For current reports go to EASY FINDER




Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 159,886 104,235 113,300 29
GNI per capita
 US $ 2,780 2,600 2,820 93
Ranking is given out of 208 nations - (data from the World Bank)

Books on South Africa


Area (




Thabo Mbeki

Update No: 059 - (04/12/06)

SA The front line on AIDS
HIV/Aids is having a crippling effect on the workforce of many countries, a report by the International Labour Organization (ILO) for World Aids Day says. 
South Africa, among the worst affected nations, has announced a plan aiming to halve the infection rate by 2011 and to boost the use of antiretrovirals (ARV). More than five million South Africans are infected with the virus and more than 1,000 South Africans die of Aids-related illnesses every day, but many more are still being infected. The announcement by Deputy-President Phumzile Mlambo-Ngcuka December 1 of a five-year action plan is expected to mark a significant change in policy. Plans to extend treatment to 80% of those who are HIV positive were outlined. However, the launch was downgraded from a fully-fledged plan to a framework document. Many details of the new policy have still to be spelt out. South Africa's former policy, which emphasised diet over the use of ARV treatment, was widely criticised. Government has formed an alliance with civic groups campaigning on Aids. Activists have welcomed the new plan, but warned it was still vague and lacked specific commitments. Earlier, in a speech to mark World Aids Day, UN Secretary General Kofi Annan urged more frank and open discussion of HIV/Aids. All politicians had to consider themselves personally accountable for stopping the spread of the disease, Mr Annan said, as did every individual. 

Cosatu seeks to overrule Supreme Court
The Supreme Court of Appeal crushed any hope Durban businessman Schabir Shaik might have had of avoiding jail when it dismissed his appeal against conviction and sentence on two counts of corruption and one of fraud November 6. The court also unanimously dismissed Shaik and two of his companies' appeal against the Durban High Court order that they forfeit assets worth about R34m seen as proceeds of crime. The court also agreed with the 15-year sentence imposed by Judge Hilary Squires on Shaik. The charge said Shaik and some of his companies made 238 separate payments either directly to or for the benefit of Zuma. These payments were to influence Zuma to use his name and political influence for the benefit of Shaik's enterprises. The constitution states that members of the cabinet may not undertake any other paid work or act in any way that is inconsistent with their office. However, the appeal court said a section in the Corruption Act of 1992 did not expressly require communication of the offer to the person who was sought to be influenced and there was no requirement to read that requirement into the section. The court said it was therefore unnecessary to decide whether Zuma was aware of the offer.
The Congress of South African Trade Unions (Cosatu) called for the resignation of the five Supreme Court of Appeal (SCA) judges who turned down Schabir Shaik's appeal, saying they misrepresented the findings of the trial judge and damaged ANC deputy president Jacob Zuma in the process. The call creates an unprecedented situation, with one of the pillars of civil society on a collision course with one of the highest courts in the land. Of course officials in COSATU are looking at personal career problems if their man Zuma fails to become the next President.
Shaik was imprisoned two days after the SCA refused his appeals against fraud and corruption convictions. The dramatic revelation has unleashed a political storm around the judiciary and raised questions over whether Zuma can receive a fair trial should corruption charges against him be reinstated. 
The world is now watching to see if democracy and the seperation of powers is safe in S Africa, as it certainly would not be on this showing, if COSATU were calling the shots. The Zuma lobby is desperate for their man to avoid trial, regardless of whether or not he is guilty. He may not take the stand if his trial goes ahead as expected, as he would have to answer why should Shaik have paid him all that money in 238 payments. 

Iraq oil-for-food scandal - what next?
President Thabo Mbeki declined to commit himself to a timeframe for the release of the findings of the Donen commission November 15, which has probed the alleged involvement of senior African National Congress (ANC) members in the Iraq oil-for-food scandal. Mbeki told the National Assembly that the Donen probe had been concluded and he had received the report on November 6. The oil-for-food scandal hit the news in January 2006, with 8 South African companies and prominent ANC politicians named in a United Nations (UN) report on kickbacks paid by then Iraqi president Saddam Hussein. Mbeki stressed that the commission was appointed to evaluate the UN report and "advise government on whether any conduct by South Africans referred to in the report amounts to a contravention of our law." He said government remained committed to ensuring that the recommendations of the UN report were addressed with the necessary urgency.

New employment not happening
South Africa's goal of halving unemployment by 2014 has been dealt a blow, with a report November 23 showing not enough jobs are being created to meet one of the country's biggest challenges. The report shows 10000-12000 jobs being created a month this year, which although strong, pales in comparison with last year, when the economy created about 30000 jobs a month. Employment creation is also likely to be slow next year. However, in the build-up to 2010 the economy is expected to pick up, and more jobs will become available. The economy grew at 4.9% last year, and is expected to slow to 4.4% this year. In the second quarter, the economy grew at 4.9%. Statistics South Africa released the third quarter Gross Domestic Product results, pinning the figure for that quarter at 4.7 per cent. The Independent Regulatory Board for Auditors (IRBA) has warned that a looming financial skills shortage could severely undermine South Africa's long-term 6 per cent growth target. Kariem Hoosain, CEO of the IRBA said that, similar to the much talked about shortage of medical and engineering skills; the financial needs of South Africa's economy were rapidly outstripping supply.

Free trade with USA
Talks between South Africa and the US on a free trade agreement hit a snag as US demands for complete access to South African markets were unacceptable, trade and industry director-general Tshediso Matona said November 15. As an alternative, the department had decided to set up a trade and investment framework to allow the parties to deal with problems as they arose. Matona told Parliament he hoped this forum would allow the two parties to settle their differences on a trade agreement. "Political developments in the US may also make it feasible for us to resume negotiations," Matona said, referring to the Democratic victories in mid-term US elections. He said the free trade talks had fallen through as the terms and conditions which the US demanded were "not friendly" to government policies. 

The poorest 23 million
Social Development Minister Zola Skweyiya expressed support for the idea of a basic income grant to assist the estimated 23-million people living in desperate poverty in the country November 9. It is the first time that a government minister has openly expressed support for some form of income assistance for those struggling to survive and who do not qualify for existing grants such as the social, disability and child support grants or an old-age pension. Skweyiya, a respected member of President Mbeki's cabinet, stressed though that this was his personal view and not that of the ruling African National Congress. Until now, government, particularly Finance Minister Trevor Manuel, has been strongly opposed the introduction of a basic income grant on the grounds that the estimated R90bn-a-year cost was unaffordable for South Africa. 

