News Update as @ 1530 hours, Tuesday 17 June 2014Feedback: bh24admin@zimpapers.co.zwEmail: bh24feedback@zimpapers.co.zw

President Robert Mugabe returned home on Tuesday from Santa Cruz, Bolivia where he was attending the 50th Group of 77 developing countries and China summit held over the past weekend.

He was met at the Harare International Airport by Vice President Joice Mujuru, Service Chiefs and Cabinet Ministers who included Media, Information and Broadcasting Services Minister Profes-sor Jonathan Moyo.

The summit adopted a number of dec-larations including the need for urgent restructuring of the international finan-cial architecture and reform of the United Nations system, in particular the Security Council. Themed “A New World Order for Living Well,” the sum-mit also pushed for the post 2015 development agenda that prioritised

poverty eradication, food security and gender equality among other matters of global concern.

President Mugabe, who was accompa-nied by Foreign Affairs Minister Sim-barashe Mumbengegwi, told the sum-mit that it should leverage on its status as the single largest bloc in the UN to

influence changes in global political and financial systems.

Other leaders who attended the sum-mit are Venezuelan President Nicolas Maduro, Equatorial Guinea President Teodoro Obiang Nguema, Zambian Vice President Guy Scott, Cuban Pres-ident Raul Castro and Iranian Vice

President Es’haq Jahangiri. The summit this year was also focusing on creating sustainable ways to protect the earth.

The G77 was established in 1964 and now comprises 133 countries, mostly developing nations. At its formation, the G77 & China members declared their unity under a common interest and defined their Group as “an instru-ment for enlarging the area of co-oper-ative endeavor in the international field and for securing mutually beneficent relationships with the rest of the world.”

While the initial mandate of the G77 & China was to accentuate the trade and development related issues of its members, the focus of the group has since evolved and today, it is a suc-cessful lobby group within the United Nations structures. ― New Ziana •

Africa should lead in global political and financial systems: President

President Mugabe

2 NEWS

By Munyaradzi Musiiwa

Essar Holdings has agreed to imme-diately inject money into Lancashire Steel and production is expected within the next six months, deputy Minister of Industry and Commerce Chiratidzo Mabuwa has said.

Lancaster Steel is a subsidiary of NewZim Steel. It closed in 2010 due to the shortage of raw materials after the mother company Zisco indefinitely suspended operations.

Speaking at the Confederation of Zim-babwe Industries (CZI) workshop on the Zimbabwe Agenda for Sustaina-ble Socio-Economic Transformation on Monday, Mabuwa said Essar would

soon inject money into Lancashire for the importation of feed stock.

“Essar is going to inject money into the project, particularly towards Lan-cashire Steel for the immediate revival and to commence operations using imported feed stock over the course of six months,” she said. Mabuwa said the resuscitation of NewZim Steel was also imminent following the completion of the revival plan.

“There have been problems that were not clear to Essar at the time of the signing of the deal. There was, how-ever, the reconsiderations of all the grey areas that had not been looked at initially and Essar representatives met President Mugabe and recommitted

themselves. They agreed on three spe-cific implementation issues which are revising the revival plan, immediate relief to workers and plans and modali-ties for the settlement of local creditors. Essar has agreed to implement the interim measures,” she said.

Mabuwa said Essar had already engaged Chinese and Indian engi-neering procurement and construction contractors to commence work on the ground based on the adjusted revival plan. “The date of the first production remains unchanged. Essar has also commenced the construction of a ther-mal power plant. They have also given support to workers by availing money for schools fees for the workers’ chil-dren,” Mabuwa said.

“The company had also inherited the debt of loans that were extended to workers by the Commercial Bank of Zimbabwe (CBZ) following reports that workers’ properties were now being attached.” Mabuwa said the skills review assessment was already under-way to evaluate the number of workers that could be taken onboard. Ziscosteel stopped operations in 2008 because of viability challenges and debts. •

Essar to revive Lancaster Steel

3 NEWS

BH24 Reporter

International e-commerce business PayPal has entered 10 new countries, including Zimbabwe, starting today.

