Major International Business Headlines Brief::: 08 August 2020

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Major International Business Headlines Brief::: 08 August 2020

 


 

 


 <mailto:info at bulls.co.zw> 

 


 

 


 

 

ü  World Bank approves $114 mln for Nigeria's COVID-19 response

ü  South Africa tries to recover over $23 mln from SAP for 'unlawful'
contracts

ü  South Africa's Denel tells unions it can't honour court ruling on
salaries

ü  AngloGold Ashanti moots higher dividend as gold price boosts earnings

ü  Co-op Bank Kenya to complete Jamii Bora Bank acquisition this month
-central bank

ü  Record bullion prices give South African gold miners a lifeline, risks
remain

ü  Lewis Group flags annual earnings drop of up to 37%

ü  Kenya's shilling weakened by dollar demand from oil importers

ü  Eat out to help out: 'We've had 15,000 bookings'

ü  US jobs growth slows in July as pandemic takes toll

ü  Facebook founder sees wealth hit $100bn after TikTok rival launch

ü  ULA, SpaceX win landmark multibillion-dollar launch agreements with
Pentagon

 


 <mailto:info at bulls.co.zw> 

 


 

World Bank approves $114 mln for Nigeria's COVID-19 response

ABUJA (Reuters) - The World Bank has approved $114 million to help Nigeria
tackle its coronavirus pandemic, the global lender said on Friday.

 

The money comes in the form of a $100 million loan and a $14 million grant
to be split between Nigeria’s 36 states and federal-level procurement of
medical equipment, tests and medicine.

 

Africa’s most populous country has recorded more than 45,000 confirmed
coronavirus cases and 930 deaths, but low levels of testing have left a
muddy picture of the outbreak’s severity.

 

“Nigeria has ramped up its efforts to contain the COVID-19 outbreak, but
more needs to done at the state level, which are at the front line of the
response,” Shubham Chaudhuri, the World Bank’s director for Nigeria, said in
its statement on Friday.

 

 

 

South Africa tries to recover over $23 mln from SAP for 'unlawful' contracts

JOHANNESBURG (Reuters) - South African investigators are seeking to recover
more than 400 million rand ($23 million) from German software firm SAP for
two government contracts they allege were entered into unlawfully, court
documents seen by Reuters show.

 

Although the amount of money sought is small for a company with a market
value of around 162 billion euros, the move by the authorities is another
headache for SAP, which in 2018 admitted to misconduct over deals with South
African state firms during former president Jacob Zuma’s tenure.

 

SAP, a major global business software company, had said it was reviewing all
its public sector deals in South Africa dating back to 2010, but it has not
publicly flagged wrongdoing over the agreements in 2015 and 2016 with the
Department of Water and Sanitation.

 

Investigators say those contracts should be declared invalid because
government regulations were contravened, according to the court papers,
reported here for the first time.

 

SAP did not comment on the specific allegations. In a statement to Reuters
the company said: “SAP continues to cooperate with South African
authorities/law enforcement and remains committed to the highest standards
of business ethics.”

 

“Our policy is, and always will be, to carry out all company activities in
accordance with the letter and spirit of applicable laws.”

 

The Special Investigating Unit (SIU), which is investigating the contracts,
told Reuters that evidence pointing to contravention of regulations by water
ministry officials had been referred to prosecutors.

 

The SIU has been probing SAP’s work for the water ministry for roughly two
years, after President Cyril Ramaphosa authorised inquiries into possible
procurement irregularities and corruption.

 

RECOVERING PUBLIC FUNDS

In court papers filed late last week, the SIU asked the Special Tribunal, a
court Ramaphosa established to fast-track recovery of misspent or stolen
public money, to order SAP to reimburse roughly 128 million rand for the
2015 agreement and 285 million rand for the 2016 agreement, plus interest.

 

In its review, included in the court documents, the SIU found the water
ministry’s 2015 contract with SAP was concluded despite the ministry still
having a year left to run on an existing agreement with the German company.
For the 2016 contract, the SIU cited a senior technology official as saying
neither the ministry nor its entities had received services from SAP despite
the 285 million rand paid.

 

A SIU principal forensic lawyer said in an affidavit that investigators were
still probing possible corruption related to SAP’s work for the water
ministry. But he said they had decided to launch civil proceedings in the
Special Tribunal now because taxpayer money was at stake.

 

The acting director-general of the water ministry said in an affidavit that
a high turnover of directors-general since 2016 meant “the obvious
illegality related to the conclusion of the SAP contracts” was not addressed
sooner.

 

A ministry spokesman declined further comment.

 

In March 2018, SAP admitted to paying more than $9 million to intermediary
companies linked to the Guptas, a family at the centre of a political
corruption scandal in South Africa, in relation to software deals with state
power utility Eskom and state logistics firm Transnet.

 

The SIU said it was also investigating SAP contracts at Eskom and Transnet.
The companies did not immediately respond to a Reuters request for comment.