UNDP Hails South African Progress
Global recognition of South Africa's advances in delivering basic services to its population reached a high point November 9 when the United Nations Development Programme (UNDP) used the country as a base from which to launch its 2006 Human Development Report. The report, titled "Beyond Scarcity: Power, poverty and the global water crisis," warns that 1.1 billion people in the world still have no regular access to clean water and that 2.6 billion people still lack access to proper sanitation. The report's lead author, Kevin Watkins of the UNDP, said at the launch of the report that South Africa's progress in delivering services to its citizens over the past 12 years provided a model for others to follow in sub-Saharan Africa and beyond. South Africa has in recent years reduced the backlog in the provision of water to its citizens to 17 per cent. He warned that many developing countries - particularly those of sub-Saharan Africa, which is lagging behind the rest of the world in meeting goals of halving poverty by 2015 - are facing an humanitarian emergency over the "twin deficits" of water and sanitation. UN officials present at the launch of the report, which also provides a global development index of 177 countries listed from high to low, said that South Africa was chosen as the site from which to launch this year's report largely because of the country's recent and rapid advances in widespread delivery of vital services to all of its citizens. By 2004, 15.5 million households in South Africa were receiving water, sewerage and sanitation services, 4.5 million more than in 2002. 

South Africa and EU Consolidate Cooperation
The European Union (EU) and South Africa have further consolidated their co-operation, agreeing to continue work on several strategic issues. In this regard, the two adopted a joint statement in Belgium November 14 to advance their strategic partnership in the context of ensuring increased market and trade to mainly benefit South Africa in terms of economic growth. The Department of Foreign Affairs said the partnership would also extend co-operation to social, cultural and environmental fields. Spokesperson Ronnie Mamoepa said the meeting also tabled the situation in the Middle East, the reform of the United Nations (UN), migration, World Trade Organisation (WTO) and HIV and AIDS. The EU remains South Africa's largest trade partner, accounting for 37 billion Euros worth of trade last year, just under 40 per cent of South Africa's total imports and exports. Its Foreign Direct Investment into South Africa in 2004 totalled a further 4.6 billion Euros. In addition, the EU has dedicated grants of 125 million Euros per annum through the European Programme for Reconstruction and Development. Furthermore, the European Investment Bank (EIB) has been mandated with 825 million Euros for infrastructure investments in South Africa from 2000 to 2006.

AIDS Strategy Restructured
The South African government marked World AIDS Day December 1, with the release of a broad framework for its HIV/AIDS strategy over the next five years. The nine-page document listed as key targets a 50 per cent reduction in the rate of new HIV infections by 2011, and the provision of treatment, care and support to 80 per cent of HIV-infected South Africans. Youth were identified as "a special target group" that would receive particular focus in the new plan. A monitoring and evaluation framework, an element acknowledged as largely missing in the previous plan, was also identified as a priority. The framework's release coincided with publication of guidelines for the restructuring of the South African National AIDS Council (SANAC), much criticised in the past as ineffectual and non-inclusive. Poor co-ordination by the country's national AIDS body was identified in the framework as a major weakness of the 2000-2005 National Strategic Plan. A new and improved SANAC will consist of high-level representatives from the business, religious, NGO, academic, media and human rights sectors, as well as a number of government departments. A technical committee charged with monitoring implementation of the national strategic plan is to meet at least four times a year. Another committee, "linked to but separate from SANAC," will be responsible for financial management, including grants from the Global Fund to Fight AIDS, Tuberculosis and Malaria. Several elements of the framework and the SANAC guidelines seemed to reinforce recent moves by the South African government to work more closely with civil society in its AIDS response. A commitment to involve all government departments and civil society sectors appeared first in a list of principles underpinning the framework. The SANAC document concludes: "If we work together, AIDS can be beaten. South Africa is uniting in its efforts to combat the epidemic and from now on, SANAC will embody that unity and purpose." Government bowed to pressure from activists and medical experts to delay the launch of the full National Strategic Plan for 2007-2011, originally intended for release December 1. "It was largely a matter of a need for broader consultation," explained the health department's chief director for HIV/AIDS, Dr Nomonde Xundu. Input from a technical task team over the next three months will culminate in a conference in March 2007, at which representatives from the various sectors will adopt a final version of the plan. A first meeting of the newly formed SANAC is expected to take place shortly after the conference. AIDS activists and experts who have seen drafts of the strategic plan welcomed the delay. "ARV [antiretroviral] treatment is the most complex health initiative ever undertaken in this country," said president of the Southern African HIV Clinicians Society, Dr Francois Venter. "We need this plan to be fantastic and, at the moment, it's not even close." The latest draft, dated November 2006, set a goal of increasing provision of treatment by 100,000 a year to adults, to reach a target of 650,000 by 2011 (the target figure for children was 100,000). The targets have been widely criticised as too conservative, considering that an estimated 800,000 people need treatment now and an additional 500,000. The broad framework released December 1 contained no target figures for treatment, but Xundu confirmed that the figures in the draft would be reviewed in the coming months. She also made the distinction between the strategic plan and a yet to be developed operational plan.

Chairing the G-20
There are two Groups of 20 countries and SA is a member of both. One, the three-year-old trade G-20, is a group of developing countries that banded together to try to get some leverage in the global trade talks. The other, formed eight years ago in the wake of the late 1990s emerging-markets crises, brings together the finance ministers and central bankers of a group of industrialised and developing countries deemed "systemically significant" for the global economy. It's this G-20 of which SA takes the chair this year, following Australia, where the group held its annual meeting November 20. Look at the list of member countries, though, and you can't help being struck by the degree to which SA punches above its weight in this forum, as it does in a number of other international forums. SA is one of the smallest economies of the 20 (the only one whose gross domestic product is smaller is Argentina) and has one of the smaller populations. SA's highly developed financial system and financial markets are one of the factors that get it on to the list; financial stability is a key focus of the G-20, and SA, with its large and liquid currency, debt and equity markets, is in the often unenviable position of serving as a proxy for other less advanced emerging markets when things go wrong. But SA's unusual combination of sophistication and underdevelopment seems to position it as an important bridge between different sets of interests. The G-20 itself plays an important role in getting industrialised and developing countries to talk to each other about global economic and financial matters. But "developing" countries or "emerging" markets have less and less in common with each other. China's interests, or even Mexico's, may diverge from those of the US or Germany but they are extremely far away from those of many of SA's neighbours in Africa. So, by being in this G-20, SA has a real role to play in trying to give voice to the issues and interests of poor and middle-income developing countries. Formally speaking, it doesn't represent them. But as chair this year, it plans to try to include some African colleagues in the meetings held in SA. And it has been one of the G-20 countries pushing hard for reform in the "Bretton Woods" institutions - the World Bank and the International Monetary Fund (IMF). Though there wasn't agreement even within its ranks on issues such as quota reform within the IMF, the G-20 played an important role in delivering change, Finance Minister Trevor Manuel believes. And it will continue to push for the institutions to be more representative and more useful: with several developing countries having been hit hard by natural disasters such as hurricanes and tsunamis, one idea is that the IMF should be providing insurance facilities for such events. 