PayPal executive in charge of the EMEA region Rupert Keeley told Reuters that the expansion would bring the number of countries it serves to 203.

"PayPal has been going through a period of reinvention, refreshing many of its services to make them easier to use on mobile (phones), allowing us to expand into fast-developing mar-kets," Keeley said. The extension of PayPal's services into Zimbabwe will help strengthen online payments and money transfer in the country, which already has a number of local and regional players currently operating.

But more than anything else, it will benefit local customers intent on online purchases and PayPal itself. It has been noted that for the PayPal's 10 new markets, peer-to-peer payments and local merchant accounts have not been enabled yet, which means the transactions currently allowed for Zim-babweans through PayPal will be of no benefit to the country's economy. The Reserve Bank of Zimbabwe has said it is in the process of developing stronger regulations for all electronic payment systems. "Financial innovation coupled with increased penetration rates in the mobile telecommunications sector has seen the phenomenal growth in the use of electronic means of payment.

"Within this context the Reserve Bank through its oversight and regulatory mandate, is currently seized with com-

ing up with an electronic-payment sys-tem regulation.

The regulations will provide for the effective management and operation of all electronic means of payments, nota-bly, cards, mobile, e-banking and inter-net among others," said then RBZ act-ing governor Dr Charity Dhilwayo in the Monetary Policy Statement. Regulation is particularly important for regional and international money transfer play-ers operating in the country, so as to mitigate instances of externalisation of cash.

At the heart of Zimbabwe's online pay-ments systems are players like Pesa-Pal, ZimSwitch's Vpayments, FloCash, Paynow and Pay4App. In addition are mobile money payments and money transfer services provided by the coun-try's three mobile telecommunication providers.

The 10 countries that PayPal has entered span across three continents, that is, sub-Saharan Africa, Eastern Europe and Latin America. Besides Zimbabwe, the other countries include Belarus, Macedonia, Moldova, Monaco, Montenegro, Nigeria, Cameroon, Ivory Coast and Paraguay. •

PayPal enters Zimbabwe; only allowing for money-out

BH24

By Lynn Murahwa

The Ministry of Primary and Second-ary Education is in discussions with the Microsoft sub-regional office to imple-ment vernacular languages for the Zimbabwean context.

Minister of Education Lazarus Dokora said while in Uganda he discussed with Microsoft the desire for ICT’s to be implemented in Zimbabwe and for the Microsoft Operating System to incorporate the country’s vernacular languages.

“I was in Uganda last week at an eLearning conference and I took the opportunity to engage with Microsoft and I said I am trying to get ICT’s embraced in education in my country.

“The conversation with Microsoft was merely to say I want the Microsoft Operating System to also speak the indigenous languages of this country. Languages that we can easily relate to in that exercise be it Shona, Ndebele and Tonga."Microsoft must speak these languages because it will help me as I mainstream ICT’s so that the kids begin to interact with that environment which is very close to their home base,” said Minister Dokora. He was speaking

at the launch of eLearning Solutions’ mCourser mobile learning platform this morning

Besides the popular operating system Microsoft also offers an e-learning plat-form - the Microsoft Learning Gate-

way - which brings together a range of Microsoft server products to deliver a Web-based portal solution that is highly scalable, while supporting deployment in smaller school scenarios.

eLearning is the use of electronic media and information communica-tion technologies (ICT) in education. eLearning Solutions' new mCourser is a platform that offers local students and teachers a mobile space to access learning material and an interactive virtual learning system. The platform has been made available for Windows, Android and Apple Operating Systems.

The system is a payment based plat-form and eLearning Solutions has part-nered with the country’s mobile money platforms Ecocash, Telecash and One Wallet to allow users to purchase learn-

ing material. The eLearning Solutions co-founder Steward Masimirembwa said that currently their education solu-tion provider is training 2 000 teachers in technology skills.