 

The Guptas, close friends of former president Jacob Zuma, have denied
corruption allegations but their relationship to the former president is one
of the main areas of focus of a state corruption inquiry that began after
Ramaphosa succeeded Zuma in February 2018.

 

Zuma also denies involvement in any corruption.

 

Ramaphosa has staked his reputation on cleaning up public life in South
Africa but a spate of tender scandals during the coronavirus crisis has made
some analysts question whether much progress has been made.

 

The COVID-19 pandemic has poleaxed an already weak economy and set the stage
for a record budget deficit in the post-apartheid era.

 

This week the SIU and Eskom took steps to try to recoup 3.8 billion rand
they allege was diverted from the utility by former Eskom executives and the
Guptas.

 

The Guptas have denied unduly winning contracts with government entities,
including Eskom, during Zuma’s time in office.

 

($1 = 17.5557 rand)

 

 

 

South Africa's Denel tells unions it can't honour court ruling on salaries

JOHANNESBURG (Reuters) - South Africa’s struggling state defence firm Denel
told trade unions on Friday that it cannot honour a court ruling that it
should pay outstanding salaries by Friday, a letter from Denel’s lawyers to
the unions’ lawyers seen by Reuters showed.

 

“Our client requests that your clients grant it an indulgence to enable it
to work on measures to raise funds,” Denel’s lawyers wrote in the letter,
adding that Denel would aim to give an update no later the end of next week.
Denel said in a statement that it remained committed to meeting its
obligations and paying outstanding salaries as soon as possible.

 

 

 

AngloGold Ashanti moots higher dividend as gold price boosts earnings

JOHANNESBURG (Reuters) - AngloGold Ashanti said on Friday it would consider
paying a higher annual dividend after reporting a more than 200% jump in
first-half earnings, driven by higher gold prices and a weaker local
currency.

 

AngloGold, which has operations in Australia, Brazil and Tanzania, said its
headline earnings per share for the six months ended June rose 234% to 97
cents against 29 cents a year earlier, despite output disruptions caused by
COVID-19.

 

Earnings before interest, taxes, depreciation and amortisation (EBITDA)
climbed 59%.

 

“Cash flows are extremely robust, demonstrating the significant operating
leverage we have to this strong gold price,” Chief Executive Kelvin
Dushnisky said.

 

Dushnisky, who steps down in September, said the company would focus on
cutting costs and capital management as it seeks to widen margins and
increase reserves through exploration and expansions.

 

Spot gold has roared past $2,000 an ounce for the first time, giving South
African gold miners a lifeline after the disruption caused by the COVID-19
pandemic.

 

AngloGold, which pays an annual dividend of 10% of its free cash flow before
growth capital, said free cash flow had increased more than four-fold to
$324 million.

 

“If gold prices stay at these levels, and we continue to manage our margins
well and we continue to generate increasing free cash flow, we will see
increased dividends,” Dushnisky said in an interview.

 

If prices remained supportive and the company strengthens its balance sheet,
the board could also consider changing its dividend policy, Dushnisky said.

 

The bullion miner, which is completing the sale of its last South African
assets, said it had lost around 85,000 ounces of output due to COVID-19,
with 63,000 ounces of that from South Africa.

 

Production during the period was 1.469 million ounces compared to 1.554
million ounces for the first six months of last year.

 

Dushnisky said the board was considering moving its primary listing from the
Johannesburg Stock Exchange but its current focus was navigating the
pandemic.

 

 

 

Co-op Bank Kenya to complete Jamii Bora Bank acquisition this month -central
bank

NAIROBI (Reuters) - Co-operative Bank of Kenya will buy 90% of micro lender
Jamii Bora Bank and the deal will complete this month, the country’s central
bank said on Friday, marking further consolidation in the East African
nation’s banking industry.

 

Co-op Bank’s takeover of Jamii Bora was first announced in March and the
deal is due to complete on Aug. 21, the central bank said.

 

Co-op Bank, owned by Kenya’s co-operative movement, is the country’s
third-biggest bank by market share with nearly 10% of the domestic market
and 159 branches across Kenya and South Sudan.

 

Jamii Bora, which is mainly focused on lending to micro-enterprises, is the
second-smallest lender in Kenya with a market share of 0.09% and 17 branches
across the country.

 

“This transaction...will (enhance)... the resilience of the Kenyan banking
sector,” the central bank said in a statement.

 

There are 39 banks competing in Kenya’s banking sector which has seen
several mergers and acquisitions since 2016, sparked by the failure of three
mid-sized and small lenders, as well as a cap on commercial lending rates,
which was removed last November.

 

Last year KCB Group took over National Bank of Kenya, while CBA Group merged
with NIC Bank to form NCBA.