2010 World Cup - Australia Told To Back Off
Irvin Khoza, chairman of the 2010 Soccer World Cup local organising committee, is to ask his CEO, Danny Jordaan, to write a strongly worded letter to the Australian high commission to complain about that country's relentless attempts to hijack the hosting rights of the event. Australia stepped up their bid to portray themselves as the ideal alternative host nation of the 2010 showpiece November 22. Khoza said the local organising committee was now fed up with the underhand weekly media reports emanating from Australia that continued to question SA's preparations. "We are aware of their latest reports and we need to ascertain whether these newspapers are encouraged by their government or not," Khoza said. "Fifa has constantly stated that the World Cup is coming to SA in 2010 and we need to know whether these reports that seem to be (fighting) this are the Australian government's position." New South Wales premier Morris Iemma continued in the now-established tradition of casting doubt on SA's readiness to host the event when he said Australia had the expertise and was willing to help in the staging of the 2010 event. "We stand ready to step in if SA is unable to host the 2010 World Cup and the Football Federation of Australia puts a bid to act as an emergency host," Iemma was quoted as saying. Iemma capitalised on the local and international media's decision to stage a walkout from a scheduled press briefing that the members of the organising committee failed to attend and stepped up the campaign to raise doubts over SA. But Khoza said the attempts to smear SA would not succeed and, in fact, football governing body Fifa had confidence in the country's hosting abilities. "So, contrary to reports that the World Cup may be awarded to Australia, that will not happen. At one stage Fifa even said we were moving too fast and we were told slow down." Khoza also revealed that Fifa was so impressed with progress that the football governing body would not appoint an independent controller to oversee progress in SA. Explaining the failure to turn up at the press briefing, Khoza said the pressing issue of the allocation of funds to the World Cup venues became so heated that the board meeting ran longer than scheduled.

« Top


Car Exports to Increase 31 Percent 

Vehicle exports were expected to soar as much as 31% from this year, the National Association of Automobile Manufacturers of SA (Naamsa) said on November 23rd. Local vehicle exports have been gathering momentum since last year after a decline in 2004, when some local manufacturers exported less as certain models reached the end of their lifecycles. The strong rand also compounded the negative effect of the phasing out of old generation models, said Naamsa. In its annual report released recently, Naamsa said exports picked up last year as all vehicle manufacturers announced or implemented export programmes. The value of the exports last year was R22bn, up from R17.5bn. "From 2006, industry new vehicle exports are expected to grow significantly as a number of major export programmes are implemented, rising by more than 43,500 vehicles, or about 31%," the association said. Naamsa said new vehicle sales were this year expected to increase to 647,000 units, up from last year's 565,018 units. These excluded sales by distributors who are not Naamsa members such as Citroen, Daewoo, Diahatsu, Hyundai, Kia, Proton and SsangYong. The report said prices of new and used vehicles had dropped for the second year in succession. In 2004 average prices fell 1.2% and last year they dropped 1.6%. Naamsa's projections are that car prices will fall 0.5% this year. Naamsa said it expected the value of component exports to increase to R23bn, up from last year's R21.7bn. Naamsa said the European Union was the largest export destination for local component exports, accounting for 68.7%. Germany, Spain and the UK were the top three destinations of local component exports. The report said the local industry's production was expected to rise to 614,000 units this year and 682,000 units next year. Last year's production was 525,271 units, representing a 15.3% increase compared with the 2004 figures. In the same comparable period, global production increased 3%, according to the International Organisation of Motor Vehicle Manufacturers. Naamsa said SA accounted for 0.79% of last year's world production of 66,4-million units. That was up from 0.70% in 2004. In 2000, the local industry's share stood at 0.61%, the body said. The trade balance in the car industry last year widened from R18.8bn in 2004 to R27bn this year. Naamsa attributed the trend to the strong rand and growth in new vehicle sales.

Peugeot Output Expands

Peugeot's new SUV bears a "00" model designation signifying a new vehicle concept for the brand. The 4007 will go on sales internationally during the second half of next year. The French car-maker is the latest newcomer to the popular sports utility vehicle segment, with the 4007. Peugeot is entering the 4x4 sports utility vehicle (SUV) market with a new model, which is 4,64m long and fitted with one of the French vehicle maker's accomplished HDi diesel engines. The SUV's name - the 4007 - uses the double-zero identity as it represents another new concept in the development of Peugeot's model range. The '4' represents its size within the range and the '7' specifies its generation. We first saw the new vehicle concept idea from Peugeot with the introduction of the 1007 in SA last year. The new vehicle, which is the result of the co-operation between PSA Peugeot, Citroen and the Mitsubishi Motors Corporation, will go on sale internationally during the second half of next year. 
With an eye to the environment, Peugeot has equipped the 4007 with its latest 2.2l diesel engine. The engine features its advanced diesel particulate filter system -- which promises the best combination of performance, economy and environmental protection. The 2.2l HDi engine features direct common-rail injection and is the result of the partnership with Ford. It develops 115kW and 380Nm of torque, and is capable of using a 30% mixture of diesel biofuel without modification. Producing a driving experience that is both dynamic and pleasurable, this engine boasts impressive fuel economy and emissions performance, which Peugeot says is among the best in the SUV sector. The engine is combined with a six-speed manual gearbox to make the best use of the HDi's high-torque characteristics. The 4007 is equipped with electronic control management on all four driven wheels. The system has been designed to increase the vehicle dynamics for on-road driving. The steering, suspension, four-wheel-drive system, brakes and tyres have all been developed to achieve maximum efficiency. The introduction of a SUV is a clear indication that Peugeot is continuing its strategy of extending the available choice of products in response to the demands of its customers. It also means that the vehicle maker will now be playing in one of the fastest-growing segments of the global motor industry.

Renault Trucks in for the Long Haul in SA

Supported by the Imperial Group, Renault Trucks are here and here to stay. That was the message the company was sending to the South African commercial vehicle market after its recent introduction to our shores. Renault Trucks are one of the few manufacturers that can offer solutions to the logistics industry in all segments in which they operate. Renault Trucks International offers comprehensive support to Renault Trucks SA, and has gained a substantial reputation for hard working, rugged and cost effective solutions on the rest of the African continent. In fact, one out of every two trucks sold in Africa (excluding SA) is a Renault. The company offers a range of trucks to suit all applications from medium commercials to extra heavies and all that lies in between. In addition they have the vehicles designed specifically for sub-sectors within the medium, heavy and extra heavy areas. Whether it is on-highway line-haul, heavy duty construction applications, or distribution, Renault promises a vehicle designed for exactly that purpose. Benefiting from being part of Commercial Vehicle Holdings, a division of the Imperial Group, Renault offers after sales service and parts supply from any of the service centres across the country. The network has been expanded to include Bloemfontein, Harrismith, Middelburg and Paarl, meaning therefore that the support network for Renault now includes 14 branches throughout SA. Instrumental to Renault's operation in SA is an assembly facility in Apex that recently benefited from a multimillion-rand expansion in order to meet the demands being made by Renault, further proof of the future support of the brand by Imperial. The Kerax range was the first of the models to be assembled at this facility, while the other models will be assembled there from early next year. Vehicles on offer range from the Midlum, a vehicle suited to the distribution sector, available in both 4x2 and 6x2 variants, to the Premium range, which is suited to on-highway, both short and long haul operations, available in 4x2 and 6x2 variants. The mainstay of Renault's business, the Kerax range, is suited to mining, forestry, construction and other industries. The Kerax is available in 4x2, 4x4 and 6x4 options, including tippers, rigids and truck tractors. Renault will supply 80,000 trucks world-wide this year. The local arm will be focusing more on the long-haul market, but has enjoyed good success with the Kerax range. Kerax sales have increased 72% since January last year, with the push largely on 6x4 applications.