"The problem is teachers do not have Technology skills and currently we are training 2 thousand teachers in tech skills” he said. Minister Dokora said ICT’s must not be misconstrued as a tool to replace teachers but rather edu-cators should be trained in the use of these technologies.

“I have two tasks for teachers, that is we need to develop systems and soft-ware to aid teaching and finding ways of integrating ICT’s in teaching. No teacher will be replaced by a computer, they can be versatile in the use of these tools” said the Minister. •

TECHNOLOGY5

Microsoft OS could soon be available in vernacular languages

Minister Dokora

By Rumbidzayi Zinyuke

Zimpost is working on a new financial service platform which will bring more convenience to banking and payment of bills in Zimbabwe.

Managing director Douglas Zimbango said the new product; ‘Financial Switch’

would be connected with all banks and other service providers.

“We are working on financial switch, a service which enables anyone to use their bank card, Visa and Mastercard at any Zimpost branch to swipe and get their money. In fact, all the financial services you can think of will be able

to pass through the switch,” he said. He said the company had already gone to tender for a partner and the project was now at evaluation stage and would be launched soon.

“This product will drive most our finan-cial services as most transactions will go through us. So whether you are

paying any account or a bill, you can do it through financial switch. It will be the convergence point for all transactions,” he added. Zimbango said Zimpost would take advantage of its already well established network across the country as the company seeks to tap into some of the money that is already being handled by mobile financial ser-vice providers.

Mobile financial services and plastic money are the new banking phenom-enon with the brick-and-motor branch networks evolving. Last year alone, approximately $2 billion was trans-acted through the mobile financial system and the figure is expected to increase this year as the service contin-ues to be popular.

Zimpost has already ventured into money transfer services with its Zip-Cash which has transacted $30 million since its inception. The service remains the only money transfer platform licensed to transfer money outside the country. Although the service is yet to go mobile, it has an advantage over the other services and could support the new financial switch. •

6 NEWS

Zimpost ventures into financial services

BH24 Reporter

Zimbabwe has so far exported tobacco worth $122,5 million, with Belgium remaining the top buyer of the local crop.

Latest figures from the Tobacco Industry Marketing Board shows that 29 million kilogrammes has been exported, but this is a 17 percent decline from the 35 million kgs exported in 2013 prior comparable

period.Belgium currently tops the buyers of Zimbabwean tobacco, having bought 7,2 million kgs valued at $30,3 million.

Belgium has been offering an average price of $4,16/kg. The United Arab Emir-ates has overtaken South Africa over the past week, in terms of mass bought, hav-ing purchased 4,3 million kgs, while South Africa is now in third place with 3,4 million kgs.

China has purchased 3,2 million kgs. But between the top four China has been offer-ing the highest average price of $6,87/kg, which has resulted in a higher value for its purchased tobacco at $22,4 million. South Africa, with an average price of $4,40/kg has bought tobacco worth $15 million, while the UAE, with a lower average price of $2,93/kg has purchased tobacco at a cost of $12,6 million.

Malaysia, however, has so far been offering the highest average price at $8,72/kg.

Meanwhile, in terms of sales at the tobacco floors, 193 million kilogrammes of tobacco has been sold to the tune of $614 million.

The country has already exceeded last season's output target of 180 million kgs. •

7 AGRICULTURE

Tobacco exports reach $122m as Belgium tops destinations

BH24

The equities market has bucked a five-day bullish trend to drop by a marginal 0.01 percent in today's trades.

The industrials index retreated 0.02 points to close at 181.03 points although today's session was domi-nated by positive trades.

TSL eased 2 cents to settle at 28 cents, while seed producer SeedCo lost a cent to 70 cents. Banker Barclays dropped 0.10 cents to trade at 3.50 cents.

