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Books on South Africa
REPUBLICAN REFERENCE
Area (sq.km)
1,219,912
Population
43,586,097
Capital
Pretoria
Currency
rand
President
Thabo Mbeki
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Update No: 058 - (06/11/06)
Two and a half cheers for the UNSC
South Africa received 186 out of the 192 possible votes in the United Nations
(UN) General Assembly supporting its candidacy for a two-year, non-permanent
seat on the UN Security Council October 16. As the excitement and
congratulations fade, many have been questioning the value of what has been
achieved. Not all world leaders view anything less than a permanent seat on the
council worthwhile. South Africa will become one of three African members of the
15-member Security Council on 1 January 2007, joining the Republic of Congo
(Brazzaville) and Ghana among the 10 non-permanent and non-veto-wielding members
of the UN Security Council.
Now that South Africa has a security council seat representing Africa will it
have the capacity to achieve what it wants? There is no shortage of issues for
the South African delegation to raise in the council's private consultations and
public debates. Deputy Foreign Affairs Minister Aziz Pahad said October 26.
South Africa would be using the "greater opportunity" afforded by its
security council seat to pursue its quest for comprehensive reform of the UN.
Such pursuit of UN reform includes ongoing attempts at expansion of the UN
Security Council. Should Africa, with Asia, Latin America and the economic
giants Germany and Japan, not be more appropriately represented?
South Africa withdrew as a mediator in the Côte d'Ivoire conflict, with
President Thabo Mbeki's spokesman saying that its two-year membership of the UN
Security Council would create conflicts of interest. Also, in the face of
hostility and doubt, there was little point in persisting. Sceptics also point
out that South Africa is just over a decade into a profound transformation. It
has limited experience and institutional memory for dealing with issues that
have perplexed the world since the UN was created. Côte d'Ivoire has been split
since rebels took control of the north of the country four years ago after an
aborted coup. Four thousand French troops and a UN peacekeeping force of 7,000
are in the country to prevent open war. Mbeki began his African Union (AU)
endorsed efforts at mediation two years ago.
The new big player in Africa
China has pledged to double its aid to Africa and provide $5bn in loans and
credits over the next three years. Chinese President Hu Jintao made the
announcement at a summit in Beijing attended by nearly 50 African heads of state
and ministers November 4. The summit is focusing on business with more than
2,000 deals under discussion. African leaders welcome their booming trade links
with China, but critics accuse Beijing of dealing with repressive regimes.
Beijing prefers the view that it is just doing business and has no political
agenda. China will also train 15,000 African professionals and set up a
development fund to help build schools and hospitals. China's drive to buy
African oil and other commodities has led to a big increase in two-way trade,
worth $42bn (£22bn) in 2005.
Africa is a growing market for Chinese goods, but critics say Beijing is
stifling African manufacturing. Some have voiced concerns over how Chinese-owned
firms treat African workers. Human Rights Watch said that all powers involved in
Africa, including China, should place human rights at the centre of their
policies. "Africans do not need another external power enabling abusive
regimes," the group said in a statement November 4. However, many
economists argue that overall, China's growing economic ties to Africa are
benefiting the region. China's contribution to the global gross domestic product
had risen sharply to 24,5% in the six years to last year, from 18% in the 1990s
and 9% in the 1980s. In contrast, the contribution of the US to the global
economy had fallen to 16,3% since 2000, from 20,2% in the 1990s and 23,3% in the
1980s.
2010 World Cup
The South African government will spend more than R15bn ($2bn) on hosting the
2010 Fifa World Cup. The country's finance minister Trevor Manuel announced the
figures to the South African parliament October 24. The bulk of the money will
be spent on building new football stadiums and refurbishing existing ones. There
is public concern that South Africa will be poorly prepared and not able to
afford to host the event. Mr Manuel outlined his plans for the World Cup while
delivering a medium-term budget policy statement to parliament. "The 2010
Fifa World Cup provides South Africa and the region with a once-in-a-generation
opportunity to showcase our land and our hospitality in a sporting festival that
knows no bounds," he added.
The Reserve Bank raised interest rates by 50 basis points, to 8,5%, as expected
October 12, despite an improved inflation outlook. It was the third increase
since June, bringing the total for the year so far to 150 basis points. Bank
governor Tito Mboweni put the improved outlook down to the "luck" that
oil prices had fallen below $60 a barrel from above $80 just two months ago. But
he made it clear the committee was not taking any chances, leaving the door open
for more rate hikes, which economists predicted would be in December and early
next year.
South Africa's high levels of crime are continuing to deter foreign investors, a
business group has warned. The comments of Johannesburg-based Business Against
Crime group come after the country's latest crime figures showed a sharp rise in
armed robberies. Although rape and murder rates had fallen, the organisation
said the overall crime rate had to be reduced, especially ahead of the 2010
World Cup. The South African Police Service said that attacks on cash delivery
vans had increased by 74% between April 2005 and March 2006, while armed
robberies of shopping malls and other retail outlets had jumped 32%.
"Especially with the World Cup coming here in 2010, we don't want to push
away tourists."
Tackling the UN
It was widely expected that SA would clinch one of the 10 non-permanent seats of
the United Nations (UN) Security Council, but there was nevertheless a
satisfying sense of victory when the announcement was made October 16. The move
is long overdue. In the 60-odd years of the UN's existence, and the 12 years
after democracy, SA has failed to secure a seat on the council. The strong focus
of the Mbeki administration on international and African issues has seen SA at
the forefront of a range of regional and international bodies. This is part of a
carefully crafted strategy to position SA as the champion of the developing
world, a project that President Mbeki has worked hard at for many years. Indeed,
the amount of time the president has spent courting alliances with regional and
global powerhouses has earned him criticism at home for not focusing
sufficiently closely on domestic issues. So the security council seat is an
important milestone in SA's quest to redefine global priorities by shifting the
focus away from global security and back to poverty, development and
unemployment. As a non-permanent member, SA will have one vote on the council.
Although it will not have the right of veto, which is reserved for the council's
five permanent members, SA can still play an influential role by guiding
discussions behind the scenes on a range of important issues. That
responsibility will fall to the delegate appointed to represent SA, Dumisani
Kumalo, the veteran ambassador to the UN who is set to take up his new post from
January. Kumalo is upbeat about SA winning the seat, saying recently that it
would allow SA to put on the agenda those issues that are important, namely
development and poverty. But the task facing Kumalo, and SA more broadly, is not
an easy one. From the beginning of next year, the UN will have a new leader, Ban
Ki-Moon. The South Korean foreign minister is well known as a diplomat and
conciliator, but he may not be as sympathetic to the issues of developing
nations as was the well-regarded Kofi Annan. Ban will have to execute a delicate
balancing act if he is to succeed in the task facing the body - trying to keep
the peace among a group of increasingly fractious global powers while
implementing much-needed internal reform. The Iraq war showed just how tough the
secretary-general's job can be. US President George Bush remains hostile to
Annan for his opposition to the war, while several other nations are angry that
he did not oppose the war strongly enough. On the global diplomatic front, North
Korea will be the first big test for Ban. The country has emerged defiant in the
face of sanctions imposed by the UN Security Council, saying they are tantamount
to a declaration of war. That situation will not be resolved any time soon, just
as the Iran and the Palestinian issues are likely to dominate the council's
agenda for the next two years. Inevitably, it will be the conflicts in Africa -
Darfur and Somalia among them - that will be a focus for the council as
ill-resourced peacekeepers battle to bring some order to these conflict-ridden
areas. So SA will be hard-pressed to drive the critical issues of poverty and
underdevelopment higher up the agenda. But there can be no doubting the
importance of this role, nor of SA's responsibility in attempting to bring
equality to the UN. Until Africa, Asia and Latin America have permanent
representation on the council, it will neither be credible nor retain the moral
high ground as the custodian of global democracy. There is little doubt that it
will be extremely challenging, but SA's long-awaited seat at the table of the
security council gives us an opportunity to influence global opinion on how
these issues are dealt with. It must not be squandered.
