsible-sourcing group RCS Global, aims to help manufacturers ensure that cobalt used in lithium-ion batteries has not been mined by children or used to fuel conflict.

Companies are under pressure from consumers and investors to prove that minerals are sourced without human rights abuses, but tracking raw materials throughout their journey is challenging.

The project announced on Wednesday has been quietly under way since December. Starting with industrially mined cobalt in Congo, it is monitoring supplies all the way to lithium-ion batteries for Ford vehicles.

Supplies of cobalt, expected to be needed in huge quantities for electric vehicles and electronic devices, are concentrated in Congo, a sprawling, volatile nation that has been racked by civil war and political tension.

The outcome of elections in December, which had been intended to be Congo’s first democratic transfer of power in six decades, is contested.

RCS says the IBM blockchain platform could be used to include other minerals and to allow artisanal miners, which analysts say are the biggest issue with regard to ethical sourcing, to join a blockchain-based network of validated participants.

Blockchain, famed as the technology behind cryptocurrency bitcoin, works by providing a shared record of data held by a network of individual computers rather than a single party.

For the pilot project, which should be completed around the middle of the year, cobalt from Huayou’s industrial mine will be placed in secure bags, entered into a blockchain and traced from the mine and smelter to LG Chem’s cathode and battery plant in South Korea and then on to a Ford plant in the United States.

Because minerals are often combined with metals from various sources when they are smelted, they are particularly difficult to track.

The RCS project seeks to enforce best practice by using guidelines drawn up by the Organisation for Economic Cooperation and Development.

IBM said it was exploring the potential of chemical analysis using artificial intelligence to pinpoint the origin of cobalt and ensure so-called clean cobalt was not smelted with minerals sourced less responsibly.

“There is no fool-proof method, but you have to keep the ball moving forward, to keep raising the level of accuracy,” Manish Chawla, general manager of IBM’s mining and industrial sector business, told Reuters.

VW and Ford team up

“Blockchain has been proven to be a very effective technology in raising the bar.”

IBM has already worked with retailers including Walmart (WMT.N) and Carrefour (CARR.PA) to trace food through supply chains.

In the mining sector, meanwhile, Anglo American’s (AAL.L) De Beers has begun using blockchain to track diamonds. -Reuters

Barbara Lewis

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Economy

150 percent price rise fails to fill Zimbabwe’s fuel pumps

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A drastic 150 percent overnight rise in Zimbabwe’s fuel prices failed on Sunday to ease a nationwide petrol and diesel shortage caused by a lack of hard currency.

Most service stations still had no fuel to sell to motorists who have been sleeping in their vehicles to queue. Some said they were awaiting an official notice from the regulatory authority (ZERA).

Deputy Information Minister Energy Mutodi tweeted that commodity price volatility “will be temporary before goods prices normalize”.

The acute shortage of U.S. dollars has made it hard for President Emmerson Mnangagwa’s government to import not only fuel but also drugs and other goods.

Mnangagwa himself was on Sunday setting off on a five-nation tour that starts in Russia and ends at the World Economic Forum in Davos, Switzerland.

Zimbabwe abandoned its own currency in 2009 after it was wrecked by hyperinflation, and adopted the greenback and other hard currencies such as sterling and the South African rand.

But now there is not enough hard currency to back up more than $10 billion in electronic funds trapped in local bank accounts, prompting demands from businesses and civil servants for cash that can be deposited and used to make payments.

Mnangagwa has said his government will not let businesses raise prices but they have been doing so anyway, arguing that they have no choice but to buy dollars at a premium on the black market.

Inflation is already at a 10-year high of 31 percent and, in the past two weeks, public transport firms have tripled fares citing a shortage of fuel, which some have been buying on the black market.

An assistant at a service station owned by Zuva Petroleum said: “We have not received any supplies since Thursday evening but we are hoping we will get a delivery before end of the day.”

A ZERA spokesman said all fuel companies had been notified of the new prices.

The Zimbabwe Congress of Trade Unions (ZCTU) said it planned a national strike from Monday in protest at the “insensitive and provocative” fuel price increase, although such calls have in the past not been widely followed.

Teachers, who are not represented by ZCTU, are planning a nationwide strike from Jan. 22, and civil servants have threatened to join them. -Reuters

  • MacDonald Dzirutwe

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Economy

World Bank Sees Global Growth Slowing In 2019

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The growth of the global economy is expected to slow to 2.9 percent in 2019 compared with 3 percent in 2018, the World Bank said on Tuesday, citing elevated trade tensions and international trade moderation.

“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead,” World Bank Chief Executive Officer Kristalina Georgieva said in the semi-annual Global Economic Prospects report here.

The World Bank outlook comes as the United States and China have been engaged in a bitter trade dispute, which has jolted financial markets across the world for months. The two economies have imposed tit-for-tat duties on each other’s goods, although there were signs of progress on Tuesday as the two countries prepared to enter a third day of talks in Beijing.

Growth in the United States is likely to slow to 2.5 percent this year from 2.9 percent in 2018, while China is expected to grow at 6.2 percent in the year compared with 6.5 percent in 2018, according to the World Bank.

Emerging market economies are expected to grow at 4.2 percent this year, with advanced economies expected to grow at 2 percent, the World Bank said in the report. -Reuters

  • Kanishka Singh

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