12 / 12 / 09 We can't afford to ignore our coal resources AS world leaders gather in Copenhagen for the climate change summit, the UK delegation sho..
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22 / 06 / 09 Anglo stresses early-stage nature of Xstrata 'proposal' The board of diversified mining group Anglo American confirmed on Sunday that it had indee..
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14 / 04 / 09 China economy shows signs of recovery China's economy is showing signs of a nascent recovery, but even officials who want to boo..
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02 / 01 / 09 China turns screws on iron ore giants JUST days into the new year the signs from China for our battered big miners are ominous.
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02 / 04 / 08 in
Tata SA Eyes Iran Chrome Ore Deal
Tata Steel is in advanced talks to buy chrome ore from Iran for its South African ferrochrome plant.
Undeterred by the power supply crunch in South Africa, the R650 million high-carbon ferrochrome plant in Richards Bay on the KwaZulu-Natal coast will start production at the end of this month.
This is according to Dinesh Shastri, executive in charge of Tata's Ferro Alloys and Minerals division, who told international media this week that the plant was originally scheduled to start production in October last year.
While South Africa is home to almost 80 percent of the world's chrome ore reserves, the plant's 135 000-tons-a-year first phase will produce high-carbon ferrochrome from ore imported from India and Iran.
Tata Steel originally proposed to source the plant's chrome ore requirements from South Africa, but the Iranian and Indian chrome ore resources are reportedly qualitatively superior to those of South Africa.
The Indian steel producer, which plans to export all of the plant's production, primarily to Europe and Asia, said the chrome ore imports for the new plant would not deprive South African miners of sales nor would its ferrochrome exports compete with locally produced ferrochrome, since both South African-mined chrome ore and locally produced charge chrome are of entirely different grades to that required and produced by the Tata plant.
Tata is expected to make a decision on a further R400-million second phase project, to expand the plant by doubling its size from two furnaces to four after the first year of operation.
Somdeb Banerjee, managing director of Tata Steel KZN, said in 2006 that if the second phase expansion is approved, the company would explore the possibility of mixing South African and imported chrome ore for use in the two additional furnaces.
The Indian steal producer, which is owned by diversified industrial giant Tata, has also indicated that it aims to mine chrome, as well as manganese, coal and iron ore in South Africa.
But the expansion is likely to wait until after 2012 when South Africa's power utility Eskom expects to have new power generating capacity come on stream.
Eskom has asked the South African government to put a moratorium on new industrial projects for the next five years because it is unable to meet the demand for extra power.
Ferrochrome production is highly power-intensive with power costs constituting around 60 percent of the total cost of production.
South Africa's cheap electricity was ironically the reason Tata Steel chose to locate its new ferrochrome plant in Africa.
Tata said South Africa was selected from an initial short list of eight countries, with the final choice made between sites in South Africa and Australia.
Indian media reported that South Africa ended being the final choice because of the country's favorable concessional power tariff, which is reportedly about 20 percent to 22 percent of the electricity tariff per unit charged in India.
Believed to have been offered a deal where power costs could be linked to international ferrochrome prices, Tata needs 150MW of power to run the plant's furnaces.
Eskom chief executive Jacob Maroga said on Thursday that there would be no problems supplying power to the plant.
But Tata is not taking any chances - it is building a R100 million co-generation plant, which will produce 10MW of electricity in the first phase and a further 10MW in the second phase, using off-gas from the furnaces.
14 / 03 / 08 in
More chrome could leave South Africa unbeneficated because of power shortages
South African exports of raw chrome ore rose by in excess of 55% in 2007, which was "killing jobs and killing revenue", JSE-listed Merafe Resources CEO Steve Phiri said on Monday, adding that the country's power crisis could worsen the situation.
Merafe Resources, which partnered with diversified giant Xstrata to produce the steel making ingredient in South Africa, said that this was a serious concern, and that State-owned power utility Eskom's supply constraints was not helping the situation.
"The argument against the export of ore will be seriously prejudiced by the Eskom electricity supply problem, which again is a concern for us, who have said we are not going to export raw ore," Phiri told reporters and analysts in Johannesburg.