South Africa in Global Top Four on Budget Transparency
South Africa ranks in the top four countries worldwide in terms of the
transparency surrounding its budgets, according to an international survey. The
survey by Open Budget Index placed South Africa fourth out of 59 countries,
making it the only developing country in the top tier of the index. "One of
the things that they [Open Budget Index] rate very highly is the amount of
transparency and the Medium Term Budget Policy Statement is a very important
part [of this]," said Finance Minister Trevor Manuel October 25, briefing
the media ahead of his medium-term budget speech to the National Assembly. The
Open Budget Index 2006 is produced by a Washington DC-based non-governmental
organisation that promotes budget transparency. South Africa scored 85 points
out of 100 for the transparency of its budget in the survey, which evaluates the
quantity and quality of information provided to citizens. New Zealand scored the
highest on the index, at 89 points, followed by France with 87 points, Britain
with 86 points and then South Africa. Particular mention is made by the Open
Budget Index report of the pre-budget statement - the Medium Term Budget Policy
Statement, of which today marks the 10th anniversary - and the People's Budget,
which is a newspaper-sized, summarised version of the budget designed to enhance
accessibility. Citing the Open Budget Index report, the Treasury said there was
room from improvement in areas such as year-end actual spending reports and the
accessibility of audit reports. "The MTBPS, the Budget Review, Estimates of
National Expenditure and our provincial and local expenditure reviews all
contribute to this achievement," the minister said to the National
Assembly, referring to the high transparency rating. "But we are not yet
where we want to be. We still have too little debate in this House and in the
country on budget priorities."
Social Challenges Holding South Africa Back
The scourges of crime, HIV/AIDS and corruption mask the remarkable political,
economic and social achievements in SA over the past 12 years, leading trend
analyst JP Landman told the annual Agri Outlook conference in Pretoria October
26. "There is more to life than crime, AIDS and Zimbabwe," Landman
told the gathering of agribusiness, farmers and farmers' organisations.
Organised agriculture has blamed these issues and fears of a Zimbabwe-style land
grab for constraining growth in the farm sector. Landman, however, pointed out
how the downward trend in the economy had been turned around since the
democratic elections in 1994. Landman referred to an Old Mutual scenario study
published in 1992 that said three challenges had to be overcome for SA to become
a modern state: the extension of political rights to citizens (the easiest);
getting the economy going (more difficult); and effecting social development
(the most difficult). Democracy and sustainable economic growth had been
achieved, as well as a degree of social development, Landman said. Since the
inauguration of former president Nelson Mandela, the economy had accelerated
from its 1% growth in gross domestic product (GDP) during the gold boom in the
1980s, to 2,5% during Mandela's term, 3% at the turn of the century and to
4%-4,5% today. If the contractions in mining and agriculture were factored out,
GDP growth would be closer to 7%, he said. Landman expected GDP growth to hit an
average of 5% by 2010. Such growth was sustainable because of the simultaneous
increase in national wealth and slowing population growth, which was at 0,9%
last year and was forecast to be 0,3% in 2010.
Survey Places South Africa Among Worst For Bribery
South African companies are among the worst in a group of 30 leading exporting
countries when it comes to bribery to get business in foreign markets. A report
released October 4 by Berlin-based anticorruption watchdog and lobby group
Transparency International ranked South African companies as the sixth most
likely to bribe. Transparency International Bribe Payers Index 2006 surveyed the
inclination of companies from 30 leading exporting countries to bribe abroad.
Firms most likely to bribe to get foreign business were, in this order, those
from India, China, Russia, Turkey, Taiwan, Malaysia and SA. Least inclined to
bribe were firms from Switzerland, Sweden, Australia, Canada and the UK. The
findings of the survey were based on questions asked of more than 11,200
business' executives from companies in 125 countries about the practices of
foreign firms in their country. The executives, who were promised anonymity,
were asked about the propensity of foreign firms that did the most business in
their countries to bribe. A score of 10 indicated a perception of no corruption,
while zero meant corruption was viewed as rampant by companies from a particular
country. South African companies received an average score of 5,61, compared
with those from Switzerland, seen as least corrupt, at 7,81, and those from
India, worst in the rankings at 4,62. The survey's release brought a sharp
reminder from Public Service and Administration Minister Geraldine Fraser-Moleketi,
who chairs the National Anti- Corruption Forum, that South Africans could face
criminal charges for bribery outside the country. She said members of the forum,
which includes organised business, had taken an oath to fight corruption. She
would not comment on SA's ranking or the survey methodology and no comment was
available from representatives of business. Local Transparency International
chairman Hassen Lorgat said the report showed his organisation was as serious in
fighting "the supply side in corruption" from business as it was
"the demand side" from governments.
Bitter Feuds Within Tripartite Alliance
A war of words between President Thabo Mbeki and SA Communist Party general
secretary Blade Nzimande signalled further cracks in the tripartite alliance.
Nzimande responded October 8 to an attack at the ANC's national executive
committee meeting in which Mbeki described him as "extraordinarily
arrogant". Mbeki said Nzimande's continued attacks on his leadership and
the ANC amounted to "serious provocation". An equally angry Nzimande
hit back, saying the president had failed to provide leadership in the crisis
engulfing the ANC and instead used its alliance partners (the third of which is
Cosatu) as a scapegoat. "I differ with (Mbeki's) political overview, both
its thrust and its conclusion this attack trying to separate the SACP from its
general secretary is extremely unfortunate," Nzimande said. "The
reason is that the allies are being used as a scapegoat, as a substitute to
dealing with problems in the ANC and the alliance. "I would ordinarily have
expected that the president would rise above this and seek to provide leadership
to the ANC and to the alliance, rather than embark on a course that would only
further poison this atmosphere." The clash between the two men has been
interpreted by other NEC members as the "naked viciousness" of the
succession battle in the ANC, which has caused havoc across the tripartite
alliance. One NEC member, who attended the meeting where Mbeki and Nzimande
openly differed, said: "What we are seeing now is the same dirty war that
we saw before, during and after the Cosatu congress. It's all about succession,
which goes to the root of the control of the ANC. It's not personal, but about
differences in policy direction." Nzimande said he believed the motive
behind Mbeki's attack was the destabilising of the party before the SACP's
congress next year. Nzimande has been at the forefront of a so-called leftist
campaign to defend ANC deputy president Jacob Zuma against what his supporters
see as the abuse of state re-sources to thwart his presidential ambitions. This
campaign, according to the NEC member, hurt Mbeki, who construed it as a
personal accusation that he was abusing state resources to deal with his
political rivals. Cosatu also hit out at Mbeki himself, saying that under his
leadership the country was drifting to-wards a dictatorship. It was the
president's turn to launch a scathing attack October 7, with Nzimande the
central target. Mbeki told the meeting that Nzimande was deviating from his own
party's constitution, which encouraged unity within the alliance. "Contrary
to Blade Nzimande's extraordinary arrogance, which leads him openly to despise
our movement, the SACP's 2002 constitution lays down an approach towards
fraternal organisations whose spirit and intent Nzimande clearly does not
respect," Mbeki said. Nzimande said Mbeki was not necessarily articulating
an ANC position. "We don't believe that the ANC as a whole shares an
approach that tends to alienate the alliance partners," he said. ANC
spokesman Smuts Ngon-yama denied that Mbeki's remarks were an attack on Nzimande:
"It's a frank, open discussion that the ANC is having with its
allies."