On the upside, cigarette manufacturer BAT added 10 cents to 1 210 cents, while giant insurer Old Mutual was up 2.08 cents to close at 253 cents. TA Holdings gained 0.76 cents to 6.26 cents and Truworths was up 0.70 cents to 2.50 cents. Conglomerate Innscor advanced 0.50 cents to 77.50

cents even after losing a court appeal against the decision of the Competition and Tariffs Commission's intention to penalise it for breaching the regulatory procedures in its acquisition of a major-ity stake in Natfoods. Fidelity Life rose 0.48 cents to close at 8 cents. Bind-ura continued on a bullish run, today

gaining 0.39 cents to trade at 4 cents. This pushed up the mining index 3.51 points (or 7.23 percent) to close at 52.08 points.

Falgold, Hwange and Riozim main-tained previous trading levels. — BH24 Reporter •

9 ZSE REVIEW

Bourse takes a dip

All Zimbabwe needs to come out of the current economic rut is monetary stimuli.

It has been noted and said from all directions that the country has all the right economic fundamentals to be a success.

But the present reality is that the econ-omy needs capital.

The present deflation pit we are in is a reflection of the liquidity crunch that has hit both ordinary consumers and industry reflected in depressed demand for goods and services.

What is required therefore is fiscal stimuli to whip up demand.

The problem Zimbabwe is having cur-rently is that people are holding back on purchases because they fear that if they lose the money they are currently holding on to, they will never get it again.

And it is a cyclical trend that has worsening consequences each time, because each time prices fall, busi-nesses cannot make a profit or pay off

their debts, resulting in lower produc-tion and job losses, resulting in lower demand for goods.

To this extent, the basic and most short-term solution is to boost money supply into the economy.

Three broad measures are used to understand money supply in an econ-omy. First is M1, which is basically a narrow measure of money's function as a medium of exchange.

On the other hand M2, more broadly reflects money's function as a store of value.

And M3, covers items that may be regarded as close substitutes of money (such as gold).

For a start at least, Zimbabwe needs money supply increase at M1 level.

It's not easy, precisely because one key problem that we have right now is that the use of the multi-currency system, especially the United States dollar - has constrained the authorities' fiscal muscle. For instance Zimbabwe cannot print money, which is one way of stim-

ulating demand.

Zimbabwe also cannot revaluate the currencies it is using to respond to the South African Rand, which has a big impact on our economy since most of our imports come from that side.

In January the Reserve Bank of Zimba-bwe tried its hand at improving money supply by adding additional currencies to the current multi-currency basket, but this has not yielded much.

Considering that the fiscal authorities' scope boosting money supply is limited one strategy is to raise the level of for-eign direct investment inflows into the country.

But that is a more long-term solution.

Another available solution - which is more short-term - is to borrow. To this extent it is critical that Zimbabwe nor-malises its relations with multi-lateral financial institutions.

It is therefore commendable that Government appreciates this fact and Minister of Finance Patrick Chinamasa has been actively appealing a number

of these institutions as well as Western countries to re-engage.

Yesterday, following an engagement with a Swiss delegation Minister Chi-namasa acknowledged the importance of re-integrating into the "mainstream economy".

"It is through those multilateral finan-cial institutions like World Bank and IMF that Zimbabwe will regain its posi-tion into the mainstream of the world economy. The country has to be in the mainstream of the world economy and the Swiss are here to assist is re-inte-grate," he said.

Mere injection of cash into the econ-omy will go a long way, if indications over the past two months are to go buy.

That is, the deflation has eased, albeit marginally, over the past two with most observers attributing it to the tobacco revenue inflows.

But we need a little more than passive tobacco revenue inflows. •

10 BH24 COMMENT

Economy needs capital injection

South Africa's rand was largely flat against the dollar on Tuesday but could come under pressure ahead of the Reserve Bank's latest quarterly bulletin, which is expected to show a sizeable widening of the current account deficit.

The rand remains vulnerable to neg-ative domestic news after falling as much as 1.3 percent on Friday when agency Fitch cut its outlook for South Africa while Standard and Poor's downgraded its rating outright.

South African markets were closed on Monday for a public holiday.

At 0644 GMT the rand was trading at 10.7610 to the dollar, barely shifted from Monday's offshore close in New York at 10.7565.