Along with its "big brother" partner, Xstrata, Merafe Resources had been campaigning for government to put an end to companies exporting unbeneficiated ore to China, arguing that South Africa could create more jobs and wealth if the chrome was smelted within its own borders.
However, Phiri said that Eskom's request to mining and smelting companies to cut their power use by one-tenth mainly affected ferrochrome producers' smelting operations, rather than mining.
"Whether that will encourage people to export more ore, it's a possibility," he stated.
"And, therefore, we need assistance from government to say: 'guys, do not leverage this problem to disadvantage South Africans'."
GOVERNMENT DELAY
Phiri went on to decry government delaying the introduction of new legislation that would prevent the export of unbeneficiated chrome ore.
It was just over one year ago to this day when Deputy President Phumzile Mlambo-Ngcuka said that the government would take this step, speaking at the launch of Xstrata’s Project Lion ferrochrome smelter, in which Merafe had a one-fifth stake.
“The Department of Minerals and Energy (DME) has been quite receptive to our complaint, and have been quite supportive, and they have undertaken that they will be piloting amendment legislation,” Phiri said.
The delay now lay within the parliamentary process.
“That legislation is still somewhere in the parliamentary pipeline,” he stated. “It’s out of the DME’s hands and in the hands of Parliament.”
“We are still hoping that government will see the seriousness of this to say that we cannot have a situation where a mature industry, like the ferrochrome industry, is being prejudiced by people who did not even use capital to create jobs, they are just mining and exporting.
“So it’s a serious concern – you’re killing jobs, you’re killing revenue,” Phiri said.
‘WORRYING SITUATION’
He went on to say that it was “surprising” that India was punishing ore exports, but South Africa – which had a far more mature ferrochrome industry – was not.
This came after Merafe Resources finance and new business director Stuart Elliot said that India had just raised the duty for companies exporting chrome ore from that country to $66/t, from the figure announced last year of $44/t.
“It’s a worrying situation,” Phiri commented.
28 / 01 / 08 in
A decade of improving China-South Africa ties
This month marks the 10th anniversary of the establishment of diplomatic relations between China and South Africa.
I first set foot on the territory of South Africa at the end of 1995 on my way to Harare as the Chinese ambassador to Zimbabwe. That short stopover filled me with anticipation for the future of this beautiful and legendary nation.
In 2001, I was posted as the second Chinese ambassador to South Africa. I worked there for six years, during which I personally witnessed major events in the development of Sino-South African relations and bilateral cooperation.
After apartheid ended in South Africa, there were some problems in the relations between China and South Africa due to the Taiwan question. However, once diplomatic relations were established between the two countries on the New Year's Day 1998, bilateral relations developed smoothly as political trust grew.
President Thabo Mbeki visited China in December 2001. Together with then Chinese president Jiang Zemin, they initiated in Beijing the China-South Africa Bi-national Commission, which has become an effective platform for bilateral, pragmatic cooperation.
During Chinese Premier Wen Jiabao's South Africa tour in June 2006, both sides said they would further their strategic cooperation. South Africa adheres to the one-China policy and has refused all requests for transit in South Africa by both Chen Shui-bian and his "foreign minister", citing "technical reasons".
The two countries have supported and worked with each other on many major issues, such as South-North relations and the common interests of developing countries.
President Thabo Mbeki attended the Beijing Summit of the Sino-Africa Cooperation Forum in November 2006. After saying that the best way to understand China and its rapid development is to read Chinese books on the topic, he visited Wangfujing Xinhua Book Store, despite his heavy schedule, where he bought books on China's economic reform, social development, culture and education.
South Africa is the largest economy in Africa. There is huge potential for economic and trade cooperation between China and South Africa. For many years, South Africa was China's top African trading partner.
The volume of bilateral trade in 2000 hit $2 billion, more than 20 percent of the total trade volume between China and the entire African continent. By the end of 2006, the volume of Sino-South Africa trade had increased nearly five times to $9.8 billion.
Within the framework of the Sino-Africa Cooperation Forum, the Chinese government has been training specialists from South Africa to help it get rid of poverty and develop its rural area. For example, academics from China Fujian Agricultural and Forestry University have been helping farmers earn more by applying their mushroom planting technology.