Archbishop Tutu's Warning on South Africa
Archbishop Desmond Tutu, the respected clergyman, recently spoke with deep anger
and frustration about the state of things in South Africa. Because of his
credentials in the fight against apartheid as well as in the innovative
house-cleansing pain-soaked burden he carried as the Chairperson of the Truth
and Reconciliation Commission, his verdict must get the attention of all
Africans who care for building on the gains of the struggle for freedom and
democracy in that land. The rampant violence, rape, armed robberies, escalating
poverty and despondency that has gripped South Africa, however, does not come as
a surprise. It was all there in the womb of apartheid as a system of organised
official socio-economic crime. It is important to look at historically similar
experiences. One example is the case of ex-slaves in Brazil after legal
emancipation. The lifting of the terror of brutal labour formerly imposed on
Afro-Brazilian slaves was followed by mass refusals to sell their labour for any
form of wages. With angry former slave owners (who controlled political and
economic power) feeling bitter and vindictive, no social safety nets were
provided for ex-slaves who were thrown out en masse from farms as well as denied
unemployment benefits. Horrendous poverty, disease, squalor, slum housing, and
alcoholism became rampant among black ex-slaves. Similar conditions were also
seen in British Guyana and Haiti with the end of slavery. In Jamaica, Cuba and
other slave economies in South and North America, the continued monopolisation
of land by former white owners and absentee landlords turned poverty into a
permanent hell. The former slave owners would turn around to blame the poverty
on the laziness of victims of landlessness. Alcoholism, lack of self-respect,
anger displaced into violence against women and fellow blacks have been a
permanent feature of African-American society. South Africa presented a
peculiarly hate-filled variant of slave society. The writer Bessie Hess called
it a "loveless country" where "the oppressed groups (were)
hounded day in and day out, their homes broken up, their movements
restricted". Every white face, she said, put oppressed groups (the
so-called "Coloureds", "Bantu" and "Indo-Malays")
under "unceasing torment of hate, hate, hate". The African National
Congress and the South African Communist Party would put emphasis on the
incredible quantum of labour extracted from able-bodied black men for long hours
in unsafe mines underground and on white-owned farms. In 1976, this white
Afrikaner power gave the world a glimpse of its barbarism by gunning down black
children in the streets as television cameras captured the tragic drama.
Beatings of protesting black people against oppression had been routine long
before 1948 when apartheid was officially instituted by the Nationalist Party. A
document attributed to President Pik Botha in 1985 exhorted Afrikaner scientists
to invent genetic weapons for ensuring the sterilisation of black women and men;
as well as racially selective virus-based diseases. In short, it was a system
that was intensely immoral and ungodly. The challenge which these social
histories present to Archbishop Desmond Tutu and other post-apartheid social
engineers is the imperative of finding the measures for healing mental wounds
and cultural monsters bred by these conditions. This is a challenge which the
Liberation Committee of the Organisation of African Unity, OAU, never created
capacity for studying and devising strategies for confronting. The African
academia failed to heed the warning set out by Franz Fanon with rare brilliance,
revolutionary anger and passion in his works "The Wretched of the
Earth" and "Black Skins, White Masks." The African National
Congress, the Front for the Liberation of Mozambique, the South West Africa
Peoples Organisation, and the Movement for the Liberation of Angola - as
liberation movements which fought long wars for liberation - all failed to
develop tools for confronting these problems. President Mandela touched its
surface with the Truth and Reconciliation. The conflicts in Southern Sudan,
Darfur, Sierra Leone and Liberia, which have vital racial and ethnic elements,
clearly indicate that this is a challenge which NEPAD must incorporate in its
programme of building good governance all across Africa. Archbishop Tutu's
recent outburst is a timely call for the urgent need to return to the one
unfinished business which Fanon drew attention to but did not live long enough
to continue working on in post-colonial and post-apartheid Africa. That is the
focus by politicians and freedom fighters on economic and political power, while
ignoring mental liberation all across the African continent.
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AGRICULTURE
Social Challenges Holding South Africa Back
The scourges of crime, HIV/AIDS and corruption mask the remarkable political,
economic and social achievements in SA over the past 12 years, leading trend
analyst JP Landman told the annual Agri Outlook conference in Pretoria October
26. "There is more to life than crime, AIDS and Zimbabwe," Landman
told the gathering of agribusiness, farmers and farmers' organisations.
Organised agriculture has blamed these issues and fears of a Zimbabwe-style land
grab for constraining growth in the farm sector. Landman, however, pointed out
how the downward trend in the economy had been turned around since the
democratic elections in 1994. Landman referred to an Old Mutual scenario study
published in 1992 that said three challenges had to be overcome for SA to become
a modern state: the extension of political rights to citizens (the easiest);
getting the economy going (more difficult); and effecting social development
(the most difficult). Democracy and sustainable economic growth had been
achieved, as well as a degree of social development, Landman said. Since the
inauguration of former president Nelson Mandela, the economy had accelerated
from its 1% growth in gross domestic product (GDP) during the gold boom in the
1980s, to 2,5% during Mandela's term, 3% at the turn of the century and to
4%-4,5% today. If the contractions in mining and agriculture were factored out,
GDP growth would be closer to 7%, he said. Landman expected GDP growth to hit an
average of 5% by 2010. Such growth was sustainable because of the simultaneous
increase in national wealth and slowing population growth, which was at 0,9%
last year and was forecast to be 0,3% in 2010.
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AUTOMOBILES
Car Makers Plan to Grow SA's Exports
South African vehicle manufacturers are accelerating their export programmes.
The South African motor vehicle industry is well on course for record-breaking
growth, with an expected 40% increase on last year's exports. A National
Association of Automobile Manufacturers of SA (NAAMSA) representative, who
prefers not to be named, says the body this year expects exports of passenger
cars and light commercial vehicles to reach 196000 units, up from last year's
139 912 units. Naamsa figures for the first quarter show that new vehicle
exports soared by almost 58% compared with the same period last year. The
projected 40% increase for the year as a whole remains more modest than the 50%
Naamsa predicted in May at the release of its quarterly review. In the report
Naamsa said exports would increase from 139 912 units to 210 400 units. But with
local vehicle manufacturers sitting on export programmes worth billions of rands,
indications are that, while foreign sales may miss the initial target, they are
unlikely to lose momentum during the remainder of the year. Toyota recently
announced plans to increase production from 600 units a day to almost 1 000 a
day within the next two years. Half of this production is for export, CEO Johann
van Zyl says. Toyota exports Hilux and Fortuner bakkies to European and other
African countries. Van Zyl says the company wants to produce 220 000 units a
year over the next three years. Toyota executive vice-president Tokuichi
Uranishi says the company has chosen SA for the Hilux export programme because
of the benefits of the Motor Industry Development Programme (MIDP) and the free
trade agreement with the European Union (EU). Ford Southern Africa said earlier
this year that it would increase production to supply its growing Ford Focus
export programme. Ford spokesman Ben Pillay says the company has doubled Ford
Focus exports to Australia to more than 2000 units a month. The company had to
stop local production of Volvo to accommodate Focus production. General Motors
SA (GMSA) intends making SA its main export base for the Hummer H3 vehicles,
which the company is to start producing later this month. GMSA has a $3bn
contract to assemble the third generation Hummer for export to Europe, Asia
Pacific, the rest of Africa and the Middle East. Volkswagen SA (VWSA) recently
announced plans to introduce bus and truck products to its range over the next
two years. The company says the bus and truck division will provide a platform
for planned truck exports to right-hand markets in the rest of Africa and south
east Asia. The mooted trucks export initiative is in addition to VWSA's existing
R25bn programme to export the Golf5's to countries such as Japan, Australia, New
Zealand, Brunei, Singapore, Sri Lanka, Hong Kong, Indonesia and Malaysia. VWSA
MD Andreas Tostmann says the company is capable of growing its presence in the
light, medium and heavy commercial vehicle markets to further expand its export
business. The Naamsa representative says the weakening rand is also expected to
boost SA's vehicle exports for the remainder of the year and well into the new
year. This should have a knock-on effect on component manufacturers' exports.
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AVIATION
SAA May Sell Off Equity Stake to Private Partner
In a surprise move, South African Airways (SAA) said October 18 it was
considering selling an equity stake in a private offering next year after
finalising a R3,2bn-R4bn re-capitalisation programme. This will be the second
time the national airline makes a foray into the world of privatisation. In 1999
government sold a 20% stake of SAA, then under CE Coleman Andrews, to Swissair
Group for R1,4bn, but bought it back two years later for R383m when Swissair
went bankrupt. SAA CEO Khaya Ngqula said in an interview in Parliament that SAA
wanted to bring in outside investors prepared to assess and take the risk of an
investment in the state-owned company. "This is very important,"
Ngqula said, adding that market enthusiasm for SAA, especially among foreigners,
was strong. SAA chief financial officer Gareth Griffiths explained that a
minority equity partner would bring critical management and commercial
disciplines into the organisation and set a new standard for shareholder
discipline. "It would change the ball game completely," Griffiths
said, not least in the sense that SAA would become self-funded and would not
have to rely on government hand-outs. The sale of an equity stake would also
bring in funds to pay off debt raised during the re-capitalisation exercise.