« Top


South African Airways Set to Axe 1 000 Jobs 

National carrier, South African Airways (SAA), is set to retrench more than 1000 employees in a cost-cutting measure, which is likely to earn it the wrath of trade unions. The airline said on November 30th that its operating costs were rising at a phenomenal rate. There was also a sharp increase in revenue due to rising passenger numbers. SAA's former parent company Transnet, which sold the airline to government for R2bn in June, said in its financial results for the six months to September that SAA's operating costs surged 7% to R10.1bn, while its revenue rose to R9.6bn. This led to the airline posting a further net loss of R652m, 37.3% higher than last year's loss of R475m. SAA CEO Khaya Ngqula said: "We need a fundamental restructuring of the business." He said cost-cutting would include a number of options, inc-luding retrenchments. "On the costs side there is going to be pain -- and a lot of it," Ngqula said. "Even with revenue growing as much as 10% we are troubled by costs." The job cuts would affect all levels and business units within the company. SAA currently has a staff complement of 11,000. The South African Transport and Allied Workers' Union (Satawu) said it would fight any forced retrenchments. The union's secretary-general, Randall Howard, said: "We do not accept that the first response to reducing operational costs comes at the expense of workers. "While we remain willing to engage SAA on the reasons for restructuring, we will not make the starting point job losses, in an environment where unemployment sits between 30%-40% in our country." Howard said SAA had yet to engage the union on the reasons that had led to operational costs not being kept in check while revenue streams were fairly good. Satawu said it was concerned that SAA was already planning retrenchments while the process of unbundling the airline from Transnet had not been completely finalised. The unbundling process included guarantees that jobs and pension benefits would be protected. Howard said Satawu had asked Public Enterprises Minister Alec Erwin to recapitalise SAA, a request the minister had turned down. Erwin had previously said government would no longer support SAA financially. Ngqula said recently that the airline would need a cash injection of about R4bn, money which the parastatal would have to borrow from local financial institutions. The Congress of South African Trade Unions (Cosatu) said it was "shocked" by SAA's retrenchment plans, and had called on the public enterprises minister to intervene. "Cosatu demands that SAA immediately suspends the retrenchments and begin a process of engagement with the trade unions. The federation will support any action that the workers' unions may be forced to take to save their jobs," said Cosatu spokesman Patrick Craven. Meanwhile, SAA announced a number of new destinations that it would serve from next year. These included nonstop flights from Johannesburg to Chicago, Buenos Aires and Munich. The airline was considering introducing a Johannesburg-Rio de Janeiro route. New routes on the African continent included Libreville in Gabon, Point Noire in Congo and Bamako in Mali. SAA GM for business development Nomfanelo Magwentshu said that the new routes would increase the airline's international capacity by 8%.

« Top


Nedbank Capital Joins Forces With ABN AMRO

Nedbank Capital has joined forces with Dutch investment bank ABN AMRO to offer clients better access to international capital markets. This would focus on corporate bonds, syndicated loans, acquisition finance and international equity distribution for new listings, rights issues and secondary block trades, they said November 27th. Nedbank Capital, the investment banking arm of Nedbank Group, is the latest local bank to form an international alliance. Rand Merchant Bank announced a joint venture with US-based bank Morgan Stanley last year to provide sales and trading services and research for JSE-listed stocks. Standard Bank formed a joint venture equities business Credit Suisse this year. Absa remodelled investment banking arm Absa Capital on the lines of Barclays Capital. Mark Sardi, head of investment banking at Nedbank Capital, said the ABN AMRO-Nedbank partnership was an alliance, not a joint venture, providing more flexibility for both parties. "There is no formal legal entity that represents both our interests," Sardi said. The alliance would span debt and equity capital markets, and be complementary for both businesses. ABM AMRO was the "only independent house that ranked in the top 10 in both debt and equity capital markets worldwide. For South African corporates who want to tap the high yield bond markets, this provides an avenue." In SA, Nedbank Capital would originate deals, while ABN Amro would provide its international distribution platform. This would save both groups time and money. Sardi said the alliance could be a "big generator of income without the associated capital cost". Simon Penney, ABN AMRO's country executive in SA, said the alliance would broaden the bank's client reach in SA. "There is a clear synergy for both institutions here," Penney said.
Nedbank's corporate customers would be able to use ABN AMRO's global expertise to raise finance offshore. "It gives Nedbank an international dimension to their product offering," Penney said. "Clearly it wouldn't be cost effective for them to start to acquire that sort of platform." 

« Top


Mineworkers' Trust Hits R7 Billion 

A black economic empowerment consortium led by the Mineworkers Investment Company (MIC) has bought gaming and hospitality group Peermont Global for R7bn. If approved, the deal will create one of SA's largest black-owned and controlled gaming companies, with interests in several casino resorts. These include Emperors Palace in Johannesburg, Graceland hotel casino in Secunda, the Grand Palm hotel casino in Gaborone and Tusk resorts in Empangeni, Taung, Klerksdorp, Thohoyandou and Mmabatho. MIC executive director Keshan Pillay said the deal would provide Peermont Global with "an excellent platform to pursue growth opportunities in the gaming, hotel and resort sectors in SA and throughout the region over time". Peermont said holders representing 73% of its shares supported the proposed transaction. The Eastern Cape Gaming and Betting Board had earlier this month named Peermont as the preferred bidder for the Mthatha casino licence. The company would next year develop a hotel casino and convention resort, at a cost of R215m, it said. The deal will see Peermont CEO Ernie Joubert exit the business he set up 13 years ago. Deputy CEO Anthony Puttergill would succeed Joubert, the company said. When the transaction becomes unconditional, probably in April next year, Peermont said, it would apply to the JSE to terminate its listing. The company made its debut on the local bourse just over two years ago. Joubert said the company was awaiting the awarding of licences in Northern Cape and Limpopo. Peermont said NewCo, which will house the interests of the empowerment consortium, would buy its entire issued share capital for R12.90 a share, and that would amount to R4.26bn. Pillay said the refinancing of debt in NewCo and acquisition of minorities in the group would raise the total cost of the transaction to R7bn. MIC would own 75% of NewCo and senior management in the group would hold 17%. The group's black economic empowerment individual partners -- Danisa Baloyi, Vusi Zwane, Monde Tabata, Archie Luhlabo and Clifford Elk -- would hold the other 7,5%. Pillay said the R12.90 a share price was a premium of 44,7% to Peermont's 30-day volume weighted average price for the period to July 17th, the day before the first cautionary about the transaction was issued. He said the consortium would pay for its shares through a combination of shares and debt. Peermont said the deal would enhance MIC's position in the gaming industry. MIC's other interests include stakes in media group Primedia, retail company Mathomo, BP Southern Africa and document storage company Metrofile. Mineworkers Investment Trust, which is part of MIC, was part of empowerment groups in First Rand's R6.8bn empowerment transaction. The company said that besides Puttergill, other senior managers would remain in the group. It said certain managers had been locked in for five years "to ensure continuity within the new ownership structure". Joubert said he was selling his stake in the company because of his preference for new projects. He said he would pursue a new venture, probably offshore in the gaming and hospitality industry.