 

The central bank said on Friday that its review of the banking sector’s
business models and consolidation, “have been beneficial in enabling the
sector to ride through the (coronavirus) pandemic period while supporting
their customers and the economy.”

 

 

 

Record bullion prices give South African gold miners a lifeline, risks
remain

JOHANNESBURG (Reuters) - South African gold miners are looking to cut debt
and boost dividends as bullion hits record highs, with analysts and fund
managers predicting a sectoral growth spurt over the next two years amid
rising investor interest.

 

Shunned by investors due to mines that are old, deep, and difficult to
extract, the country’s gold miners have traded at a discount to their global
peers for years.

 

Higher prices, as spot gold roared past $2,000 an ounce for the first time,
coupled with a weaker rand currency, comes as a lifeline.

 

Interviews with companies executives, analysts and fund managers show that
higher gold prices could see some local miners bring their net debt to zero
and pay healthy dividends over the next 18 to 24 months.

 

“Gold mining companies will spew a lot of cash in the next 12 months,” said
Franco Lorenzani, an independent mining analyst.

 

    Sibanye Stillwater, which has battled high debt, said it achieved its
leverage target in the first quarter, ahead of plan.

 

Its net debt, which stood at 20.964 billion rand ($1.2 billion) in 2019,
dropped 40% year-on-year in the first quarter.

 

Higher prices have also made more marginal ounces profitable for Sibanye,
spokesman James Wellsted told Reuters, adding the company was looking at
other ways to benefit from favourable market conditions.

 

“Maybe mining secondary reefs ... might be viable at these prices,” said
Wellsted.

 

Pan African Resources is hoping to be net debt free by June 2021 and plans
to increase its dividend payout to 5% from 1% last year, its head of
investor relations Hethen Hira said. Its net debt dropped 49% to $62.5
million at end December.

 

Gold Fields has flagged hefty gains from the gold rally, with half-year
profits seen up more than 300%.

 

Rene Heichreiter of Noah Capital said he was advising his clients to
continue to invest in local gold miners, predicting a exponential jump in
revenues in the coming months.

 

Some investors have already turned bullish.

 

Factsheets of fund managers seen by Reuters show South Africa’s Fairtree
increased its exposure to Harmony Gold by 0.78% between March and June,
while U.S.-based ASA Ltd, which invests in gold mining companies globally,
increased its investments in South Africa to 10.7% in June from 9.9% in
January.

 

But the operating environment remains risky.

 

While power cuts and regulatory uncertainty have always hung over
operations, the mining sector is also battling rising COVID-19 cases in
underground mines where social distancing is a challenge.

 

This could threaten output, as some analysts warn the frenzy over high
prices could backfire as investments add to costs.

 

“Whenever the gold prices go up the costs tend to go up with it,” said
Nedbank mining analyst Arnold Van Graan.

 

($1 = 17.5317 rand)

 

 

 

Lewis Group flags annual earnings drop of up to 37%

JOHANNESBURG (Reuters) - South African retailer Lewis Group Ltd on Friday
flagged that annual earnings could fall by as much as 37%, after an increase
in debt servicing costs, the financial impact of lost trading days and an
impairment charge.

 

The furniture and appliance retailer said its headline earnings per share
(HEPS) for 12 months ended March is expected to be between 282.2 to 237.0
cents, or between 25% to 37% lower than the same period a year ago.

 

HEPS is the main profit measure used in South Africa that strips out certain
once-off items.

 

The group is expected to release full-year results on or around Aug. 25.

 

 

 

Kenya's shilling weakened by dollar demand from oil importers

NAIROBI - The Kenyan shilling weakened on Friday due to high dollar demand
from oil importers, traders said.

 

At 0915 GMT, commercial banks quoted the shilling at 108.00/108.20, compared
to Thursday’s close of 107.95/108.15.

 

 

 

Eat out to help out: 'We've had 15,000 bookings'

"A lot of people have used the subsidy as the first time they're going out
again - it takes once or twice venturing out of the home to get them to feel
comfortable," says Will Beckett, the co-founder of steakhouse chain
Hawksmoor.

 

Six of his restaurants have received a combined 15,000 bookings for the 13
days of the "Eat out to help out" scheme, while two sites remain closed.

 

"The most obvious way in my mind that it's helping restaurants, is that it's
helping people to learn to go out again," Mr Beckett told the BBC.

 

The government promotion, which launched this week, gives people a discount
of up to 50% up to a maximum of £10 when eating or drinking soft drinks in a
participating restaurant or other food establishment every Monday, Tuesday
and Wednesday in August.

 

It's early days, but there was an average rise in visits to retail
destinations of 2.3% on Tuesday 4 August and Wednesday 5 August, compared
with the previous week, according to industry analysts Springboard.

 

Meanwhile, restaurant booking website Opentable found that the number of
diners making reservations jumped 10% on 3 August, compared to the same day
in 2019.