Friday's downgrades reflected the ratings agencies' concerns about the poor prospects for Africa's most advanced economy, which contracted in the first quarter of the year mainly due to a platinum strike now in its fifth month.

The leader of labour union AMCU indicated last week that a deal to end

the strike was imminent but miners and platinum producers have not yet reached an agreement.

"The rand remains vulnerable to South Africa's weak fundamental backdrop over the medium term," Barclays Africa said in a note.

"The fact that the reported wage deal in the platinum sector has yet to be signed also detracts from a rand recovery."

The Reserve Bank's quarterly bulle-tin due out on Wednesday could deal another blow to the currency, with economists polled by Reuters expect-ing it to show the current account deficit widened to 6.1 percent of GDP in the first quarter from 5.1 percent.

Government bonds were slightly down in early Tuesday trade and yields for the benchmark 2026 and

2015 issues each added 1 basis point to 8.25 percent and 6.7 percent respectively. ―Reuters •

11 REGIONAL NEWS

South Africa's rand flat but vulnerable to more weak data

enjoy the CAIO ride!

12 DIARY OF EVENTS

The black arrow indicate level of load shedding across the country.

POWER GENERATION STATSGen Station

17 June 2014

Energy

(Megawatts)

Hwange 422 MW

Kariba 750 MW

Harare 45 MW

Munyati 27 MW

Bulawayo 22 MW

Imports 200 MW

Total 1466 MW

26 June - Pioneer 44th Annual General Meeting of Sharehold-ers, Venue: Pioneer Corporation Africa Limited Boardroom, Corner Hood/Hermes Roads, Southerton, Harare, Time: 10:00 hrs

26 June - Masimba Holdings Limited Thirty-Ninth Annual General Meeting of Mem-bers for the period ended 31 December 2013, Place: 44 Til-

bury Road, Willowvale, Harare, Zimbabwe, Time: 12:00

30 June - TA Holdings 79th Annual General Meeting of the ordinary members Venue: Miti Room, Sango Conference Centre, Cresta Lodge, Harare, Time: 1400 hours

30 June - ZIMRE 16th Annual General Meeting of members, Venue: NICOZDIAMOND Audito-rium, 7th Floor Insurance Centre, 30 Samora Machel Avenue, Time: 1230 hours