Black Owned Pamodzi Gold Ready for Listing

The public will be able to buy into and enjoy the opportunities available to SA's first black-owned and controlled gold mining company from December 11 when Pamodzi Gold makes its debut on the JSE. Pamodzi Gold has an estimated value of about R950m based on the current rand gold price. The value is derived from its two gold mines, Middelvlei near Randfontein and Petrex Mines on the East Rand. The valuation takes into account that Pamodzi is burdened with a substantial gold hedge, inherited with Petrex Mines, which commits it to sell about 183,000 ounces of gold over seven years at US$350/oz. The gold price is about US$627/oz. Management plans to reduce the hedge over time. Middelvlei was an undeveloped deposit bought four years ago from Gold Fields. It is being developed into an open-cast mine which will mine about 30000 tons of gold-bearing ore a month at steady state. Petrex Mines has a long and chequered history, with its most recent owners, Canadian-listed Bema Gold, unable to make the mine profitable. According to Bema's website, Petrex will produce an estimated 169000oz this year at a cash cost of US$440/oz. Pamodzi Gold CEO Ken Steenkamp said it would have about 200000 ounces of gold production at listing but planned to double in size within a year. This would be possible because its status as a black-owned company positioned it to make acquisitions from the major gold companies. Under the mining charter, South African mining companies must have 15% black equity ownership by 2009 and 26% by 2014. They can also achieve the targets by building up credits for selling assets to black investors. The Middelvlei mine is contiguous with Harmony's Lindum Reefs open-cast mine, where Harmony is not mining the pits. Pamodzi Gold has started discussions with Harmony on taking over Lindum Reefs though a formal due diligence exercise has not yet begun. On the East Rand, Petrex Mines is contiguous to Aflease Gold's developing Modder East gold mine. Bema and Aflease are known to have held discussions about co-operation in the past. Steenkamp said there were no talks with Aflease at present, but geographically there were opportunities for consolidation. Pamodzi Resources, which will own 50,1% of Pamodzi Gold directly and indirectly, will inject R75m into the company. Another R150m-R200m will be raised through a placement of shares ahead of the listing.

« Top


SABMiller Revenue up 33% Despite Difficult US Market

SABMiller reported a 33% increase in revenue November 9, to $9,3bn from $7,05bn for the six months to the end of September as consumer demand continued to drive sales in Latin America, Asia and Europe. Total beverage volumes were up 29,9% to 144-million hectolitres for the period while organic volumes increased 9,3%, which chairman Meyer Kahn said were "running ahead of expectations." The Latin American region grew lager volumes 11% as the group benefited from buoyant economic conditions. CE Graham Mackay said the volume growth in the region had accelerated and warranted further expenditure to increase capacity, including the construction of a new brewery in Colombia which is to come on line late next year. Group revenue at the Africa and Asia division increased 23% as organic lager volumes increased 24% for the period. China grew organic volumes 27% as CR Snow became China's largest brewer by volume, increasing its market share to 15%. India experienced volume growth of over 40% for the period. The good performance at the group's Angolan and Ugandan operations offset difficult trading conditions in Botswana, which continued to be affected by poor economic conditions. Mackay said growth at operations in Africa was driven by the increased sophistication of urban consumers and general economic development and improvement in infrastructure, which gave consumers more confidence to spend. He said SABMiller planned to continue its push of beer brands into rural areas. Competitive pricing conditions, market share gains by imported and craft beers, increases in commodity prices and segment price gaps in North America squeezed mainstream brands such as Miller Lite, to the benefit of economy and "worthmore" brands. Miller's operations in the region showed a 3,6% decrease in sales to retailers and a 3,8% decline in shipments to wholesalers. Mackay said the group would renew its focus to rekindle growth in Miller Lite by increasing marketing spend and exploit growth opportunities at the top end and economy brands, including Sparks and Steel Reserve, which it acquired in September. Mackay said SABMiller would accelerate the roll-out of its premium international brand, Peroni Nastro Azzurro, to more urban centres in North America to take advantage of favourable conditions for top-end brands. Peroni volumes in the region grew 23% in the six-month period. South African Beverages, the group's domestic beer and soft drink business, grew revenue 10% for the period, and organic lager volumes 1%. However, Mackay said this masked the mix improvement made in the premium beer sector, which had happened "faster than expected as consumers demonstrate greater affluence and desire for differentiation," he said. The group expected the rate of growth in the top end to decline as a result of toughening economic conditions and less disposable income as a result of consecutive interest rate increases.

SABMiller Upgrades Polish Breweries

Global brewer SABMiller said November 21 that its Polish subsidiary Kompania Piwowarska would invest $100m in upgrades of its three breweries in the country. The majority of the investment would go to increasing the production capacity of the Tyskie brewery near Krakow, SABMiller said. This would make it the group's largest European brewing facility, producing more than 8- million hectolitres, or 16% of SABMiller's total European brewing capacity. Tyskie is Poland's best-selling beer and biggest export brand. UK sales volumes of Tyskie have risen more than 400% since the brand's introduction last year, driven by the influx of migrant workers since Poland's acceptance into the European Union. According to Dow Jones, the brand's most dramatic growth has been in Ireland, where it enjoys a 73% share of Polish beer sales. The beer is also available in Holland, France, Germany and Iceland, the US and Canada. SABMiller said the investment formed part of a three-year programme, with the majority of the investment already under way and set to be completed by the end of the group's financial year next March. The investment at Tyskie would include a new brewing house and an additional packaging line to improve packaging capacity across the country. The added capacity would mean SABMiller's total brewing capacity in Poland would rise to 15-million hectolitres from 12,5-million hectolitres, it said.