 

"Footfall results for the three days from Monday to Wednesday indicates that
the 'Eat Out to Help Out' scheme has benefited retail destinations post 6pm,
more than at lunchtime. Also, smaller towns across the UK gained a larger
uplift in footfall than large city centres," says Springboard insights
director Diane Wehrle.

 

"Over the three-day period, footfall rose in retail destinations across the
UK by 18.9% post 6pm, versus a rise of 9.6% at lunch time (12pm to 2pm).

 

"And in market towns across the UK the rise in footfall of 25% from the same
three days in the week before was a third higher than the rise of 19.2% in
regional cities."

 

• 'Eat out to help out will definitely affect the weekend'

 

• Eat out to help out: Coronavirus scheme offering UK diners 50% off begins

 

• Coronavirus: How can I use the 'eat out to help out scheme'?

 

Despite the uptick in business, Hawksmoor' Mr Beckett expects the scheme to
cause a "slight displacement" where "some of the demand moves to
Monday-Wednesday, from Thursday-Sunday".

 

The extra bookings have been helpful to the business, but only to a certain
extent.

 

"We've had 50% more covers, but we didn't make 50% more revenue, as our
spend per cover is high," says Mr Beckett.

 

"Even if people are coming out less frequently than previously, even if
they're spending less than before, the key thing is they're coming out, and
that's got to have a positive impact on the economy overall."

 

Other restaurant chains are more cautious about the impact the scheme will
have overall.

 

The Restaurant Group - which owns a portfolio of restaurants and pubs
including Wagamama, Frankie & Benny's, Chiquito, Garfunkel's Restaurant and
Brunning & Price - remains cautious.

 

"We have seen a very strong customer response to the scheme, but we are not
complacent and the real proof of the pudding will be when the scheme
finishes at the end of August," says a spokesman for The Restaurant Group.

 

'Too early to tell'

UK Hospitality, an industry group representing the sector, said it's too
early to tell if the scheme could lead to consumers changing the days of the
week when they prefer to dine out.

 

"Anecdotally, it looked like business was good on Thursday evening, so
hopefully demand, buoyed by the good weather, will still be strong over the
weekend," says chief executive Kate Nicholls.

 

Luke Davis is chief executive of IW Capital, a UK venture capital firm that
focuses on high growth companies, including the hospitality sector. He
thinks a lot more needs to be done to help the hospitality industry survive.

 

"Gimmicky schemes like the ones we're seeing at the moment aren't going to
stop the carnage," says Mr Davis, who owns bar and restaurant Rockwater in
Hove, and is one of the lead shareholders in pub and restaurant chain
Brewhouse and Kitchen.

 

"The sad truth is that people are still scared, the damage has already been
done. People are still nervous [to go out to dine]."

 

Spending data from Barclaycard suggests Mr Davis may be right. Although
total value spend in UK restaurants between Monday and Wednesday was up 9.3%
on the same period the week before, it is still 11.2% below the same time
last year.

 

Mr Davis strongly believes that the only way to solve the problem is to
inject more investment into the hospitality sector.

 

'Investment needed'

He is particularly critical of a change of legislation in March 2018 that
has meant the government's Enterprise Investment Scheme (EIS) is no longer
applicable to the hospitality industry "at large".

 

"People were really annoyed about this, it meant that the net investment
into the sector decreased," said Mr Davis.

 

"A real quick win and something that would give longevity to the sector
would be to encourage investment, allow hospitality businesses to qualify
for EIS."

 

The EIS is a government scheme that offers tax reliefs to individual
investors who buy new shares in companies that qualify.

 

A HM Treasury spokesperson said: "Since the start of this crisis, we have
provided a wealth of support for the hospitality sector... [including] a 15%
cut in VAT, cash grants worth up to £25,000 per business property, 100%
business rates relief, eviction protection and tax deferrals."

 

Mr Davis said that he has recently been contacted by several individuals in
the hospitality industry, asking him to raise funds to purchase distressed
assets.

 

"To bring the sector back to life, it's going to see a lot of investment.
The government isn't going to be able to stop the rot. You do need people to
come along and buy up these assets, people who are willing to take the
risk," he added.

 

"But it would still be a risk, as no one knows what is going to happen.
There is no guarantee."--BBC

 

 

 

US jobs growth slows in July as pandemic takes toll

Hiring in the US slowed sharply in July as the country struggled to control
the coronavirus pandemic.

 

Employers added 1.8 million jobs last month, down from a record 4.8 million
in June.

 

The unemployment rate fell to 10.2%, continuing to improve from the high of
14.7% seen in April.

 

The figures reignited calls for Washington to approve further economic
stimulus, though the slowdown was not as bad as many economists had feared.

 

"While this number exceeded our expectations, it still does not signal all
is well," said Kathy Bostjancic, chief US financial economist at Oxford
Economics. "We're far from a healed or good labour market."

