23 Apr

South Africa to Appeal Ruling on Black Ownership of Mines

South Africa has sought leave to appeal a court judgment earlier this month over a crucial black-ownership principle in the country’s Mining Charter, the nation’s mining lobby said.

The Chamber of Mines has been notified that Mineral Resources Minister Gwede Mantashe and the Department of Mineral Resources filed the application, it said in a statement Monday.

The High Court in Pretoria on April 4 ruled that the first two versions of the country’s charter didn’t require producers to top up black-shareholding levels in perpetuity if they previously met the minimum 26 percent requirement.

“The chamber is currently reviewing the specified grounds of appeal, although the DMR’s appeal appears to center on the majority judges obiter dictum comments about the legality of the 2010 charter and the enforceability of the charters,” the lobby group said.

The development is another volley in a longstanding legal battle to clarify the charter rules. The case was revived last year by the chamber, which sought a declaratory order on the so-called “once empowered, always empowered” principle.

The group has argued that companies can reach the black-ownership requirements by counting previous sales to black investors, even if those investors later sold their shares to whites or foreigners. The Department of Mineral Resources didn’t immediately return an email and call seeking comment.

South Africa has the world’s biggest reserves of platinum and manganese, and its mineral deposits also include gold, iron ore, coal, chrome and zinc. Anglo American Plc, Glencore Plc and South32 Ltd. are among companies operating in the country.

Malan Scholes Inc., a Johannesburg-based law firm, has made a separate application to declare current and previous charters unconstitutional because they lack definition and are inconsistent. The chamber opposes the view that the 2004 and 2010 charters are not valid and has agreed to join as a respondent to that application, it said.

Mantashe is holding talks with the industry, unions and mining communities on a new charter, a set of rules aimed at distributing the wealth of the industry more widely. Earlier this month, he said he’s confident that work on the charter will be concluded in May.

Source: https://www.bloomberg.com/news/articles/2018-04-23/south-africa-to-appeal-court-ruling-on-black-ownership-of-mines

23 Apr

Zuma Legacy Leaves South African Anti-Graft Panel With Huge Task

A South African judicial commission faces a daunting task in investigating allegations that members of the Gupta family and their allies connived with former President Jacob Zuma and his son Duduzane to loot billions of rand from state coffers.

Its success or failure will go a long way in determining whether South Africa can put behind it years of mismanagement and plunder during Zuma’s scandal-ridden administration that undermined investor confidence and stymied economic growth.

Zuma agreed to the inquiry after losing control of the ruling party and a lawsuit challenging a directive from the nation’s former graft ombudsman that spelled out its powers and appointment procedures.

Deputy Chief Justice Raymond Zondo and his panel of six senior staff members must probe an array of deals between state entities and private businesses, some of them set up to obscure the intended beneficiaries.

It will require wading through hundreds of thousands of documents and interviewing scores of witnesses, many of who may be reluctant to give evidence because they risk implicating themselves. Several key players, including the three Gupta brothers and Duduzane Zuma, have fled the country.

While the panel was given six months to complete its investigation into what’s become known in South Africa as “state capture,” Zondo has said that’s woefully inadequate and he’s requested an extension to its mandate. He hasn’t said when public hearings will begin. The commission’s findings could be used as the basis for criminal prosecutions by law enforcement agencies, which are also conducting several concurrent probes.

These are among the key controversies the commission will have to focus on:

Peddling of cabinet posts

Former Deputy Finance Minister Mcebisi Jonas and Vytjie Mentor, the ex-chairwoman of parliament’s public enterprises portfolio committee, alleged that the Guptas offered them ministerial posts in exchange for business concessions. Jonas said he was also offered a 600-million-rand ($50 million) bribe.

To read the full article, click here.

20 Apr

Ramaphosa Leaves London Meeting to Address South Africa Protests

South African President Cyril Ramaphosa will meet the top leadership of the country’s ruling party to decide on the future of the premier of the North West province after clashes broke out between protesters and police in the region.

Ramaphosa will consult the African National Congress’s so-called top-six leaders about Supra Mahumapelo, International Relations Minister Lindiwe Sisulu told reporters in London Friday.

The president cut short his participation in a Commonwealth leaders’ meeting in the city to return to South Africa to deal with the protests, his spokeswoman Khusela Diko said.