"Government will not be putting new money into SAA. It will all be coming
from the markets," Ngqula said. Ngqula said an equity sale was under
discussion with the public enterprises department but would not happen before
June next year. The decision to go ahead with it would depend on market
conditions in the airline industry at the time and the level of the oil price.
Ngqula stressed that government would remain the major shareholder and that SAA
would definitely not seek a listing on the JSE, saying, "I would love to go
on to the JSE but our shareholder is not ready for this yet". The need to
raise R3,2bn- R4bn in capital related to SAA's need for cash to repay debt, buy
two new wide-body aircraft and position the airline for future growth and
expansion. The re-capitalisation, which will take place this financial year,
would also help mitigate currency risks and allow the airline to repay
dollar-denominated loan finance, Griffiths said in a briefing to the public
enterprises committee on SAA's latest annual report. Ngqula said public
enterprises had agreed with the fund-raising programme, which now simply awaited
approval from national treasury. He hoped government would guarantee 50% of the
capital raised. SAA's very high debt equity ratio of about 90:40 had to be
brought down to about 60:40. In addition, the SAA board was also scheduled to
approve the disposal of the airline's noncore assets at its next board meeting.
SAA's capital and reserves were sharply reduced to R1,2bn from R2,7bn in the
past financial year as it had to pay back R1,6bn to Transnet. Transnet sold SAA
to government in March this year at the R2bn book value.
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BLACK ECONOMIC EMPOWERMENT
AngloGold Ashanti Increases Empowerment Shareholding
Gold miner AngloGold Ashanti has increased its black empowerment shareholding to
26% by relinquishing the equivalent of 2,6% of its shares to employees and a
black consortium. The value of 2,6% of AngloGold Ashanti was R2,1bn October 2,
but it includes a new class of shares, some of which will only vest in the
future, which makes it impossible to value them now. It introduces 6% black
shareholding in AngloGold's South African production in addition to the 20% of
"credits" it received for selling a number of gold assets to African
Rainbow Minerals between 1998 and 2002. The deal means the miner has reached the
minimum black shareholding required by the mining charter, which stipulates that
companies should have at least 26% black equity by 2014. Under the Minerals and
Petroleum Resources Development Act and associated mining charter, South African
mining companies are required to have 15% black equity by 2009 and 26% by 2014
to convert mining rights granted under the old legal regime into "new
order" rights. AngloGold Ashanti was the first South African gold miner to
achieve conversion of all its "old order" rights to "new
order" rights last year. AngloGold CE Bobby Godsell (pictured) said at a
presentation yesterday that the company had made a commitment to the minerals
and energy department to introduce an employee share scheme but that was not the
primary reason for doing so. It was to make AngloGold a "thoroughly new
South African company". Investec Securities analyst Leon Esterhuizen said
it was a cost-effective deal for AngloGold Ashanti but it was a pity it had not
been done earlier, before the recent weakening of the rand. South African miners
benefit from the weakening of the rand against the dollar, as long as the gold
price remains stable, as their costs are denominated in rand while they earn
income in dollars. AngloGold Ashanti has signed deals with the main mining
unions - the National Union of Mineworkers, Solidarity, the United Association
of SA -- as well as black empowerment company Izingwe Holdings, which is headed
by Sipho Pityana, a former director-general of labour and later of foreign
affairs. AngloGold Ashanti's 30000 South African employees, 91,5% of whom fall
within the definition of "historically disadvantaged South Africans"
in the mining charter, will each be given 30 free AngloGold Ashanti ordinary
shares and 90 "loan shares", which vest over a five-year period. These
will be held in a trust, the Bokamoso Employee Share Ownership Plan. Both free
and loan shares will have full voting rights and participation in the dividend.
Another 1,4-million AngloGold Ashanti loan shares, or 0,5% of the company, will
be issued to Izingwe Holdings, also with full voting and dividend rights.
Izingwe and the unions are concluding a co-operation deal that will see Izingwe
act as a channel of communication between the trust and AngloGold Ashanti's
board. Izingwe is an empowerment investment company. Its other interests are in
technology and financial services. It said the partnership with AngloGold
Ashanti would be a springboard for jointly pursuing other opportunities. The
deal should be implemented by year-end.
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ENERGY
British Firm Shores Up South African Power Supply
British electricity company Independent Power Southern Africa (Ipsa) says it
will spend $750m building two new power stations in Eastern Cape to help ease
SA's rapidly developing energy crisis. It is expected that the entrance of
private power producers into the domestic market will not only ensure that SA
continues to enjoy low electricity prices but that it will also provide the
country with security of power supply. Power utility Eskom, which supplies 95%
of SA's electricity needs, said recently that its excess peaking capacity of
36000MW was projected to run out next year, and that an additional 2000MW would
have to be generated each year over the next 20 years. Ipsa said October 19 its
planned projects entailed the construction of a 1600MW combined cycle gas
turbine at the Coega Industrial Development Zone in Port Elizabeth and a 400MW
clean technology power station at Elitheni in East London. Speaking at the
listing of Ipsa on the JSE's AltX market, CEO Peter Earl said the company had
already signed preliminary agreements with government and would begin with the
construction as soon as environmental impact assessment studies had been
completed. The Coega project would be operational by the first quarter of 2008
while the Elitheni project would be up and running by 2009. Earl said the
proposed projects would be in addition to the 73MW gas-fired plant it was
building in Newcastle, KwaZulu-Natal. The first phase of the Newcastle project,
which would produce 18MW of energy, would be operational in December. In terms
of government's revised policy, Eskom will be responsible for the production of
70% of new generating capacity while the private sector will supply the
remainder. Initially, government wanted the private sector to play a leading
role in building new generating capacity. The minerals and energy department
said all new power producers would sell electricity to Eskom for an initial
period of 15 years. Eskom's short- and long-term power generating plans include
building two new open-cycle gas turbines in Western Cape before next winter.
They would produce 1022MW. Other projects are the construction of a 1332MW
pumped storage station in the Drakensberg at a cost of R9bn and the installation
of a new R6bn transmission line from Standerton to Cape Town. Also included is
bringing back to service the Camden, Komati and Grootvlei power stations at a
cost of R12bn. Ipsa said it was also in talks with OAO Sual Group over supplying
electricity for an aluminium smelter on the country's southeast coast. Ipsa has
assured the Moscow-based Sual that it could guarantee electricity supply should
it build a smelter at the port of Coega, Earl said. "We've had discussions
to give them comfort that there will be power. For that sort of investment, they
need uninterruptible power," Earl said. Sual may build an aluminium smelter
in SA should Alcan scrap a similar plan, according to Sual's billionaire owner,
Viktor Vekselberg.
U.S. Backs SA's Pebble Bed Venture
South Africa's Pebble Bed Modular Reactor Company (PBMR) received a shot in the
arm when it was announced the US Department of Energy (DOE) would pump
$8-million into a partnership, involving PBMR shareholder Westinghouse, to carry
out engineering studies and develop a pre-conceptual design for mini nuclear
reactors in the US. The investment in development of what is believed will be
the next-generation nuclear plant is a vote of confidence in the technology and
the first revenue flow into the South African government-owned PBMR.
"Should we meet the expectations [in the US] it could lead to a long-term
involvement and substantial funding from the DOE," said Tom Ferreira, a
spokesman for PBMR. Government holds 85% of PBMR, directly and indirectly,
through Eskom and the Industrial Development Corporation. Westinghouse
Electricity, a US company, holds the remaining stake. Interest in nuclear energy
as a potential alternative power source is at its highest level globally since
the 1980s, and Eskom has already said it is looking at development of a another
nuclear plant in SA. This is in pre-feasibility stage, said Eskom CEO Thulani
Gcabashe. Eskom already operates the Koeberg power station in the Western Cape.
Alec Erwin, Minister of Public Enterprises, said at a High Temperature Reactor (HTR)
conference in Johannesburg that the government planned to invest hundreds of
millions of dollars in the pebble bed technology if the pilot plant planned for
SA is successful. Government would back a plan for development of 20 to 30
pebble bed modular reactors in SA, with the first potentially being linked to
the electricity grid by 2013 at the earliest. PBMR may look for more partners.