THE BH24 DIARY

BH24

14 ZSE

ZSEMOvERS CHANGE TODAY PRICE USC SHAKERS CHANGE TODAY PRICE USC

TRUWORTHS 38.89% 2.50 TSL -6.67% 28.00

TA 13.82% 6.26 BARCLAYS -2.78% 3.50

BNC 10.80% 4.00 SEEDCO -1.41% 70.00

MASH 9.09% 2.40

FIDELITY 6.38% 8.00

PADENGA 4.65% 9.00

DAIRIBORD 3.66% 8.50

TURNALL 2.22% 2.30

CFI 1.35% 2.25

Indices

INDEx PREvIOUS TODAY MOvE CHANGE

INDUSTRIAL 181.05 181.03 -0.02 POINTS -0.01%

MINING 48.57 52.08 +3.51 POINTS +7.23%

Stocks Exchange

15 AFRICA STOCkS

Botswana 8,664.65 -11.96 -0.14% 12July

Cote dIvoire 246.37 +2.18 +0.89% 07Mar

Egypt 7,949.60 -75.68 -0.94% 06Mar

Ghana 2,343.98 +9.46 +0.41% 06June

Kenya 4,881.56 +12.30 +0.25% 06June

Malawi 12,662.47 +0.00 +0.00% 07Mar

Mauritius 2,074.51 -3.51 -0.17% 07Mar

Morocco 9,544.10 +21.01 +0.22% 07Mar

Nigeria 41,529.11 -40.98 -0.10% 06June

Rwanda 131.27 +0.00 +0.00% 24Oct

Tanzania 2,018.97 +25.40 +1.27% 07Mar

Tunisia 4,624.39 -39.32 -0.84% 07Mar

Uganda 1,503.90 +0.81 +0.05% 10Sep

Zambia 4,242.74 +14.95 +0.35% 10April

Zimbabwe 178.58 +1.54 +0.87% 06June

African stock round up Commodity Prices

Name Price

Crude Oil 1,300.91 -0.21%

Spot Gold USD/oz 1,292.63 -0.26%

Spot Silver USD/oz 19.38 -0.46%

Spot Platinum USD/oz 1,421.25 -0.33%

Spot Palladium USD/oz 798.50 -0.64%

LME Copper USD/t 6,770 -0.18%

LME Aluminium USD/t 1,780 -1.17%

LME Nickel USD/t 18,230 -1.73%

LME Lead USD/t 2,095 -1.41%

Quote of the day —"The secreT of success is consisTency of purpose." - Benjamin Dis-raeli Globalshareholder.com

BH24

General Motors Co., in the latest recall related to ignition-switch flaws, is call-ing back about 3.2 million more vehi-cles and said recall-related charges would reach $700 million in the second quarter.

The latest announcement brings GM's total recalls this year to 20 million. The biggest U.S. automaker said it is recall-ing models including Buick Lacrosse from 2005 to 2009; Chevrolet Impala 2006-14; Cadillac Deville 2000–05; Cadillac DTS 2004–11; Buick Lucerne 2006–11; Buick Regal LS and GS 2004–05; and Chevy Monte Carlo 2006–08.

The ignition switch may inadvertently move out of the "run" position if the key is carrying extra weight and expe-riences some jarring event, the com-pany said in a statement.

GM is aware of eight crashes and six injuries related to this recall, the com-pany said. The company is stepping up the pace of recalls as it faces multiple investigations for its slowness in deal-ing with 2.6 million small cars with igni-tion issues linked to at least 13 deaths.

The carmaker, which also called back more than 500,000 Chevrolet Cama-ros Friday for an ignition-related design flaw, released the results of an inter-nal probe into its February recall this month.

The report blamed a lack of urgency in the company's engineering and legal departments in dealing with problems, though no conspiracy to hide facts.

The company agreed last month to pay a $35 million fine as part of the U.S. Transportation Department's investiga-

tion into how GM handled the February recall. The Detroit-based company also has added about 35 investigators as it shows a willingness to take vehicles off the road for a variety of issues.

In April, CEO Mary Barra was called to testify before two congressional com-mittees to explain why the company took years to publicize the faulty igni-tion switches. Since then, GM has told owners of millions more vehicles to bring their cars to dealers for repairs to shift cables and seat belts, among other parts. While Barra was held blameless

in the company's own investigation, she dismissed 15 employees for their roles in the episode. That probe was led by Anton Valukas, chairman of law firm Jenner & Block L.L.C., who served as a Justice Department-appointed exam-iner of the downfall of Lehman Bros. Holdings Inc.

GM's recall total exceeds the 10.7 mil-lion-vehicle mark set by the automaker in 2004, according to the U.S. National Highway Traffic Safety Administration. ― Philly.com •

17 INTERNATIONAL NEWS

GM recalls this year hit 20 million

By Jade Davenport

South Africa’s phenomenal minerals revolution, which has its roots in the last quarter of the nineteenth century, facilitated not only the establishment and growth of the largest and most diversified mining sector in Africa, but also the emergence of a mining-related support and supply industry, the likes of which can hardly be rivalled any-where else in the world.

The sheer extent of the mineral com-modities that have been exploited, coupled with the challenges of access-ing and mining deep, thin and met-allurgically difficult orebodies, forced South African industry stakeholders to pioneer world-class expertise in mine construction, extraction and mineral processing.

Subsequently, these skills are famed the world over, with many local compa-nies firmly situated at the very frontier of global mining technology.