 

The job gains reported by the US Labor Department on Friday came from many
of the sectors hit hardest by shutdowns, including restaurants, bars and
retail outlets.

 

Economists have said this kind of hiring, happening as states around the
country allow establishments to reopen, represents the "easy" part of a long
recovery ahead.

 

"The initial bounce from widespread re-openings is now behind us. Further
improvement will occur in fits and starts and depends on the course of the
virus," said Sarah House, senior economist at Wells Fargo.

 

Worse than financial crisis

Since February, the US has lost more than 12 million jobs and seen
unemployment spike from a roughly 50-year-low of 3.5%.

 

In the three months to the end of June, the country's economy suffered its
sharpest quarterly contraction in more than 70 years of record-keeping,
shrinking at an annual rate of 33% or nearly 10% year-on-year.

 

US economy suffers sharpest contraction in decades

The millions of Americans 'hanging by a thread'

The 10.2% unemployment rate recorded in July is higher than the worst of the
2007-2009 financial crisis, when the jobless rate peaked at 10%.

 

This week, nearly 1.2 million people filed new claims for unemployment. More
than 31 million people - roughly 1 in 5 American workers - continue to
collect the benefits.

 

Heidi Shierholz, economist at the left-leaning Economic Policy Institute,
said: "We added 1.8 million jobs in July, but our jobs level remains in
absolute crisis".

 

Economists have said the hiring slowdown last month is a reminder of the
risks facing the American economy, as health concerns put a dampener on
consumer spending and temporary measures passed in March, including bans on
evictions and a $600 emergency boost to unemployment benefits, expire.

 

"As it becomes clear that businesses will be contending with a pandemic
economy for some months to come, job losses are shifting from temporary to
permanent," Ms House said. "That brings us to a more dangerous phase."

 

While Washington lawmakers have been trying to negotiate further stimulus,
many Republicans oppose a deal of the size Democrats say is necessary.

 

"The talks are in worse condition than we would have liked to see but I
think we have to give it a bit more time," Ms Bostjancic said. "I believe
the situation is so dire that both sides will have to compromise and
something will get passed."

 

Republicans want a deal to include legal protections for employers against
virus-related health claims from workers.

 

They are also pushing to reduce the $600 emergency supplement to
unemployment benefits, which expired last month, and have proposed far less
aid to local governments than Democrats want.

 

"The most responsible thing we can do is to take proactive measures to allow
people to return to work safely, instead of continuing to lock down the
economy," Republican Congressman Kevin Brady said after the jobs report.

 

The Republican has presented a challenge for US President Donald Trump, who
had hoped to use a strong economy as his calling card to voters in his
campaign for re-election in November. With politicians due to leave the US
capitol for August recess, he has said he may act unilaterally to extend
some aid.—BBC

 

 

Facebook founder sees wealth hit $100bn after TikTok rival launch

Facebook founder Mark Zuckerberg has seen his personal wealth rise to $100bn
(£76bn) after the launch of a new short-form video feature.

 

On Wednesday, Facebook announced the US rollout of Instagram Reels, its
rival to controversial Chinese app TikTok.

 

Facebook shares rose by more than 6% on Thursday. Mr Zuckerberg holds a 13%
stake in the company.

 

He joins Amazon founder Jeff Bezos and Microsoft’s Bill Gates in the
exclusive so-called 'Centibillionaire Club'.

 

Technology bosses have been in the spotlight recently as the size and power
of their companies and their personal fortunes continue to grow.

 

Facebook, Amazon, Apple and Google have been among the biggest benefactors
of coronavirus lockdowns and restrictions as more people shop, watch
entertainment and socialise online.

 

Mr Zuckerberg’s personal wealth has gained about $22bn this year, while Mr
Bezos's has grown by more than $75bn, according to Bloomberg.

 

The short-form video feature Reels, which is seen as a rival to the
controversial Chinese-owned TikTok platform, works within the Facebook-owned
Instagram photo-sharing app.

 

The launch couldn’t have come at a better time for Mr Zuckerberg as late on
Thursday Donald Trump issued an executive order to deal with what the US
president called the "threat" of TikTok in the US.

 

Trump signs order to address 'threat' of TikTok

Is the US about to split the internet?

Trump administration plans Chinese tech crackdown

So-called tech titans, including Mr Zuckerberg, have come under increased
scrutiny from US and European lawmakers over allegations that their power
and influence are out of control.

 

The five largest US tech companies, Apple, Amazon, Alphabet, Facebook, and
Microsoft, currently have market valuations equivalent to about 30% of US
gross domestic product (GDP).

 

Wealth tax

 

US senator and former presidential hopeful Bernie Sanders this week unveiled
a plan to tax what he called “obscene wealth gains” made by billionaires
during the coronavirus pandemic.

 

The “Make Billionaires Pay Act” would tax 60% of the increase in a
billionaire's net worth from from the start of the pandemic through to the
end of the year.