Erwin said: "South Africa very obviously needs partners like Areva [a
French company which is the world's largest maker of nuclear reactors] and
Westinghouse. "We have been in discussions with Areva and other companies.
The government is committed to putting significant funds into the development to
forge a partnership with the major players." In addition to producing
electricity, the next-generation nuclear plant can be designed to produce
hydrogen -- a further alternative fuel source. At the same conference, Jeffery S
Merrifield of the US Nuclear Energy Regulator said there could be a perception
among some people in the US that hydrogen, which is highly volatile, should not
be produced next to nuclear reactors. "They [the public] will think back to
the Hindenberg [disaster] in 1937," said Merrifield. The Hindenburg was a
German airship, powered by hydrogen, that exploded on docking in New Jersey. He
said he recognised technology had moved on, but believed questions would be
asked about the safety of having hydrogen and nuclear power produced side by
side. Asked if government was confident the development of atomic plants in SA
would be thoroughly monitored, Erwin said there was no danger of SA becoming
swept up irresponsibly in the renewed international enthusiasm for nuclear power
generation. "We benchmark against the US and Europe. We have detailed
processes and experienced practitioners processing environmental and operating
licences," he said.SA is not a stranger to nuclear technology and has
expertise and experience, he said, and emphasised the importance of dispelling
many of the myths surrounding nuclear power. At the conference, Erwin reiterated
the government's backing for nuclear technology for peaceful purposes. "As
South Africa's economy grows we need more energy and to reduce coal-fired power
generation ... We are major producers of uranium and it makes sense to move
towards nuclear technology," Erwin said. Coal-fired power plants have come
in for much criticism in recent times because of their high carbon emission
levels. But Gcabashe said: "We are a developing economy and we cannot
ignore something we have in abundance." Coal-fired power stations generate
about 90% of SA's electricity supply. If Eskom significantly cuts its power
generation from coal plants SA could lose the competitive advantage it has
through its low electricity prices. SA's electricity prices are the lowest in
the world, but the big question is whether they will remain cheap enough to
attract foreign investment given the country's distance from global markets.
Gcabashe said electricity prices are 30% lower than the next cheapest producer
in the world. Although prices will have to rise to help fund Eskom's R97-billion
expansion, in which the company will add 47252 megawatts of capacity between
2005 and 2025, Gcabashe is confident SA will hold its competitive edge on
electricity prices.
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FOOD AND DRINK
SABMiller Takes Colombian Bavaria Plans Offer to Ecuadorian Minorities
Global brewer SABMiller plans to make simultaneous tender offers for the
remaining shares held by minorities in its three Ecuadorian subsidiaries. The
group said it would offer about $88m, or $36,25 cash a share, to minority
shareholders at Compania de Cervezas Nacionales, Cerveceria Andina and unlisted
Ecuadorian subsidiary Agrilsa Agricola e Industrial. SABMiller planned to merge
the operations of Compania de Cervezas Nacionales and Cerveceria Andina,
Ecuador's largest and second-largest brewing businesses respectively, into one
integrated business. SABMiller South America president Barry Smith said although
the process depended on the outcome of the offers it would allow the group to
move closer to integrating the two businesses in Ecuador into a single company.
Both companies produce SABMiller's full portfolio of Ecuadorian beers, including
Pilsner, the country's leading lager. SABMiller owns an effective economic
interest of 92,06% in CCN, 72,34% in Andina and 92,19% in Agrilsa. Dow Jones
reported October 16 that SABMiller increased its stake in Colombian subsidiary
Bavaria. After a tender offer for shares, it bought an additional 0,21% in the
company for $9,9m, bringing its total stake to 97,99%. The brewer had expressed
its preference to delist Bavaria from the Colombian stock exchange once it held
a large enough majority. SABMiller has South American brewing operations in
Colombia, Peru, Ecuador and Panama, which continue to benefit from good economic
growth in the region. Lager sales in the region rose 11% for the first half to
September. The region is part of SABMiller's emerging-market portfolio, which
includes eastern and central Europe and Asia.
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HIV/AIDS
Mbeki's New HIV/Aids Focus is Applauded
President Mbeki's move to repackage SA's fight against HIV/AIDS seems to be
paying off. Mbeki has earned himself a breather from calls to sack his bungling
health minister by placing Deputy President Phumzile-Mlambo Ngcuka in charge of
managing the pandemic. Mbeki and his health minister Manto Tshabalala-Msimang
have become objects of ridicule both here and abroad for their unorthodox and
often denialist views on HIV/AIDS. In contrast Mlambo-Ngcuka received rapturous
applause at a stakeholder conference October 27 in Johannesburg when she said
that the bickering between role players had set the country back in its fight
against the disease. Government's new anti-AIDS drive is also beginning to win
international recognition. On Friday a report in the US-based Washington Post
hailed what it called SA's "dramatic shift on AIDS". "The
beetroot and all that lemon stuff is out the window. These guys are now serious
about getting it right," an adviser involved in recasting government's
policy told the influential daily. He was referring to Tshabalala-Msimang's
much-ridiculed obsession with vegetables as a method to manage the disease.
Organisers of this weekend's conference said the minister, who was discharged
from hospital on Friday after suffering from a lung ailment, was not invited to
the conference to ensure unity and no controversy. In September, after a United
Nations AIDS conference where Stephen Lewis, the UN special envoy for AIDS in
Africa, accused the South African government of expounding HIV/AIDS theories
"more worthy of a lunatic fringe than a concerned and compassionate
state". The attack, aided by internal pressure from labour and civic groups
prompted Mbeki to announce a shake-up which sidelined Tshabalala-Msimang and
established an inter-ministerial committee to oversee the implementation of the
comprehensive plan against HIV/AIDS. The plan included reviving the South
African National AIDS Council (Sanac), now headed by Mlambo-Ngcuka.
Civil Society Coalition Announces New HIV/Aids Action Plan
A coalition of South African civil society organisations on revealed their
response to the South African government's calls for greater unity in the fight
against HIV and AIDS October 3. The Treatment Action Campaign (TAC), a national
AIDS lobby group, has joined forces with other civil society organisations,
including the South African National NGO Coalition (SANGOCO), the South African
Council of Churches, the AIDS Consortium and the Congress of South African Trade
Unions (COSATU), to launch "an action plan to save lives." According
to a coalition statement, the first phase will be a two-day conference on South
Africa's HIV crisis to achieve "national consensus on targets and
programmes for HIV prevention and treatment, care and support, as well as on the
restructuring of the National AIDS Council (SANAC), and to present this
consensus statement to the government." South African Deputy President
Phumzile Mlambo-Ngcuka called for a "new spirit" between government
and non-governmental organisations (NGOs) in the fight against HIV/AIDS at a
COSATU conference in September, after widespread criticism that SANAC has been
ineffective and unrepresentative. The government has been considering how to
restructure its national AIDS body to include greater input from other sectors,
and Mlambo-Ngcuka, chair of a new inter-ministerial committee on HIV/AIDS,
described the involvement of NGOs in the government's efforts against AIDS as
critical. Prominent AIDS activist Zachie Achmat, of the TAC, said the
coalition's role was to help create clear targets for reducing the numbers of
AIDS-linked deaths and preventing new infections. "We're ready to work with
government, but we have to get on with the job if government is taking too
long," he said. According to Zanele Twala, executive director of SANGOCO,
"It's time that civil society organisations stand up and put their weight
behind the struggle against this pandemic and make our voices heard. We need to
collaborate and come up with a national action plan that is owned by all of us
and supported by all of us." Referring to a long history of tensions
between South Africa's health minister, Manto Tshabalala-Msimang, and AIDS
activists, Hassen Lorgat, also of SANGOCO, emphasised that the coalition's goal
was "to put a line under the squabbles" and focus on drawing up a
comprehensive plan to deal with the pandemic.