Although the growth and diversification of South Africa’s mining sector under-pinned the successful mushrooming

of a local mining- related services and supply industry, South Africa’s once mighty and economy-dominating industry is currently in dire straits and struggling for its very survival, owing to subdued commodity prices, increased working costs, constrained infrastruc-ture, high labour costs, coupled with poor levels of productivity, strained labour– management relations, ongo-ing strike action and an uncertain regu-latory environment.

Many mines are facing a precari-ous future, particularly in the plati-num-group metals sector, and some companies are considering selling

off assets. Another inevitable conse-quence of the challenges facing the sector is the difficulty of attracting foreign investment for expansion initi-atives and greenfield mining projects.

The significant dearth of new capital expenditure projects being commis-sioned is having a particularly negative impact on South Africa-based consult-ing and project engineering companies and equipment, procurement, con-struction, and maintenance (EPCM) firms.

Consulting engineering and project implementation firm Hatch Goba

mining and mineral processing direc-tor Lister Sinclair tells Mining Weekly that, since the last quarter of 2012, there has been a noticeable tapering in the commissioning of large capital expenditure projects (those exceeding R10-billion) in the mining sector. The extent of the tapering has been signifi- cant. Sinclair states that 2013 has been the South Africa-based division’s most challenging year in terms of securing new contracts in well over a decade.

“In fact, while we used to have five core mining clients in this country, the con-traction of the industry has been such that, today, we have very few of our traditional clients left,” he says.

South African-headquartered total technology solutions supplier Tenova Mining & Minerals president Walter Küng concurs, elaborating that less than 5% of the company’s revenue is currently generated locally.

“The market in South Africa is com-pletely overtraded. There are many more suppliers than there is demand and the pricing levels in South Africa are, quite honestly, not conducive to

18 ANALYSIS

Constrained SA mining sector forcing contractors to seek opportunities in other parts of Africa

survival,” he adds.

Nevertheless, consulting firms are still actively engaged in executing various large capital projects across South Afri-ca’s mining sector, including expansion initiatives and replacement tonnage mines.

However, in recent years, engineering and EPCM firms have, like the industry itself, been struggling to execute con-tracts effectively in the face of increas-ingly difficult circumstances.

Local construction, mining, develop-ment and engineering group Basil Read Mining MD Antonie Fourie tells Mining Weekly that, in recent years, it has become extremely difficult to operate and provide a high-quality, value-for-money service with an ever-increasing cost base, industrial action and Section 54 stoppages.

“We are now much more exposed to unforeseen stoppages and inefficien-cies that negatively impact [on] our production.

Conditions are significantly different from those anticipated during our orig-inal tenders and, although the clients understand it is not necessarily under

our control, we are still held respon-sible and they will put pressure on us to recover lost time and keep to our production targets, despite the labour issues at hand.”

Fourie adds that the South African labour issues and difficult market condi-tions are slowly eroding profit margins to a point where it is no longer viable to continue operating in the country.

Expansion into Africa

Given the contraction of the mining sector and the challenging operating conditions, South Africa-based compa-nies have been increasingly compelled to look north of the country’s border for

new project opportunities.

The consensus of the four major com-panies interviewed by Mining Weekly is that there has been a robust move into the rest of the continent, particularly into Central and West Africa as well as the Southern African Development Community regions of Africa to take advantage of the substantial growth of the continental mining sector and to mitigate the decline of new projects in South Africa.

Global project delivery and consult-ing services provider WorleyParsons, Hatch Goba and Tenova Mining & Min-erals are all currently involved in, or have recently completed, projects in Mauritania, Cameroon, Burkina Faso, Côte d’Ivoire, Niger, Ghana, Guinea, the Democratic Republic of Congo and Zambia involving iron-ore, bauxite, gold or copper mining.

Further, all four companies, including Basil Read Mining, are currently actively engaged in Namibia-, Botswana-, Zim-babwe-, and Mozambique-based pro-jects across a range of commodities including uranium, coal, diamonds and gold.

Most of these projects are feasibility

studies, bank due diligence reports and stay-in-business- type maintenance initiatives, among other smaller-scale contracts.