 

Mr Sanders proposes that the tax revenue earned would go towards
out-of-pocket health-care expenses for Americans.

 

Mr Zuckerberg has previously said he plans to give away 99% of his Facebook
shares over his lifetime through the charitable foundation he set up with
his wife Priscilla Chan.—BBC

 

 

 

ULA, SpaceX win landmark multibillion-dollar launch agreements with Pentagon

If you would like to see more articles like this please support our coverage
of the space program by becoming a Spaceflight Now Member. If everyone who
enjoys our website helps fund it, we can expand and improve our coverage
further.

 

United Launch Alliance and SpaceX beat out Northrop Grumman and Jeff Bezos’
Blue Origin for billions of dollars in U.S. military rocket contracts, and
will share the load in launching the Pentagon’s highest-priority national
security space missions through 2027, officials announced Friday.

 

ULA, the 50-50 joint venture formed in 2006 by Boeing and Lockheed Martin,
will get 60 percent of the military’s most critical satellite launch
contracts awarded through late 2024 for missions that will take off between
2022 and late 2027. SpaceX will receive 40 percent of the national security
launch contracts over the same period, the Pentagon said.

 

The Pentagon did not select proposals submitted by Northrop Grumman and Blue
Origin.

 

The agreements cover contracts to launch satellites for the U.S. Space
Force, the National Reconnaissance Office, the Missile Defense Agency, and
other military services and agencies, providing an anchor customer for
SpaceX and ULA.

 

“This is a groundbreaking day, culminating years of strategic planning and
effort by the Department of the Air Force, NRO, and our launch service
industry partners,” said Will Roper, assistant secretary of the U.S. Air
Force for acquisition, technology and logistics. “Maintaining a competitive
launch market, servicing both government and commercial customers, is how we
encourage continued innovation on assured access to space.”

 

The agreements with ULA and SpaceX are part of Phase 2 of the Pentagon’s
effort to transition military satellite launches off of rockets using
Russian-made RD-180 engines, and onto vehicles with U.S.-built engines.
ULA’s Atlas 5 rocket has launched more national security satellites than any
other rocket currently in service, and its first stage is powered by the
RD-180 engine.

 

The procurement strategy is also intended to reduce launch costs for the
Pentagon.

 

“We have been stuck on Russian RD-180 engines for too long,” Roper said
Friday in a conference call with reporters. It is a risk to our national
security, so many years ago the Air Force decided to create an acquisition
strategy to get us through the sole-source environment that we were in with
a single rocket provider, and still tied to Russian engines, (and) build up
a competitive U.S. industry base that would ultimately culminate in today,
in a Phase 2 award to two vendors.”

 

The announcement Friday also marked the end of a hard-fought competition
between four major players in the U.S. space industry for a chance at
billions of dollars in revenue from lucrative military launch contracts.

 

ULA is developing the next-generation Vulcan Centaur rocket, with all
U.S.-made engines, to replace its Atlas and Delta launch vehicles, and
SpaceX offered the Pentagon its Falcon 9 and Falcon Heavy rockets already in
service, albeit with some modifications to meet the military’s demanding
launch requirements.

 

“ULA is honored to be selected as one of two launch providers in this
procurement,” said Tory Bruno, ULA’s president and CEO. “Vulcan Centaur is
the right choice for critical national security space missions and was
purpose built to meet all of the requirements of our nation’s space launch
needs.

 

“For decades, we have been a trusted partner to safely and securely deliver
strategic national security space assets for our nation’s defense and this
award shows the continued confidence of our customer in the commitment and
dedication of our people to safeguard these missions by reliably launching
our country’s most critical and challenging missions,” Bruno said in a
statement.

 

SpaceX did not respond to a request for comment Friday on the Pentagon
launch contract award.

 

Northrop Grumman’s OmegA rocket and Blue Origin’s New Glenn launch vehicle
were also in the running.

 

Despite losing out on the Phase 2 awards with their own rockets, Northrop
Grumman and Blue Origin will still get business through national security
launches. Northrop Grumman will supply solid rocket boosters and Blue Origin
will build BE-4 main engines for ULA’s Vulcan Centaur rocket.

 

“We evaluated every proposal by the published award criteria, technical
factors being first and foremost, then followed by past performance, their
ability to work with small business, and then finally totally evaluated
price,” Roper said. “Every proposal is evaluated. We call the ball and
strikes as they are, and the ability to meet those technical factors — to do
the mission –is the most important thing above all.”

 

For nearly a decade, the Pentagon awarded sole-source national security
launch contracts to ULA, which builds and operates the fleet of Atlas and
Delta rockets that have delivered to orbit nearly all of the military’s
large reconnaissance, surveillance, communications, navigation and missile
warning satellites currently in use.