Demonstrators opposed to Mahumapelo and angry about a lack of service delivery set fire to buses and looted shops in the provincial capital Thursday, police said.

South Africa’s special police unit known as the Hawks said it raided Mahumapelo’s offices last month in connection with alleged maladministration, fraud and corruption amounting to about 160 million rand ($13 million).

Ramaphosa “called on all aggrieved parties to express their grievances through peaceful means and engagement rather than violence and anarchy,” Diko said in an emailed statement.

The president will also meet with provincial leaders of the ANC Friday, the party said in a separate statement. Mahumapelo is a supporter of Jacob Zuma, who Ramaphosa ousted as the nation’s president in February.

Ramaphosa has been meeting government officials and investors in London, where he unveiled his plan to attract $100 billion of investment to kick-start the economy. He has been working to convince investors that he’s committed to reversing years of economic stagnation, policy uncertainty and looting of state funds since succeeding Zuma as president two months ago.

There haven’t been fatalities linked with the protests, provincial police spokesman Sabata Mokgwabone said by phone.

“We are requesting that the communities respect the rule of law and the people that are not participating in the protest,” he said. “They need not participate in actions that will lead to loss of life.” Police have arrested 23 people for looting, regional police said on their Twitter account.

Source: https://www.bloomberg.com/news/articles/2018-04-19/ramaphosa-quits-london-meeting-to-calm-south-african-protests

18 Apr

Troubled Gupta Coal Mines Threaten South Africa With Power Cuts

South Africa’s state-owned power utility is working with the National Treasury to source more coal for seven of its plants that don’t have adequate supply, raising the specter of a return to rolling power cuts that have periodically slowed the economy since 2008.

 Eskom Holdings SOC Ltd. is diverting coal to the under-resourced stations from facilities that have sufficient supply, spokesman Khulu Phasiwe said on Johannesburg-based broadcaster SAfm.
The supply problems stem from mines run by Tegeta Exploration and Resources Ltd., a struggling company controlled by the politically connected Gupta family, he said.
“There are some difficulties — that’s the situation they’re managing now,” Phasiwe said of Tegeta. “From our side, we’re looking for a replacement supplier as soon as possible to make sure we don’t go back to the days of load shedding, especially as we’re going into winter,” he said, using a local term for rolling blackouts, which the country was forced to last implement in 2015 after seven years of power shortages hindered economic growth.
Tegeta is a company controlled by the Guptas through Oakbay Investments Ltd. and a son of former President Jacob Zuma.
In December 2015, it bought Optimum, which includes a mine of the same name, the Koornfontein operation and a stake in Africa’s biggest coal-export terminal, from Glencore Plc. Last year the company sought higher prices from Eskom for its coal.
Oakbay said in August that it agreed to sell Tegeta for 2.97 billion rand ($247 million) to Swiss company Charles King SA. The disposal was expected to be concluded in 12 months, Oakbay said at the time.
17 Apr

Ramaphosa Vows to ‘Hunt’ $100 Billion in South Africa Investment

South African President Cyril Ramaphosa is spearheading a drive to attract $100 billion in new investment as he seeks to kick-start an economy that looks to be on the rebound following years of stagnation.

The investment push Ramaphosa announced Monday is the latest sign that he intends following through on pledges to create jobs and address years of economic mismanagement since he replaced Jacob Zuma as the leader of Africa’s most industrialized economy two months ago.

His administration has already replaced the boards of a number of state companies beset by governance and financial woes.

Ramaphosa named former Finance Minister Trevor Manuel, former Deputy Finance Minister Mcebisi Jonas, former Standard Bank Chief Executive Officer Jacko Maree and Asrapak Chairwoman Phumzile Langeni as “investment envoys.”

He also appointed Makhaya Advisory Chief Executive Officer Trudi Makhaya as his economic adviser. South Africa will hold an investment conference in the fourth quarter, he said.

“The reason for putting together a top team like this is to enable us to go out like a pack of hunting lions,” Ramaphosa told reporters in Johannesburg. “We are unleashing this pack of lions to go and hunt down those investments for us.”

The World Bank said last week that it sees South Africa’s economy growing 1.4 percent this year, up from 1.1 percent estimated in January.