« Top


South Africa, Mauritius, And DRC Unite to Assist the Vulnerable

South Africa, Mauritius and the Democratic Republic of Congo have signed co-operation agreements to ensure social assistance for their vulnerable communities. Minister of Social Development Zola Skweyiya signed co-operation agreements with his Mauritian counterpart, Minister Sheilabai Bappo and the DRC's Minister Otete Omanga at a Southern African Development Community (SADC) ministerial conference November 23. "These agreements should have taken place a long time ago in order to highlight the need to work closely on issues affecting vulnerable groups. "We are going to touch the poorest of the poor. As minister and a South African citizen I am pleased that we are going to work very, very hard to implement these agreements," Minister Skweyiya said. The conference, which took place in Johannesburg, was attended by regional ministers of social development and focused on the development of a regional social policy. The Memorandum of Understanding (MoU) between South Africa and Mauritius covers issues around HIV and Aids, rehabilitation from drug abuse, persons with disabilities and capacity building for civil society organisations amongst others. The memorandum signed with the DRC is aimed at supporting programmes for displaced families, communities and refugees. The MoU with the DRC is further expected to develop programmes to tackle HIV and Aids and integrate a social policy that includes vulnerable groups such people with disabilities, children and women. The countries are to pay each other reciprocal visits, share technical expertise on policy development and exchange expertise for institutional development, capacity building, and programmes for civil organisation. The regional dialogue is hosted by the South African government in partnership with the United Nations Department of Economic and Social Affairs.

Oman Trade Pact Sets Stage for Further Growth

South Africa and Oman have signed an agreement to promote trade and technical co-operation, thus paving the way for further growth in trade following a recent spurt. Trade and Industry Minister Mandisi Mpahlwa and his Omani counterpart Maqbool Ali Sultan signed the agreement in Pretoria November 20. "We must do more in terms of trade and increasing investment between the two countries," Mr Mpahlwa said, adding that trade between the countries had lately experienced "unprecedented growth." Total trade between South Africa and Oman was R1.6 billion in July 2006, having grown from R123 million in 2003. Exports to Oman stood at R180 million in 2005, while imports from the gulf state totalled R792 million in the same year. "This in itself represents a 61 percent growth in exports and 151 per cent growth in imports from the trading year 2003," Mr Mpahlwa said. Mr Ali Sultan is leading a 30-member delegation made up of Omani business representatives who will hold bilateral talks with their South African counterparts, in order to explore trade and investment opportunities. This is a reciprocal visit, following Mr Mpahlwa's trip to Oman earlier this year, where he held bilateral meetings with the Ministers of Oil and Gas, Transport, Communication, Defence and Foreign Affairs. Addressing a business seminar attended by delegates from both countries, ahead of the signing, Minister Mpahlwa said the South African government was embarking on measures to make it easier to invest in the country. This was because government held the view that investing in South Africa should be a "smooth process without any unnecessary bureaucracy, challenges and hindrances." He outlined several "immediate and concrete" steps government had resolved to take, in order to grow the countries' partnership. These included the agreement signed November 20; the scheduling of a trade mission to Oman in the upcoming year; a visit to the country by Foreign Affairs Minister Nkosazana Dlamini-Zuma and later, President Thabo Mbeki. Mr Ali Sultan called for the two countries to cooperate in sectors such as tourism, fisheries and shipping for mutual benefits as there was a high possibility for success in these ventures. He agreed with Mr Mpahlwa emphasising that "there is a lot of room for improvement in our trade relations especially involving the re-export of South African goods and services from Oman to other countries in the [Middle East] region."

Venezuela May Barter Oil for Goods to African States

Venezuela is willing to barter oil for goods to poor African states on a credit basis, without intermediaries. This emerged after Venezuela's vice Foreign Minister Reinaldo Bolivar explained to South African authorities that his country was exporting oil in this manner to Latin American and Caribbean countries, because costs were lower this way. "Our government believes that with oil-producing countries in Africa, we can expand this framework," Mr Bolivar said November 23 after signing co-operation agreements with his South African counterpart, Foreign Affairs Deputy Minister, Aziz Pahad. He explained that oil was sold for 60 percent on a credit basis directly and the rest of the 40 percent of the transactions, were carried out by bartering for goods with interested parties. South Africa and Venezuela signed agreements on visa exemption for holders of diplomatic and official passports; a draft co-operation agreement in arts and culture and the promotion and protection of investments, among others. Mr Bolivar expressed confidence that oil trade with Africa would be advanced especially with South Africa's political will. Deputy Minister Pahad praised Venezuela for adopting policies that sought to help other countries in oil trade. "We will discuss how these policies can benefit African countries as we know that Venezuela has one of the largest oil stocks in the world," he said. Mr Pahad said the country would take this issue to the Africa-South America summit which is scheduled for Abuja, Nigeria on 30 November. He said South Africa sought this initiative to be extended to poor African countries first before the country itself could benefit. Both ministers agreed that the summit would help strengthen South-South co-operation. "This summit is historic because it means that Africa can look up to South America and not only Europe and the United States. "We believe the strategy of South-South [co-operation] will guarantee the development and growth of our countries, the people of the south will grow together and maintain each other," said Mr Bolivar. Mr Pahad noted that trade links between the two countries could be improved. "We have agreed to do more to increase economic, cultural and people to people relations; the potential exists for this," he said. With Venezuelan President Hugo Chavez expected to visit South Africa next year, the two deputy ministers agreed to fast-track the implementation of the agreements, in order for President Thabo Mbeki and his counterpart to assess progress.