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FOREIGN AFFAIRS
New Framework to Guide UN Developments Operations in South Africa
Government and the United Nations Development Programme (UNDP) have signed a new
framework to inform UN operations in the country for the next four years. The
Deputy Minister of Foreign Affairs Sue van der Merwe and the UN Resident Co-ordinator
Scholastica Sylvan Kimaryo signed the UN Development Assistance Framework (UNDAF)
at the Diplomatic Guesthouse October 24. The UNDAF is based on a common
understanding of how the strengths of the UN system in the country can best be
harnessed to add value to the government's plan of action in pursuit of its
objectives and priorities. It is thus hoped that the UNDAF will assist the
government in achieving its main objective of improving the quality of life for
all. The UNDAF supports amongst others first and second economy interventions
around the Accelerated and Shared Growth Initiative for South Africa (AsgiSA),
spatial development, local economic development and land reform. It also
supports the optimisation of service delivery across all sectors; capacity
development; strengthening local government and resource mobilisation. Expected
outcomes post the period 2007-2010 include the achievement of a strong
democracy; support to government and its partners to accelerate economic growth
and development; the strengthening of government's efforts to promote justice,
peace, safety and security. The UNDAF also seeks to achieve the intensification
of poverty eradication interventions as well as strengthened South African and
sub-regional institutions to consolidate the African agenda, promote global
governance and South-South co-operation. The signing took place on the 61st
commemoration of United Nations Day.
South Africa Grateful for UN Support for Refugee Programme
South Africa has expressed appreciation for the role played by the United
Nations High Commission for Refugees (UNHCR) regarding the implementation of the
country's refugee backlog project. "We are grateful for the support
received from UNHCR ... in particular their assistance in the implementation of
our backlog project," Home Affairs Minister Nosiviwe Mapisa-Nqakula said
while addressing the 57th session of the UNHCR executive committee in Geneva,
Switzerland, October 4. The UNHCR, a United Nations refugee agency, helped train
new home affairs staff last year in preparation of the launch of the refugee
backlog project, which took place in June this year. The UNHCR also monitored
the processing of asylum applications, which the refugee backlog project aims to
fast track. Temporary offices were set up in Cape Town, Durban, Port Elizabeth,
Johannesburg and Pretoria to process applications received in the time between
the promulgation of the Refugee Act of 1998 and July 2005. By April the backlog
stood at just over 100 000, said the department. Ms Mapisa-Nqakula indicated
that South Africa "notes with concern" that financial constraints and
the adoption of strict immigration measures had limited the UNHCR's activities
in Africa. "We call for greater spending in Africa, as befits the
continuing need. For instance, Burundi has stabilized and after elections in the
DRC, it is expected that there will be an even greater possibility for Congolese
return," she said. The minister told the session that South Africa
continued to integrate refugees and asylum seekers by giving then enabling
documents to access employment, education and health benefits including
treatment for HIV and AIDS. "South Africa is committed to the eradication
of all forms of discrimination and racial hatred and we are involved in
programmes to educate the public regarding rights of refugees," she said.
The Office of the UNHCR was established in 1950 by the United Nations General
Assembly. According to the agency's website, it is mandated to lead and
co-ordinate international action to protect refugees and resolve refugee
problems worldwide. The agency strives to ensure that everyone can exercise the
right to seek asylum and find safe refuge in another state, with the option to
return home voluntarily, integrate locally or to resettle in a third country. In
more than five decades, the UNHCR has helped an estimated 50 million people
restart their lives. It has staff of around 6 540 people in 116 countries
worldwide, who continue to help 19.2 million people.
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FOREIGN TRADE
South-South Ties Boost Africa's Development
The World Bank says a recent, massive increase in African trade and investment
by Asia's two emerging economic giants, China and India, holds great potential
for growth and job creation in Africa, if significant asymmetries within the
regions' relationships are resolved. A study, themed Africa's Silk Road: China
and India's New Economic Frontier, released by the bank in September,
recommended an array of trade and investment reforms within and between both
regions to deepen the growing South-South ties and address imbalances that could
prevent African economies benefiting from the increasingly important roles China
and India play in the global economy. Based on new evidence on the operations of
Chinese and Indian businesses in Africa, the study finds Asia now receives 27%
of Africa's exports, triple the amount in 1990 - the level is almost on par with
Africa's exports to the US and European Union (EU), Africa's traditional trading
partners. Meanwhile, Asian exports to Africa are growing 18% a year, faster than
to any other region in the world. China and India's foreign direct investments
in Africa are more modest than trade flows, but they are also growing very
rapidly, the study shows. "This new 'Silk Road' potentially presents to
Sub-Saharan Africa -- home to 300-million of the globe's poorest people and the
world's most formidable development challenge -- a significant and, to date,
rare opportunity to hasten its international integration and growth," said
Harry G Broadman, World Bank Africa Region Economic Advisor and author of the
study. This new economic frontier extends beyond trade and investment in natural
resources, according to new data presented in the study. China and India's
commerce with Africa is opening up the way for the Sub-Saharan continent to
become a processor of commodities and a competitive supplier of labour-
intensive goods and services to Chinese and Indian firms and consumers -- a
major departure from Africa's long established economic relations with the
North. Moreover, a growing number of Chinese and Indian businesses active in
Africa are operating on a global scale, working with world class-technologies,
producing products and services according to the most demanding standards, and
fostering the integration of African businesses into advanced markets. Still,
there is a significant unevenness in the emerging commercial relationships
between the two continents. African exports to Asia constitute only 1,6% of what
Asians buy from the rest of the world, and China and India's African purchases
total only 13% of Africa's total exports. Africa accounts for only 1,8% of the
world's foreign direct investment flows, while 20% of the world's foreign direct
investment goes to East Asia. "It is imperative that both sides of this
promising South-South economic relationship address asymmetries and obstacles to
its continued expansion through reforms," Broadman said. "This is not
only in the best interests of Africa's economic development, but in China and
India's own economic fortunes." The study details a series of reforms that
should be undertaken by all the countries:
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FOREIGN ECONOMIC RELATIONS
South Africa Must Learn From China's Job And Skills Creation
South Africa must learn from China's experiences in skills development and
employment creation, if it wished to make the most of the world's economy,
Labour Minister Membathisi Mdladlana said Ocotber 9. Mr Mdladlana said he was
impressed by China's economic progress and that if South Africa wished to be
"a player" in the global economy, "we must use the experiences of
China." The minister was speaking in Cape Town after signing a memorandum
of understanding on job creation with Zhang Xiaojian, the Vice Minister of
Labour and Social Security in the People's Republic of China (PRC). "I
believe that South Africa can learn a lot in that process," the minister
told BuaNews. Mr Mdladlana said the MoU on Co-operation in the Fields of Human
Resource Development and Employment Creation would mean that "we rearrange
ourselves" in South Africa regarding human resource development and skills
development. In order to meet the Millennium Development Goal of halving
unemployment by 2014, "we must make sure we develop the skills of our
people fairly quickly" and for this, the MoU signed with China "makes
business sense," the Labour Minister said. To meet this goal, South Africa
needs to create more than the 500 000 jobs it has created over the past year, he
said. "We want to halve unemployment by 2014 - that's our goal," said
Mr Mdladlana. Mr Zhang said the MoU would result in "practical
co-operation" that would benefit both countries. For its part, China is
looking to create no less than 10 million jobs a year, said the Chinese vice
minister for Labour and Social Security, adding that the foreign investment
pouring into China had helped to solve "certain employment issues".
This investment, however, depends on the skills and qualifications of the
workers themselves, said Mr Zhang, saying this was why the Chinese government
paid "a lot of attention to skills development and vocational
training." He added that the Chinese government emphasised that Chinese
companies must "run their businesses legally and with integrity and
honesty." Mr Zhang said his ministry had studied the employment experiences
of many countries and had combined these experiences with China's own policies
to implement active employment policies. He added that his delegation also
wished to take back to China, lessons learned in South Africa. Mr Zhang had
brought officials with him who had particular experience in certain aspects of
job creation, such opportunities in the tourism industry and in "practical
agriculture technologies." South Africa's engagement with China through the
MoU "will mainly be learning the experiences of the Chinese people - how
they managed to participate in this tough global economy, to make themselves to
be in the top five, as we speak today, being a developing country". The
Chinese visitors and the Labour Department's top officials will visit several
skills training projects in the Western Cape and Gauteng in between meetings
where they are expected to exchange expertise and ideas on enhancing skills
development.