The country could more than halve its number of poor people to 4 million by 2030 if it tackles corruption, gets free higher education right and reduces policy uncertainty in its mining industry, the Washington-based lender said in a report.

Source: https://www.bloomberg.com/news/articles/2018-04-16/ramaphosa-vows-to-hunt-100-billion-in-south-africa-investment

16 Apr

KPMG South Africa Audits Own Staff After Breaking Public Trust

KPMG South Africa, which has faced scrutiny for its audit work on failed VBS Mutual Bank and companies linked to the politically connected Gupta family, said all staff face background checks every two years to try improve public trust in the firm.

“The vetting is to be done by an external, independent party,” Wiseman Nkuhlu, chairman of KPMG, told reporters in Johannesburg on Sunday. The firm will also extend a review of its past work to stretch back 18 months and set up a hotline for employees to raise concerns about the quality of KPMG’s work, he said.

Two of the auditor’s partners, Sipho Malaba and Dumi Tshuma, resigned this month after they were faced with disciplinary charges related to work done for VBS Mutual Bank, which collapsed in March after the lender was unable to repay some of its clients’ deposits.

The allegations against them included their failure to comply with the firm’s policies and procedures regarding the disclosure of relevant financial interests, KPMG South Africa said in an emailed statement on Saturday.

On the VBS work, “the disappointment and anger is palpable,” said Nhlamu Dlomu, chief executive officer of KPMG South Africa. If the two partners who quit need to be reported to the country’s authorities following the KPMG probe, the firm will take those steps, she said.

Last year, KPMG LLP’s South African unit appointed nine new executives in an attempt to restore trust in the auditing firm as clients distanced themselves over its involvement with the Gupta family.

The Guptas, who have fled South Africa, are accused of using their friendship with former President Jacob Zuma to win state contracts and influence government appointments. Zuma and the Guptas have denied any wrongdoing.

VBS, which isn’t listed, gained attention in 2016 when it gave Zuma a mortgage to settle a Constitutional Court order to repay taxpayers some of the money spent upgrading his private residence.

Source: https://www.bloomberg.com/news/articles/2018-04-15/kpmg-south-africa-putting-all-staff-through-background-checks 

11 Apr

South Africa Growth Could Pick Up Faster Than Expected

South Africa’s economic growth could pick up faster than forecast if the right structural reforms are implemented, the Reserve Bank said.

That means the economy could expand faster than the 2 percent for 2020 the central bank projected last month, a rate it hasn’t exceeded since 2013.

While last year’s 1.3 percent advance beat predictions, this doesn’t equate to a good performance, the Reserve Bank said in its six-monthly Monetary Policy Review released Tuesday in the capital, Pretoria.

Cyril Ramaphosa replacing Jacob Zuma as head of the ruling party and president boosted sentiment and the currency on hopes of structural reforms in Africa’s most-industrialized economy.

While Ramaphosa has since changed the cabinet to remove some Zuma appointees who were seen as compromised, overhauled the board of the state power utility and pledged to root out corruption, confidence indexes show business and investors now want to start seeing real reforms.

“The pickup in growth is not especially strong,” the central bank said. “This is mainly because, at this early stage, there is little clarity around the reform agenda and without specifics it is difficult to quantify growth responses.”

Moody’s Investors Service last month removed the threat of a junk credit rating, citing the impact of political changes. Downgrade concerns could re-emerge if narrowing the nation’s budget deficit prove harder than the markets anticipate, the Reserve Bank said.

That, and a current-account deficit that may widen more than expected, could put pressure on the rand, the bank said.

The currency has gained 9 percent since the December election of Ramaphosa as the African National Congress’s leader, helping to lower price pressures. Inflation slowed to an almost three-year low of 4 percent in February.

The central bank forecast it will remain in the target band of 3 percent to 6 percent until at least the end of 2020, stabilizing at just more than 5 percent.

While current inflation is unusually low, recent developments in services prices and expectations “provide some evidence that positive price shocks, if properly managed, can engender permanently lower inflation,” the central bank said.

To read the full article, click here.

10 Apr

Barclays Africa to Split Into Four Units in Growth Strategy

Barclays Africa Group Ltd., South Africa’s third-biggest bank, will split into four operating units as the lender outlines its growth strategy after the sale by its U.K. parent.

The Johannesburg-based firm will separate retail and business banking, investment banking, wealth and insurance, and its operations in the rest of Africa, it said in a statement on Monday.