South Africa is a "rainbow country", with separate capitals for legislation, administration and justice and 11 official languages. And since China and South Africa were isolated from each other for many years, the two countries lack mutual understanding. Some South Africa media and sections of the public still hold prejudices against China.
As Sino-South African cultural exchanges increase and the Chinese economy grows, more and more South African people want to know more about China. Meanwhile, more Chinese nationals and tourists have been traveling to South Africa, which also contributes to the exchanges and understanding between the people of the two countries.
There were about 50,000 Chinese nationals in South Africa six years ago. This number at least doubled in 2007. These people have contributed to the development of South Africa. However, the improper behavior of some of these Chinese people have stained the image of China.
At the same time, the Chinese people also need to know more about South Africa, in particular the public security situation. The Chinese should view and treat this country with a more forgiving attitude.
The author is former Chinese ambassador to South Africa
19 / 11 / 07 in
Itochu signs accord to develop minerals in South Africa
Itochu Corp (8001.T: Quote, Profile, Research), Japan's fourth-biggest trading company, has signed a memorandum of understanding on Friday with South Africa's Mvelaphanda Group to jointly develop minerals, mainly rare metals and platinum.
The Japanese trading company has been seeking to increase investments in metals, coal and energy in Africa, Itochu said in a statement.
The MOU confirms that Itochu and Mvelaphanda -- a conglomerate owned by black business tycoon Tokyo Sexwale -- will cooperate in research and development of minerals in the country, the trading firm said.
An official of the Japanese company said last week that executives of Itochu would accompany Japan's Trade Minister Akira Amari's trip to South Africa and Botswana this week.
Amari and South Africa's Minerals and Energy Minister Buyelwa Sonjica agreed on Friday to jointly develop new metal, mining and beneficiation projects, the Japanese government said in a statement.
Both countries also discussed promotion of energy conservation and nuclear energy, the statement said.
"The two ministers recognised that the usage of and demand for more diversified rare metals is expected to expand, in proportion to the need to further progress technology development in the future," the statement said.
Last week, Amari told Reuters in an interview that China should not squeeze Tokyo and other buyers of its rare metals as Beijing tightens its grip on the minerals, which are indispensable for Japan's high-tech industries.
Amari said he would visit South Africa and Botswana in a bid to secure alternative sources of supply, many of which resource-poor Japan depends almost entirely on China.
05 / 11 / 07 in
China presence in Africa grows
The purchase of a 20 percent stake in Standard Bank by the Industrial Commercial Bank of China (ICBC) is but the latest sign of China's growing presence in Africa and of its capacity to influence events in the continent from Cape to Cairo and Lagos to Lilongwe.
The size of the ICBC - it is the world's largest bank if market capitalisation is the yardstick - emphasises the importance of the deal for South Africa and Africa as whole, given that Standard Bank is located in no less than 18 African countries.
There is another perhaps more imperative reason for the importance of ICBC's acquisition: its largest stakeholder is the Chinese government, which has identified Africa as a major arena in which to secure natural resources in general, but oil and gas in particular for its burgeoning economy.
The link between the Chinese bank and the mandarins in Beijing implies that its further ventures into the African interior from its South African base will have the sanction and support of President Hu Jintao and his ministers.
The origins of China's economic drive into Africa go back to the pro-market reforms introduced by Deng Xiaoping after the death in 1976 of Mao Zedong and the revitalising impact the reforms had on the Chinese economy after more than 25 years of stultifying control by government bureaucrats.
The liberating influence of Xiaoping's bold reforms is manifest in the phenomenal growth of the Chinese economy from the mid-1980s to the present day: during the last two decades annual GDP growth has been in the order of 10 percent, an incredible achievement in light of the huge setbacks suffered as a consequence of Chairman Mao's policies of enforced collectivisation and industrialisation.
Once the boom started the Chinese government had no option but to press ahead to avoid political and social instability.