 

But rising launch costs, pressure from upstart SpaceX, and worsening
diplomatic relations with Russia prompted the Air Force to rethink its
rocket procurement strategy for the military’s highest-priority space
missions. Congress also passed a law in 2014 — after Russia’s annexation of
Crimea — that capped the number of RD-180 engines the military could use to
launch national security satellites before transitioning to a rocket with
U.S.-made propulsion.

 

 

The highest-priority class of payloads was previously part of the Evolved
Expendable Launch Vehicle, or EELV, program. Last year, military officials
renamed the EELV program as the National Security Space Launch, or NSSL,
program as the Pentagon moved into a new era of launch services, which
include reusable rockets.

 

The Air Force ended competition for its EELV-class missions when the
Pentagon approved the Boeing and Lockheed Martin consolidation in 2006, a
decision ULA and military officials said was necessary to ensure the
survival of the Atlas and Delta rocket families to launch U.S. national
security satellites.

 

Pentagon officials say the military needs two independent launchers to
ensure crucial payloads can get to space even if one of the rockets is
grounded.

 

The Air Force certified SpaceX’s Falcon 9 rocket to launch national security
satellites in 2015, a process the military promised to speed up after SpaceX
filed a lawsuit against the Air Force the previous year protesting the
Pentagon’s $11 billion “block buy” sole-source order of Atlas 5 and Delta 4
rockets in 2013.

 

Military officials made more launch contracts available for competition
between ULA and SpaceX in an intermediate “Phase 1A” procurement round
before moving on to Phase 2, which required rockets use only U.S.-made
engines.

 

The Air Force awarded funding to Aerojet Rocketdyne, Northrop Grumman,
SpaceX and United Launch Alliance in 2016 as part of cost-sharing
public-private partnerships with industry to advance research and
development of new U.S. rocket propulsion systems.

 

In 2018, the Air Force selected Blue Origin, Northrop Grumman and United
Launch Alliance for the next round of launch service agreement awards. Those
agreements were cumulatively valued at around $2.3 billion.

 

SpaceX, which was the only company competing with a rocket already flying,
was left out of the development contracts awarded in 2018.

 

The Pentagon also announced Friday the first three firm-fixed-price launch
contracts awarded by the U.S. Space Force under the NSSL program’s Phase 2
agreements.

 

Two of those missions, designated USSF-51 and USSF-106, were awarded to ULA
for launches in the the first quarter and third quarter of calendar year
2022. SpaceX won a task order to launch the USSF-67 mission in the third
quarter of calendar year 2022.

 

ULA received $337 million in the task orders announced Friday, while SpaceX
was awarded $316 million.

 

If ULA’s Vulcan Centaur rocket, which scheduled to debut in 2021, is not
certified for the national security missions in 2022, ULA could offer an
Atlas 5 rocket — with its Russian-made engine — as an alternative for the
USSF-51 and USSF-106 missions.

 

A contract announcement posted on a Defense Department website said the
contracts include “early integration studies, launch service support, fleet
surveillance, launch vehicle production, mission integration, mission launch
operations, mission assurance, spaceflight worthiness, and mission unique
activities for each mission.”

 

Roper said of the 18 RD-180 engines Congress has allowed the Pentagon to buy
through 2022 for national security missions, 12 remain available for
purchase. There’s no prohibition on when the engines can actually launch a
national security mission, just that the Pentagon can’t procure any more
launches using the RD-180 engines after 2022.

 

“By the end of ’22, we cannot buy any more RD-180 engines,” Roper said. “We
do have 12 engines that are available should we need to use those engines
beyond the ’22 mark. We’re allowed to use them. We’re just allowed to
purchase more. So the reason that this Phase 2 award weighted technical
performance — technical merit — as the No. 1 priority is that we have to
ensure that we get off of those engines.

 

“I’m very confident with the selection that we have made today that we have
a very low risk path to get off the RD-180 engines on time and to not have
to dip into that surplus that we have available, though we’re glad to know
it’s there should we need it.”

 

The three task orders unveiled Friday are just the tip of the iceberg for
ULA and SpaceX, which stand to compete head-to-head for dozens more national
security launches contracts over the next four years. The U.S. Space Force’s
Space and Missile Systems Center, or SMC, will order launch services
annually from ULA and SpaceX, the military said in a statement.

 

Roper said military officials estimated SMC would order 32 to 34 national
security launches during the five-year period covered by the Phase 2
agreements. But there is some uncertainty in that number, Roper said.

 

“It is an indefinite quantity contract because we wanted to be ready for a
number of launches that can be in flux,” Roper said Friday.

 

That will help ensure ULA and SpaceX can relay on a steady “drum beat” of
launches for the Pentagon, supplementing commercial missions on their launch
manifests, he said.

 

“So there’s no ceiling on this contract,” Roper said. “It’s driven by the
number of launches that we and the NRO, and organizations like the Missile
Defense Agency and the Space Development Agency need.