Deputy Chief Executive Officer David Hodnett, who became finance director in 2010, will take a two-month sabbatical, while Arrie Rautenbach will become head of retail and business banking in South Africa.

Barclays Africa is separating its business from its U.K. parent in a process that started in 2016 and is due to be completed in early 2021.

The London-based bank paid 765 million pounds ($1.1 billion) for the split and the deal has allowed Barclays Africa to set out its own strategy for growth in South Africa and on the rest of the continent where it has operations in more than 10 countries.

Yasmin Masithela, former head of compliance, will become chief executive of strategic services, responsible for digital strategy, group strategy and the bank’s separation from its British parent.

Bongiwe Gangeni will head the lender’s private and business banking, and will become deputy chief executive of retail and business banking in South Africa. Charles Russon will take on the role of chief technology officer, while August Van Heerden will become chief risk officer and part of the executive committee.

Barclays Africa plans to double in size and capture at least 12 percent of banking revenues across the continent.

CEO Maria Ramos said in March she will consider acquisitions to support the company’s growth, explore strategic partnerships and new markets, and use technology to make the lender’s operations fully digitized.

To do this, Ramos said it would create a consumer-finance business across Africa, build a payments hub and boost its transaction banking platform.

To read the full article, click here.

09 Apr

Biggest South Africa Cement Maker PPC Eyes Growth Post Turmoil

PPC Ltd. is weighing expansion into new markets as South Africa’s biggest cement maker seeks to draw a line under a tumultuous two years that included an emergency rights issue and takeover interest from competitors.

Since taking the top job in July, Chief Executive Officer Johann Claassen has reviewed the company’s operations and balance sheet, with a particular focus on boosting liquidity and extending debt maturity, he said in an interview in Bloomberg’s Johannesburg office. “We had to steady the ship and make it sustainable,” he said. “Now we need to get a new pipeline of projects.”

New investment would follow a 12 billion rand ($995 million) outlay on five plants in the past half decade, which took PPC into countries including Ethiopia and the Democratic Republic of Congo from its South African base. All are now in operation and generating cash, said Claassen, 58, allowing the company to consider new facilities.

East Africa is a particularly fast-growing region, while an abundance of projects in Ivory Coast implies a high demand for cement in the West African country, Mokate Ramafoko, PPC’s head of Africa operations, said in the same interview.

While he and Claassen declined to identify specific markets PPC will expand into, Ramafoko said Kenya had a shortage of cement clinker plants and Uganda also looked promising, with new projects coming up.

The plan marks a step change in the strategy of PPC, which raised 4 billion rand from shareholders in 2016 to service debt after S&P Global Ratings cut its credit rating to junk.

That came during a perfect storm of heavy investment in new projects and slowing economic growth and falling prices in its home market, which accounts for about 70 percent of sales.

Looking ahead, the company sees the potential for growth, both at home and internationally, as it seeks to repay shareholders for the faith shown during the rights issue.

To read the full article, click here.

05 Apr

Trump’s Trade War Could Hit South African Rand Through Oil Price

The path ahead looks challenging for South Africa’s rand, if oil prices are anything to go by.

Concern that U.S. President Donald Trump’s measures will trigger a trade war may hamper global growth and weaken demand for oil, according to Mehul Daya, a strategist at Nedbank in Johannesburg.

“Oil leads the rand,” Daya said. “Sixty percent of the movement in the rand can be explained by changes in the oil price since 1990.”

Talk of tit-for-tat tariffs has already hit the rand and other South African assets. The currency led emerging-market losses Wednesday and was down 0.8 percent to 11.9065 per U.S. dollar as of 2:43 p.m. in Johannesburg. The yield on rand-denominated bonds due December 2026 jumped seven basis points to 8.09 percent. Johannesburg’s equity benchmark tumbled 2.3 percent as escalating tensions between the U.S. and China dragged emerging markets lower.

“It’s all due to those trade wars and a lot of uncertainty,” said Marius Grobler, a trader at Unum Capital. “Investors are seeing a lot of fear on the market.”

Since 2016, oil has recovered from about $28 to $68 a barrel. That’s supported the rand, strengthening it to below 12 per dollar from more than 16, according to Nedbank.

Read the full article at Bloomberg Markets