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INTERNATIONAL ECONOMIC RELATIONS
Pact to Boost South Africa's Trade With South Korea
Business Unity SA (Busa) and the Korea International Trade Association (Kita)
signed an agreement of co-operation for promotion of trade and business between
SA and South Korea October 25. The move is likely to boost trade between the two
countries. SA is currently concluding import protocols with South Korea to ease
access to that market for local products such as beef, mutton, chicken, pork,
ostrich, chicken, fresh flowers, fruit and vegetables. The SA-South Korea
economic co-operation committee had its inaugural meeting in Johannesburg the
same day. South Korea is SA's fourth-biggest trading partner in Asia, while SA
is Korea's biggest trading partner in Africa. SA's imports from South Korea rose
from $998m in 2004 to about $1,4bn last year while SA's exports to South Korea
increased from $697m to $836m. SA's first-quarter exports to South Korea
amounted to R13,1m, and this was expected to more than double in a year, says
the CEO of Inveritas Global Holdings, Pieter Strydom. SA's exports to South
Korea include bulk raw materials and semiprocessed minerals and metals. Korean
manufactured exports to SA include automotive, fabric, apparel, plastic, wood
and consumer electronic goods. Well-known Korean brands include Hyundai,
Samsung, Daewoo and Ssangyong. Strydom said trade between the countries was
complementary, with a range of products, minerals and semifinished products to
sophisticated hi-tech electric and electronic products. "The success of the
2002 World Cup and of Korean companies such as Samsung, LG and Hyundai means
that Korea is now better known in SA than before," Busa president and
businessman Patrice Motsepe said. Kita is a trade promotion body representing
more than 66000 companies in Korea. "The partnership between Busa and Kita
is a very important step in building a sustainable and productive partnership
between the two countries," Kita director Wang-Kyu Lee said yesterday.
Motsepe said SA was eager to learn from Korea's experiences during the 2002
Soccer World Cup. Don-hoo Moon, who is a former general secretary of the 2002
Fifa World Cup organising committee, was also at the inaugural meeting. Moon is
the general secretary of the World Taekwondo Federation, the international body
governing the sport of taekwondo.
South Africa and Mexico Agree On Social Development
Social Development Minister Zola Skweyiya signed a co-operation agreement with
his Mexican counterpart Ana Orozco, October 30. The bilateral agreement
formalised co-operation between the two countries in areas such as the
implementation and continuance of strategies to overcome poverty and inequality
in the two countries. It would also ensure the achievement, monitoring,
continuance and evaluation of programmes with the aim of eradicating extreme
poverty. The agreement is further expected to look at the institutional
organisation for the accomplishment of a strategy to reduce poverty and measure
inequality. Departmental spokesperson Lakela Kaunda said the two countries would
develop action plans based on their national priorities to implement the
agreement. Dr Skweyiya had earlier attended the annual meeting of the
Inter-American Conference on Social Security. The conference focused on among
others, the impact of globalisation of economic activities on social security
systems, globalisation and social security, preventive care for older adults and
migration.
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LAND REDISTRIBUTION
Walking the Tightrope of Land Reform
South Africa is caught between a rock and a hard place. It must address the
growing hunger for land on the part of black people and, at the same time, avoid
going the route of Zimbabwe. Land reform in this neighbouring state, meant to
address colonial injustice, has ended up undermining the economy. Zimbabwe's
land reform has involved the seizure of property from thousands of white
commercial farmers, starting in 2000. But South African officials have dismissed
perceptions that the difficulties surrounding land reform - which aims to
rectify the wrongs of apartheid - will scare off foreign investors. In September
Lulu Xingwana, minister for agriculture and land affairs, warned that the
government would start expropriating white-owned farms by February 2007. She
gave six months for negotiations concerning the transfer of property, and said
if commercial farmers resisted this, government would have no choice but to go
ahead with expropriation. The government wants to complete restitution by 2008.
White farmers also believe that a spate of murders on farms is aimed at driving
them off their land. "An average of two farmers and their workers are
killed every week. Some 2,400 murders of farmers (and) their black workers have
taken place since 1996. A third of those murdered are black workers,"
Jordan said. Police say the murders are criminal in nature, and not directed at
farmers. But Jordan disagrees: "We have experience that when there's a
claim on a farm then the level of murders goes up. They kill and don't take
anything from the farm. From our point of view, it's an attack directed at white
farmers and their workers to force them off land." Where white and black
farmers co-operate, there seem to be some success stories.
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MANUFACTURING
Manufacturing Production Increases
Manufacturing production increased 4.6 percent in the first eight months of
2006, compared to 3.2 percent during the same period last year. Statistics South
Africa reported October 11 that higher production levels were reported by nine
of the ten manufacturing divisions. "In addition, the estimated seasonally
adjusted manufacturing production for the three months ended August 2006
increased by 2.2 percent compared with the previous three months, which is
higher than the growth of 0.7 percent reported during the same period in
2005," Stats SA said. Higher production levels were also reported by nine
of the ten manufacturing divisions for the three months ended August 2006,
compared with the preceding three months after seasonal adjustment.
"However, during this period, low production by the petroleum industry, due
to maintenance of machinery, has limited the extent of growth in the
manufacturing industry results." The manufacturing division with the
largest contribution to the year on year increase between January to August 2005
and January to August 2006 was the motor vehicles, parts and accessories and
transport equipment division, contributing 1.4 percentage points. This was
followed by the 1.3 percentage points contribution made by the basic iron and
steel, non-ferrous metal products, metal products and machinery division. The
wood products, paper, publishing and printing division contributed 0.6 of a
percentage point.
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MINERALS AND METALS
Lead, Nickel Take the Shine From Gold
Both the rand and the dollar gold prices are stagnating at around their current
levels, but the demand for industrial resources continues at a brisk pace. Lead,
for example has gained 66% since mid-June and nickel almost 200% in the past 12
months. The chart shows that over the past 18 months, the basic minerals index
rose at much the same pace as the gold share index and is now outperforming it.
About 77% of Anglo's profit comes from industrial commodities including base and
ferrous metals and industrial minerals. Currently moving down from an overbought
level, but with a count to R397, Anglo is worth considering in its next dip. ARM
is heavily involved in nickel and ferrous metal and looking a little overbought,
but with a count to R86, it's worth a look. Also moving down from an overbought
position is BHP Billiton, whose last quarterly report tells of record production
in aluminium and manganese ore, and has a count to R177. Heavily involved in
coal, Metorex with a count to R16, is nudging at an overbought position and is
likely to move sideways. Take care in Palamin as it is at its R51 count, is
overbought and, while the longer-term outlook remains good, it may ease back in
the short term. Mainly involved in iron ore, Kumba is easing back from an
overbought position and might be watched for a buying opportunity. With the
search on for alternative energy, uranium share SXR is of particular interest.
SXR shot past its R70 count to a well-overbought level on news that workers at
Rio Tinto's Rossing plant are on strike, and another competitor, Cameco, is
suffering from flooding.
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MINING
Cabinet Approves Diamond, Minerals Bills
Cabinet has approved the second draft of the Mineral and Petroleum Resources
Royalty Bill which "significantly" reduces royalty rates in the mining
sector compared to an earlier draft of the bill. "The reduction of such
rates better takes into account the lifecycle of many of the mining operations
in South Africa," said a statement released by the National Treasury
following a post-Cabinet briefing October 11. The second draft reduces royalty
rates for refined platinum to 3 percent, while the royalty rate for refined gold
decreases to 1.5 per cent. Government spokesman Themba Maseko said traditional
communities who currently receive royalty payments from mining operators who
mine on their land would continue, under the Mineral and Petroleum Resources and
Development Act of 2002 (the MPRDA), to receive such royalties. This is
regardless of whether these royalties are paid with respect to "old
order" or "new order" mining rights. However, this raises
concerns from mining companies at the potential payment of double royalties.