Although the reforms had aroused hopes for a more open society and stimulated the emergence of the pro-democracy student movement - which was ruthlessly crushed in the Tiananmen Square massacre of June 1989 - a contracting economy would, in all likelihood, have accentuated the widening rift between the age-old poor and the emerging new rich.
In a very real sense it was boom or bust for China's post-Xiaoping rulers, the more so as relaxation of controls over the economy had not been accompanied by a matching reduction of political constraints.
For the increasingly industrialised economy to continue expanding, China had to acquire new sources of raw materials as its own resources became increasingly insufficient to sustain its dizzyingly rapid growth rate.
As an article published by the United States Council of Foreign Relations notes: "China's manufacturing sector has created enormous demand for aluminium, copper, nickel, iron ore and oil."
China's decision to take its quest for new supplies of natural resources to Africa was - and is - prompted by two considerations: Africa's large, varied and relatively untapped reserves of mineral and hydrocarbon fuels and the dominance of the United States and the European Union as the main consumers of Middle East oil.
The figures below - culled from an article published by the Heritage Foundation in the US, entitled "China's influence in Africa" - summarise the growing volume of trade between China and Africa:
# In 1999 the trade between Africa and China was valued at $5,6-billion (about R36,7-billion).
# By 2004, after the establishment of the Forum for China-Africa Co-operation (FCAC), Sino-African trade had quadrupled to $29,5-billion.
# Before the end of 2005 it had increased to $32,2-billion, well in excess of the total for the whole of 2004.
It has continued to grow since then, partly as a result of the summit meeting of the FCAC in Beijing in 2006, attended by African heads of state, at which China undertook to double its aid to Africa and to strive to increase Sino-African trade to $100-billion by 2010.
A hostile interpretation of China's growing and increasingly conspicuous pressure in Africa is that it is re-enacting the role played by Britain and its European rivals in the late 19th-century scramble for Africa. The analogy - which casts China in the role of a colonising power - is without substance, however.
Unlike the 19th-century European powers, China has not sent soldiers to Africa to fight wars of dispossession against African indigenes or presumptuously raised its flag over huge tracts of African territory and issued proclamations annexing it.
A more subtle but no less disparaging interpretation portrays China as a neo-colonialist power seeking to undermine African governments subtly by making them dependent on Chinese aid.
There is no evidence, however, that China wishes to usurp the power of African governments.
Its primary objective is to attain a substantial share of Africa's resources, for which it is prepared, in turn, to offer financial assistance and low-interest loans, as well as sign trade treaties and enter into partnerships with local companies (of which the ICBC-Standard Bank deal is a prime example).
Leaving aside its invasion of Tibet in 1950 - which China regards as one of its historical provinces - and its border dispute with India in the early 1960s, it has not engaged in territorial wars with any of its neighbours for close to 50 years, let alone against countries in a faraway continent.
Its government has quite enough problems governing one of the largest countries in the world, containing a culturally diverse population of 1,3 billion people, without adding an African empire to its burdens.
Having jettisoned Mao's penchant for exporting revolution, China's current drive into Africa is predicated on the principle of noninterference in the internal affairs of sovereign nations, for which it has been accused of giving comfort and solace to African dictators presiding over countries that they have impoverished by their greed and/or incompetence.
The Heritage Foundation article quoted above exemplifies the charge when it accuses the Chinese government of "securing exclusive access to African natural resources with an aggressive political campaign to ingratiate itself with African tyrants and despots".
The authors seems to have forgotten US support over decades for the corrupt regime of Mobutu Sese Seko, who was an accomplice in the conspiracy to oust and eventually murder the legitimately elected prime minister of the Democratic Republic of Congo, Patrice Lumumba.
South Africans know that the CEO of Standard Bank, Jacko Maree, is no fool. As a hard-headed businessman who saw Standard Bank beat off a predatory takeover bid by Nedbank in 1999, he is presumably inured to ingratiation, irrespective from whom it emanates and least of all if it come from a company that is a prospective partner.
African heads of state - whether democratically elected as in the case of South Africa or politicians versed in the skills of palace coups or street demagoguery - are usually astute enough not to surrender readily the national sovereignty entrusted to them or acquired by them to foreign merchants.