« Top


Alcan Seals Deal On R20bn Coega Smelter

After four years of negotiations, Canadian aluminium producer Alcan has finally signed on the dotted line to bring smelting capacity to SA, the largest foreign-backed greenfields project in SA to date. A 25-year agreement with Eskom for the supply of cheaper electricity, which was a key requirement for securing the deal, was formalised at Coega headquarters in Port Elizabeth November 24. A leading economist says Coega's clinching the R20bn anchor investment is a "profound endorsement" from foreign investors who believe that SA will experience robust growth in years to come. "This is clearly a massive project, and local and foreign investors have shown that the appetite to inject capital is there," says Standard Bank group economist Goolam Ballim. "We must celebrate the idea that this is a greenfields investment." The R20bn smelter will have an initial annual capacity of 720000 tons a year - the largest smelter in Africa - with projections that capacity could be raised to just under 1,2-million tons in future, the Coega Development Corporation says. It is expected that R6,3bn worth of equipment will be sourced locally for the construction of the plant. Alcan's stake in the plant will be 25%-40% and the Industrial Development Corporation (IDC) is likely to be the biggest local investor with a 15% stake. The National Energy Fund will hold an unspecified stake, and other investors still have to be secured. The IDC pledged to provide some of the debt finance, assist with empowerment shareholding in the project and provide a co-financial advisory role. The Alcan investment is undeniably a fundamental injection into Coega, which will finally see taxpayers earn a return on their money, says Ballim. The Coega industrial development zone was established at a cost of R7,5bn to the state. The investment also confirms that SA is an attractive destination for foreign capital, he says. "The heightened private equity interest shows that SA's interests are comparatively cheap." While the impact on jobs is "unflattering in terms of the size of the capital investment" - construction will create 2500 jobs, while 1000 permanent staff and 300 subcontractors will be hired at the smelter - Ballim reckons the indirect consequences might be material. The Coega Development Corporation estimates 27667 jobs will be created over 20 years. The electricity requirement for the project would be 1350MW, which is almost equal to the entire output of the Koeberg power station. It means Eskom will have to bring additional power capacity on stream, over and above its planned capacity expansion. Particularly pertinent is that the smelter will be built in an area that is not a "vanguard" of economic activity in SA, says Ballim. Eastern Cape is one of the poorest provinces and the smelter is expected to have a positive impact on the province's economy. The Coega Development Corporation estimates the plant will add R230m a year to Port Elizabeth's economy. The project fits into the IDC's larger mandate to support downstream beneficiation to maximise development, employment and wealth creation in provinces that need them most. The smelter will allow SA to explore downstream manufacturing of aluminium and projects related to the maintenance of the plant, and the creation of manufacturing skills and related skills transfer projects, the Coega Development Corporation says. Demand for aluminium in the transport sector is expected to grow 4,5% a year until 2014. A driver of demand is the trend towards lighter-weight vehicles as a response to tightening emissions and fuel economy regulations. Construction of the plant, expected to start in 2008, will take five years, and finished product could be shipped from Coega's Port of Ngqura in 2013.

Lonmin in R3 Billion Offer for Afriore Platinum

Platinum producer Lonmin is making a R3,2bn offer for the shares of platinum explorer AfriOre in one of the first signs of long-expected consolidation in SA's platinum sector. Although there are only three major platinum producers in SA, there are many smaller companies with early- to advanced-stage platinum prospects in the Bushveld complex, north of Johannesburg, the world's biggest source of platinum. Lonmin said November 15 that it would make an offer to buy the shares of London- and Toronto-traded AfriOre at C$8,75 each. AfriOre's main asset is a 74% stake in the Akanani deposit on the northern limb of the Bushveld complex, about 60km from Lonmin's current operations. The remaining 26% is held by black investors. Lonmin said its preliminary investigation suggested Akanani's current resource could support a mine initially producing about 500000oz of platinum group metals a year. It would cost about $600m-$700m to build a mine, concentrator and the necessary infrastructure. Lonmin CE Brad Mills said a feasibility study was under way, which was expected to be finished within the next two years at a cost of about $50m. Construction of a mine will take another four years, which means first production will be in 2013. The reason for buying AfriOre is that the size and thickness of the Akanani deposit makes it the best undeveloped platinum deposit in SA. In a separate announcement, Lonmin said it planned to make an early offer to holders of its $215,8m of convertible bonds, due in 2008. Mills said it made sense to redeem the bond early because of the company's prevailing share price and the positive effect it would have on the balance sheet. Lonmin said that it would increase its total dividend for the year to September 39% to $1 a share, reflecting the group's strong cash flows. It generated $290m in free cash in the past year. Mills said in June that the group could consider increasing the dividend or share buybacks but he said yesterday that there were no immediate plans for share buybacks as the Akanani project would take priority. The situation would be reviewed every six months, as would the extent of increases in the dividend, he said. Turnover from continuing operations rose 64% to $1,855bn compared with last year, while earnings before interest, tax, depreciation and amortisation more than doubled to $923m. Underlying earnings surged to $0,312 a share from $0,119 a share. The group produced 1,017-million ounces (941940oz) of platinum in concentrate and set a new sales record of 952682oz (912844oz) of platinum for the year, but this was below expectations as a result of rebuilding its smelter and an outage in April. Cash costs net of by-product credits rose 8,8% at the Marikana operations but fell 5,1% in Limpopo. Mills said the main reasons were hikes in the costs of consumables and skills as well as investments in safety, health and the environment. Costs were also affected by the smelter outages and, at the Limpopo operations, by lower-than-expected production, he said. Numis Securities analyst Simon Toyne said he would be downgrading forecasts for Lonmin's earnings in the current financial year because production was lower and costs were higher than expected. But in the longer term, the acquisition of AfriOre could add significant value, he said.

Harmony Could Cost Mittal Up to R1,6 Billion

Gold producer Harmony wants the Competition Tribunal to impose a penalty of 10% on flat-steel turnover on Mittal Steel SA, in a case on excessive pricing through Mittal's use of import parity pricing, and market power abuse. If the application is granted, Mittal could face a penalty of up to R1,6bn. Rudolph Torlage, GM of company controlling in Mittal's finance department, said after the hearing November 29 that the requested penalty was previously based on 2003's flat-steel sales. However, senior counsel for Harmony, David Unterhalter, asked for the penalty to be based on the R16bn in flat-steel sales achieved in 2004. The fine would be over and above relief sought in the form of a new pricing model, based on ex-factory price, Mittal selling its 50% stake in steel merchant MacSteel International and paying legal costs. The tribunal is hearing final arguments in the case, brought by Harmony and its counterpart, DRDGOLD. The fine sought by Harmony is the maximum administrative penalty that can be levied by the tribunal. However, it was unlikely to be granted as the tribunal, in determining the penalty, has to consider, among other factors, whether the respondent had previously been found to have contravened the Competition Act. In reply to a question from tribunal chairman David Lewis, on whether a penalty was the appropriate relief for a "first-time offence", Unterhalter said Mittal had been "wholly intransigent" on pricing and had tried to mislead the tribunal. Unterhalter pointed to contradictions in Mittal's communications on profitability and replacement costs with its shareholders and the tribunal. While the company had made substantial additional profits to the tune of R20bn over the years, its behaviour had had a systemic effect on the country's downstream industry, he said. "To let them get away without some sanction would be too lenient." Mittal senior counsel Chris Loxton said the relief requested by Harmony was based on static market conditions. He said a necessary element of the complaint was that there was a significant surplus of steel in the domestic market, which was no longer the case.