According to Treasury, to address these concerns, "government will
encourage communities and mining companies to enter into negotiations to, where
appropriate, convert the financial interest of communities into equity stakes in
the operating companies." Such talks would require that "role-players
make some concessions in order to ensure lasting and sustainable
arrangements." According to the department, the new Royalty Bill that has
been approved for a second round of consultation prior to its tabling in
Parliament next year, "attempts to reconcile the objectives of the MPRDA
with the broader objectives of the mining sector." This includes the need
to stimulate investment in the sector and to provide certainty for potential
investors. Investors would "still get a decent return on the capital
required to sink a mine," said department's director-general Lesetja
Kganyago. In terms of the Diamond Export Levy Bill, also approved by Cabinet for
public comment and subsequent tabling in Parliament, "the focus here is on
encouraging beneficiation of the South African diamond", said Mr Kganyago.
This is seen as important to the creation of employment and skills that are
vital to the development of South Africa's economy. This Bill proposes a 5
percent export levy on rough diamonds, down from the 15 percent export levy as
provided for in the Diamonds Act of 1986. On top of this, the Bill provides for
"certain relief measures" that may offset the five percent levy
"in full or in part", according to the Treasury, but these measures
would apply only to producers and not to independent dealers, cutters or
polishers. A ministerial exemption from the five percent levy may, however, be
applied if a producer's activities are supportive of the local diamond
beneficiation industry or if the producer is a small miner who has an annual
turnover of less than R10 million and who has offered diamonds for sale at the
Diamond Exchange and Export Centre but received no takers. These conditions
preserve South Africa's "right of first refusal" regarding bidding on
rough diamonds intended for export. Two sets of levy payers are provided for
under this Bill, which is open for public comment until the end of this month,
following which it will be tabled in Parliament in November. It is applicable to
producers such as diamond miners including in-house dealers, and non-producers
such as independent dealers, cutters and polishers. Producers must register with
the South African Revenue Service (SARS) and pay export levies twice a year,
while non-producers must pay the full levy when exporting diamonds. The five
percent levy, says Treasury, is "low enough so as not to unduly encourage
[diamond] smuggling." Local beneficiation of mineral resources is also seen
as an important objective of the Mineral Resources Royalty Bill, with further
reduction in royalty rates applied to beneficiated or refined minerals. The
reduced rates for local beneficiation are significant: in the case of platinum
group metals, including palladium, rhodium, iridium, ruthenium and osmium, the
rates are halved, from 6 percent to 3 percent. However, metals in this group are
regarded as refined only if processed to at least 99.9 percent purity. The 50
percent reduction in royalty rates also applies to chrome, manganese, silicon,
vanadium, iron, cobalt, copper, nickel, lead, zinc, antimony and tin: from 4
percent to 2 percent. In the case of gold and silver, the royalties are also
reduced by half, from 3 percent to 1.5 percent, if local beneficiation takes
place, which in the case of gold would need to result in at least 99.5 percent
purity, and in the case of silver, a process resulting in silver metal or silver
nitrate.
Mining Production Increases
Total mining production for the three months ended August 2006, after seasonal
adjustment, increased by 2.6 percent compared with the previous three months.
The increase is higher than the -3.5 percent reported for the same period in
2005, said Statistics SA on key findings regarding mining production as at the
end of August 2006. Furthermore, the actual total mining production for the
three months ended August 2006 increased by 1.2 percent compared to the same
period last year. The report said the 2.6 percent increase in the seasonally
adjusted total mining production for the three months ended August 2006,
compared with the previous three months was due to a 3.5 percent increase of 3.5
percent in the production of non-gold minerals. The major contributors in the
total production of non-gold minerals were increases in the production of
Platinum Group Metals (PGMs), which include platinum; iridium; osmiridium;
palladium and rhodium. According to the report gold production increased by 0.6
percent for the period of August 2006 compared to August 2005. However, gold
production decreased by 2.5 percent after seasonal adjustments after three
months ended August 2006 compared with the previous three months. The seasonally
adjusted value of mineral sales at current prices for the three months ended
July 2006 reflected an increase of 16.1 percent compared with the previous three
months. Stats SA attributed this to an increase of 31.2 percent (+R2 278.2
million) in the sales of gold and 12.8 percent (+R4 347.9 million) in the sales
of non-gold minerals. Furthermore, the actual value of mineral sales at current
prices for the three months ended July 2006 increased by 31.6 percent compared
with the three months ended July 2005. Stats SA said total sales reached a high
of R17.7 billion for the month of July 2006 and it is the second consecutive
months that sales reached an excess of R17.0 billion in sales.
Chinese Take 30 Percent Stake in Ridge Mining
Chinese miner Zijin Mining will take a stake of up to 29,9% in London-listed
platinum miner Ridge Mining in the first high-profile investment by the Chinese
in SA's precious metals mining sector. Chinese investment in Africa's resources
has been edging upwards steadily in the past couple of years. Chinese Premier
Wen Jiabao visited SA and other countries in Africa in June and July with a
delegation of 79 Chinese businessmen looking for investment opportunities in a
range of industries, including mining. Ridge Mining is developing two platinum
projects on the eastern limb of the Bushveld complex. At Blue Ridge, property
financing is being secured and construction of the portal of the mine will begin
this month. At the nearby Sheba's Ridge property, which is a joint venture with
Anglo Platinum and the Industrial Development Corporation, a full feasibility
study is under way. Ridge said Zijin would pay £8,2m to acquire 16-million
shares at 45p a share and warrants to subscribe for up to 10-million additional
shares at 70p a share. Zijin's investment will provide a platform for future
collaboration and technical co-operation between the two companies to develop
future projects. "The investment in Ridge Mining is an important step in
our long-term strategic objective to increase our resources and production base
overseas," Zijin chairman Chen Jinghe said. "It also represents a
breakthrough for Zijin in the South African precious metals mining
industry." Ridge Mining CE Terence Wilkinson said the firm had been looking
for a "big brother" with finance and technical expertise to help
develop the open-cast Sheba's Ridge project, in particular. Zijin has experience
with open-cast gold mining and has been looking for metals and geographic
diversification. It had approached Ridge Mining and the two partners spent time
getting to know each other, Wilkinson said. Other Chinese investment in SA's
resources sector includes a joint venture between Sinosteel and Limpopo
Development Corporation in a ferrochrome plant, ASA Metals, and a substantial
stake held in chromite miner and processor International Ferro Metals by Chinese
state-owned steel producer Jisco. Elsewhere in Africa, Chinese firms have
secured rights to explore for uranium in Niger. In Zimbabwe, Chinese firms are
understood to have been granted a slew of mining rights in return for defence
hardware and loans. The country has also made a substantial loan to the Angolan
government in return for which it has received oil- drilling rights, and in
Sudan it has provided defence equipment in return for oil-drilling concessions.
Chinese investment in Zambian copper and coal mines has received some negative
press. At the Chinese-owned Chambishi copper mine, workers rioted earlier this
year because they said they were being underpaid and 46 people had been killed
at the mine in an accident at an explosives facility. In June, Zambian
authorities closed the Chinese-owned Collum Coal Mining because workers were
being sent underground without protective equipment.
Minister Expresses Concern Over Conditions in SA Mines
Minerals and Energy Minister Buyelwa Sonjica has expressed concern at
life-threatening conditions in the country's mines. This follows a tragic
accident at the Tau Tona mine of the AngloGold Ashanti in Carltonville in the
North West October 23. Seven workers were trapped by rocks after a tremor
occurred at one of the mine's shafts. The Minister said gold mine had reached a
plateau in terms of fatalities and were the worst performers in this regard. In
addition, the mines had deteriorated by 18.5 percent from a fatality rate per
million hours worked of 0.27 to 0.32 percent. The country's miners in 2003
reportedly set a target to improve their fatality and accident performance by 20
percent per year. "In the last few months, coal mines (0.11 percent) and
other mines (0.18 percent) also show no sign of improvement," said Ms
Sonjica. She said although the cause of the accident was not known yet, security
measures in the mines should be reinforced. The mine's acting chief of inspector
Jacques Erasmus said two of the seven miners had been rescued and admitted at
Lesley William hospital in the area. "We are still to recover the five
although it has been for a long time since the incident happened," said Mr
Erasmus. He said other miners would receive trauma counselling, while they would
be working around the clock monitoring the situation. Ms Sonjica has since
wished the victims a speedy recovery and was expected to visit the mine this
afternoon to get a briefing from mine management on the accident.
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