While this push into the rest of Africa has certainly been robust for most companies, the growth rate of this expansion has not been at an optimum pace, says WorleyParsons RSA CEO Digby Glover.

“The global mining industry is, as a whole, a little gun shy at this stage in terms of capital expen- diture, which does not help companies like us who are accustomed to using that capital to develop mining assets,” he elaborates.

“Thus, because of the current global financial constraints, many of the con-tinental projects we are [currently] engaged in are prefeasibility-type stud-ies and there are not many construc-tion initiatives.”

Glover adds, however, that while WorleyParsons is seeing a short-term reduction in some mining capital spend, the company’s work in deep-shaft underground mining projects, which typically run for more than ten years, is not as susceptible to short-term market fluctuations.

19 ANALYSIS

20 ANALYSIS

“In fact, in areas outside the South African geography, the opportunity has recently significantly increased in deep-level mining projects,” he says.

Meanwhile, as a result of global finan-cial constraints, competition to secure work for other types of new large-scale projects – whether it be feasibility stud-ies or infrastructure development – is particularly buoyant.

Compounding the highly competitive mining project development scene in Africa is that Chinese- and Indian-fi-nanced projects, which form a large percentage of the capital expenditure initiatives currently under way, usually award contracts to Asian engineers and suppliers.

“Except for investment in South Africa, not very much of that investment comes to the typical western firms,” says Glover.

Thus, South African companies are being forced to be considerably pro-active in securing new contracts from western mining houses operating in Africa.

Hatch Goba, for instance, is actively researching all the projects currently

under way in Africa and, to date, has identified more than 900 projects in the mining and infrastructure sectors.

“We have singled out the low-hanging fruit, and have cold-called and used our international leverage to visit min-ing company head offices in Australia, Canada, and the UK to secure new contracts on these various projects,” states Sinclair.

“In addition, we facilitated a big mar-keting drive into sub- Saharan Africa, visiting the clients that we do know.

“The net result of those efforts is that the projects we are currently engaged in, particularly on the infrastructure side, have been negotiated off the back of that research and marketing drive.”

Despite the buoyant competition, the outlook for the African mining sector and the ability to secure future con-tracts is certainly optimistic.

Glover maintains it is not all doom and gloom for the commodi- ties market and believes it will not take too much in terms of an uptick in global demand to get supply up to prefinancial crisis lev-els and to facilitate the commissioning of several new mining projects across

the continent.

Similarly, Küng insists that Tenova Min-ing & Minerals is bullish about the pros-pects of mining in Africa.

“If you look at copper alone, many of the copper mines around the world are in a mature state and the only large, unexploited copper deposits now only exist in Africa,” says Küng.

“Africa will be the showground for future mineral development, particu-larly in the copper and uranium fields.”

He adds that South Africa-based firms are in the best position to assist Afri-can mines and leverage off the future boom of the continent’s mining sector.

Outlook for the SA Mining Sector

While local firms may actively be moving into the rest of Africa, indus-try stakeholders believe there is still a future for consulting firms and suppli-ers in South Africa’s mining sector.

“Existing mines need to continue oper-ating and we have the skills to opti-mise and prolong existing assets. We are certainly willing and do stay-in-business-type capital projects,” states

Glover.

He adds that South Africa is still endowed with a “phenomenal array” of mineral resources – a fundamental that is not going to change.

However, there is consensus that, unless South Africa changes the way business is con- ducted and unless gov-ernment positively transforms the way in which it allows companies to oper-ate in terms of regulations and labour policies, there will be little opportunity for growth and investment in the local mining sector.

“As contracting companies, we need to play a more active role, together with our clients and government, to improve the relationship with labour. Similarly, we need longer-term con-tracts that will enable us to establish a better [relationship] with our labour force and our communities.

“Finally, we need to be guided by the trade unions in their demands and [we need to] help train and develop unions to understand the business and labour aspects of the mining industry,” con-cludes Fourie. ― MiningWeekly •