China's leaders have invested huge sums of money in Africa in their quest to restore China to its past greatness of two millennia ago, when it generated one-fifth of the world's total economic output.
They are not about to discard it in favour of reckless adventurism in a distant continent.
28 / 09 / 07 in
South Africa, China make trade deals
Trade between China and South Africa has now grown to the point that exports to China were at R14 billion and imports from China at R46.7 billion last year.
But during a binational commission meeting in Beijing, deputy president Phumzile Mlambo-Ngcuka told the Chinese leadership that South Africa needs to manufacture capital goods for the growing construction industry.
This industry, she said "needs capital goods and specialised skills which would make it possible for the currently unemployed to be employed in the rural and urban areas".
In addition, South Africa has undertaken to support China's position with regard to Vietnam seeking membership at the United Nations.
A statement released in Beijing said that it was agreed the two countries would use the China-Africa Development Fund to encourage companies from each country to promote trade and investment in areas such as minerals, energy, infrastructure development, machinery, home appliances, agro processing, tourism and finance.
China will donate 20 million renminbi (R19 million) for education projects in South Africa, and the Chinese vice-president Zeng Qinghong stressed the importance of having a Chinese-funded vocational training centre opened as soon as possible.
China will build a school in a rural area in South Africa as part of an education agreement that was signed.
Other agreements signed during the meeting of the commission included deals on minerals and energy, human resource management, public administration, public policy and reform and training.
10 / 08 / 07 in
Chromex Mining to acquire 271 hectare chrome project on Bushveld complex, South Africa
Acquisition of 15 million tonne chrome project located on the Western Limb of the Bushveld complex in South Africa
· Acquisition to more than double Chromex's resources from 9 million tonnes to approximately 24 million tonnes chromite and reduce operational risk through development of two mines
· Mining Right in place will facilitate the fast-track development of project and reduce timeline to production
Chromex Mining plc, the AIM listed dedicated chrome company operating in Southern Africa, has entered into a binding Heads of Agreement with Mkhombi Stellite (Pty) Ltd ("Mkhombi") whereby Mkhombi will vend 100% of its chrome assets into Chromex's South African subsidiary Chromex Mining (Pty) Ltd for a total consideration of ZAR34m (approximately GBP2.4m). This comprises ZAR14m (approximately GBP1m) cash with the balance of ZAR20m (approximately GBP1.4m) in new Chromex shares at a price of 25p per share.
Mkhombi is the controlling (51%) and managing shareholder of Ilitha Mining (Pty) Ltd ("Ilitha") which is the 100% owner of the Stellite chrome project located on the Western Limb of the Bushveld complex in South Africa. A New Order Mining Right has been granted to Ilitha, encompassing the entire 271 hectare Stellite property. The project has an estimated 15 million tonnes of chrome resources comprising four seams, namely the LG6, MG1, MG2 and MG4. All four seams outcrop on the property and it is anticipated that approximately 3 million tonnes will be open cast. The project has been extensively drilled and has had approximately 170,000 tonnes of chromite mined and sold both to the domestic and international chrome markets.
The Mining Right will facilitate the fast track development of the Stellite opencast resources, which will significantly reduce the Company's timeline to production. The proposed transaction will more than double the Company's controlled resources from 9 million tonnes to approximately 24 million tonnes and reduce the Company's operational risk through the development of two mines instead of a single standalone operation. . In terms of the agreement Chromex has secured the current management team to ensure continuity in the development of this asset.
The transaction is conditional on a successful due diligence, consent from the South African Department of Minerals and Energy ("DME") related to the change of control in Ilitha and the waiver of pre-emptive rights by the remaining minority Ilitha shareholders.
Nigel Wyatt, CEO of Chromex, said, "This transaction is in line with our strategy of increasing our chrome resources particularly with acquisitions that have the potential for near term development, to facilitate the rapid growth of the Company within the current buoyant ferrochrome market."
Ayanda Ngubane, a spokesperson for Mkhombi said, "The combination of Mkhombi and Chromex's chrome assets will provide the critical mass necessary to underpin the long term viability of the projects through the commodity circle."
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