Gold Fields to Invest R1,25bn In Ghana

Gold Fields continues to take advantage of the high gold price with the announcement it would spend R1,25bn on expanding processing facilities at its Tarkwa mine in Ghana. Investment projects this year included ramping up production at the Choco 10 gold mine in Venezuela, which it bought this year, and developing a new mine at Cerro Corona in Peru. Locally, the group is making a buyout offer to all shareholders in the South Deep mine and deepening its Kloof and Driefontein mines. Executive vice-president and head of international operations Terence Goodlace said investments would be funded from internal cash flows. Management did not believe there would be recourse to external funding. The expansion would shorten the life of Tarkwa to 2022 from the 2028 expected now, by maintaining production at a high level. With existing facilities, gold output at Tarkwa would have started to taper off from 2009. Gold Fields would invest R900m to expand the carbon-in-leach processing facility to 12-million tons a year (tpa) from the current design capacity of 4,2-million tpa. The plant processed 5,4-million tpa. As the Tarkwa mine deepened, rock became harder and less porous. Carbon-in-leach technique was suited to extracting gold from hard rock. Goodlace said Gold Fields had envisaged the expansion since 1998. Orders for long-lead-time items were placed in April, ahead of the completion of a feasibility study in October. After the expansion of the carbon-in-leach plant, 52% of tonnages would be processed through the plant, producing 70% of total gold output. Total gold production from carbon-in-leach would rise to 540000oz a year from 276000oz, with an overall reduction in cash costs from about $344/oz to just more than $300/oz. September cash costs were about $20/oz higher than normal (they were $321/oz in the June quarter) as the mine had to generate some of its own power when late rains hit Ghana's generation. The second investment was R350m in developing the north heap-leach facility. Heap leaching is the extraction of low-grade gold through piling the crushed ore on to large pads lined with clay and plastic and using a cyanide solution to leach the ore out of the rock. Goodlace said the capital cost was higher than normal as it included infrastructure to be used in later expansion phases. Management queried the carbon-in-leach project's viability against the background of power-generation problems in Ghana as it would require a 14MW mill, but it would be viable even if the mine had to generate half the power itself. Gold Fields, AngloGold, Newmont and Golden Star were considering a 100MW plant to feed power into Ghana's national grid.

Platinum Price Hits a Record 

The platinum price had its biggest jump in almost 20 years and reached a record high in London November 21 as investors speculated that demand may be boosted by the introduction of a new investment fund for the commodity. The precious metal rose to a record $1400,50/oz, the biggest one-day gain since at least January 1987. But a trader said the new price level was likely to be temporary, and a platinum exchange-traded fund was unlikely as the global supply of the metal was not sufficient to support such a fund. "There isn't that much platinum, while you have no difficulty getting gold anywhere," he said. SA stood to do "very well" out of continued commodity price rises, treasury director-general Lesetja Kganyago said November 21. However, he said, SA would be following a cautious fiscal policy in 2007-08, despite the rise in commodity prices, which would bring in additional revenue.
"The subject of commodity prices for SA is an unusual one," Kganyago said. SA exported minerals and imported oil, but 30% of its oil was from domestic coal, which meant the rise would have mixed effects, said Kganyago. Analysts said the rally in the platinum price was expected to provide some support for the rand. 

« Top


Bioclones Signs $6m Deal to Make Bone Marrow Drug

Biotechnology company Bioclones said it had secured a $6m deal with Swiss firm Solidago November 15, to manufacture a key bone marrow stimulating drug for the global market. The licensing and technology transfer agreement will see Bioclones producing human recombinant granulocyte-colony stimulating factor (G-CSF), which is used in cancer treatment to counteract the damage caused on patients' bone marrow by chemotherapy drugs. The deal is the first such agreement Solidago has concluded with a developing-world company, and marks an important step into the human biotechnology arena for investment firm, and Sekunjalo subsidiary, African Biotechnology Medical Innovation Investments - which owns 49,9% of Bioclones. "This product (G-CSF) has the potential to generate revenue running to hundreds of millions of dollars," said Sekunjalo chairman and CEO Iqbal Survé. Bioclones would expand the capacity of its Goodwood facility to produce the G-CSF, which regulates the production of white blood cells in bone marrow. The agreement complements Bioclones existing portfolio, which includes the production of a hormone produced by the kidneys to regulate the production of red blood cells in bone marrow. Erythropoietin is the biggest biotechnology product in the world, with annual sales of $12bn, according to Survé. Bioclones only supplies the local market, but is planning to launch in Europe next year. Solidago had granted Bioclones the exclusive rights to sell G-CSF in all markets except the US, said Survé. He said that the global market was worth $3bn to $4bn. Bioclones's main competitor was US-based Amgen, he said.

« Top


Telkom Hit By Court's R1,5bn Telcordia Ruling

Fixed-line operator Telkom was dealt a R1,5bn blow when the Supreme Court of Appeal (SCA) ruled against it November 22 in a long-running dispute with US computer software company Telcordia Technologies. The court's ruling ends a six-year dispute that led to Telcordia pulling out of SA. Telkom will have to cough up up to R1,5bn at a time when its costs are rising to the extent that brokerage Merrill Lynch warned that it was "concerned" about Telkom's profit margins after expenses raced ahead of expectations. Partly as a response to concerns over rising expenses, Telkom's share price fell 3,3% on the JSE. The Telcordia dispute began in 2000 when Telkom terminated its agreement with the company for the delivery of a "fully integrated end-to-end customer activation and assurance system". Telkom refused to pay certain money that Telcordia contended was due to it in terms of the agreement. What makes the case even more damaging for Telkom is that it has not set aside anything as a contingent liability. Telkom CEO Papi Molotsane said that it had not set aside any money as it was "confident it would win" the case. Molotsane said that "if the case does go against us, then we would have to determine the amount, but we haven't provided for it". Now that the merits of the case have been decided against Telkom, the company must go to arbitration with Telcordia to determine the amount of the payment. Telcordia's attorneys said the company was claiming $200m-$220m. They expected the arbitration hearings to be decided "early next year". If Telcordia gets the highest amount of $220m (about R1,5bn), this would be more than 16% of Telkom's net profit for its past financial year. Telcordia's lawyer, Greg Nott, said "that in South African legal history, this would be one of the largest civil claims yet, running into the billions of rands". In a long-winded legal process, Tecordia first got an arbitration in its favour, but Telkom appealed against this in the Pretoria High Court. The high court overturned the arbitrators' decision. Telcordia then approached the SCA. The SCA said the high court, in setting aside the award by arbitrator Anthony Boswood, disregarded the principle of party autonomy in arbitration proceedings and failed to give due deference to an arbitral award, something the country's courts had done consistently since the early part of the 19th century. Appeal Court Judge Louis Harms said Telcordia and Telkom had bound themselves to arbitration in terms of the Arbitration Act of 1965. Harms said it was a fallacy to label a wrong interpretation of a contract a wrong perception or application of South African law, or an incorrect reliance on inadmissible evidence by the arbitrator as a transgression of the limits of his power Telkom said it was studying the judgement and evaluating its options regarding the protection of its rights. Anton Klopper, Telkom's group executive for legal services, said the arbitrator had made an interim award, which addressed only certain aspects of the case, which had been effectively upheld by the SCA judgement. "The remainder of the matter will be dealt with at the arbitration proceedings." Klopper said Telkom's legal team was considering other avenues.

« Top

« Back


Published by 
Newnations (a not-for-profit company)
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774