 

“We’re very excited within the Space Force to provide a launch capability to
the entire department that its dependable and reliable, and we look forward
to building on the 81-out-81 mission success that the Air Force, and now the
Space Force, has provided over the past years,” Roper said.

 

 

While SpaceX’s Falcon 9 and Falcon Heavy rockets have the lift capacity to
meet the Pentagon’s launch requirements, which include access to unusual,
hard-to-reach orbits, there will be some changes on the launch vehicles and
ground systems to accommodate the new missions.

 

For the Pentagon’s Phase 2 missions, SpaceX did not propose using the
company’s next-generation Starship launch vehicle.

 

“It’s Falcon 9 and Falcon Heavy, no Starship,” said Gwynne Shotwell,
SpaceX’s president and chief operating officer, last year. “We bid to meet
every requirement. The only modifications we need are an extended fairing on
the Falcon Heavy, and we are going to have to build a vertical integration
capability. But we are basically flying the rockets that they need.

 

“There are more data requirements they’re asking for, some additional
inspection, some additional stuff that’s new to Phase 2,” she said. “I
believe some of the reference orbits have slightly more mass to each orbit.
But Falcon 9 and Falcon Heavy are beasts as they are.”

 

The most significant upgrades SpaceX plans for the Phase 2 missions are the
construction of a new moveable gantry on pad 39A at NASA’s Kennedy Space
Center, where the company launches powerful Falcon Heavy rockets. The mobile
tower will sit just to the north of the pad’s launch mount, enabling SpaceX
to satisfy military requirements to vertically integrate sensitive top
secret spy satellites.

 

Read our earlier story for details on the dimensions and requirement for the
gantry.

 

SpaceX will also introduce a larger payload envelope to fit some of the
biggest satellites that need to be launched on the Phase 2 missions. The
company could expand its Falcon 9 launch pad at Vandenberg Air Force Base in
California to accommodate the Falcon Heavy, which uses three Falcon 9 first
stage boosters bolted together.

 

The NSSL missions include the military’s most expensive and critical
payloads, such as school bus-sized spy satellites, nuclear-hardened
communications satellites to link the president with military commanders,
spacecraft to detect enemy missile launches, and the GPS navigation fleet
used around the world.

 

The Space Force has other launch procurement mechanisms to award launch
service contracts for smaller missions, such as technology demonstration
satellites.

 

Roper said the Pentagon will work with Blue Origin and Northrop Grumman to
wind down their work under the launch service agreements awarded in 2018.

 

“The goal is not to carry them indefinitely,” Roper said. “So we will tie
off the (launch service agreement) contracts as soon as we can at a point
that makes sense. We want to make sure that work that’s in flux, that we’re
able to document that 
 Where the government has rights to the data and the
work, we want to make sure that we retain those.”

 

In a statement, Northrop Grumman said it was disappointed in the Pentagon’s
decision to go with ULA and SpaceX for the Phase 2 awards.

 

“We are confident we submitted a strong proposal that reflected out
extensive space launch experience and provided value to our customer, and we
are looking forward to our debriefing from the customer,” Northrop Grumman
said.

 

The fate of Northrop Grumman’s OmegA rocket program is uncertain. Building
on its recent acquisition of Orbital ATK, the defense contractor designed
the OmegA launch vehicle to be profitable with just a handful of launches
per year, with an emphasis on capabilities aimed at the U.S. military’s
requirements.

 

In recent months, construction crews have been assembling a tower on a
mobile launch platform for the OmegA rocket at the Kennedy Space Center in
Florida. Charlie Precourt, vice president of propulsion systems at Northrop
Grumman, said in an interview in June that qualification test-firings of the
OmegA rocket’s solid-fueled stages were completed, and engineers were
gearing up for a test-firing of the launcher’s hydrogen-fueled upper stage
before the end of this year.

 

Precourt said in June that the OmegA rocket was on schedule to be ready for
its first test launch from pad 39B at the Kennedy Space Center in mid-2021.
But that assumed Northrop Grumman would win a Phase 2 award from the
Pentagon.

 

Blue Origin says development of its New Glenn rocket will continue in
pursuit of business in the commercial and civil space markets.

 

The huge privately-developed rocket is the largest of all the launchers that
were part of the Phase 2 competition. Capable of deploying up to 99,000
pounds, or 45 metric tons, to low Earth orbit, the New Glenn will have a
reusable first stage powered by seven BE-4 engines.

 

ULA’s Vulcan Centaur rocket will have two methane-fueled BE-4 engines on its
first stage.

 

Jeff Bezos, the billionaire founder of Amazon.com, established Blue Origin
in 2000. Bezos is funding the development of the New Glenn rocket, which is
estimated to cost more than $2.5 billion, including construction of a huge
factory near the Kennedy Space Center and a launch pad and test facility at
Cape Canaveral Air Force Station.

 

Bob Smith, Blue Origin’s CEO, said the company was disappointed the New
Glenn was not selected for a Phase 2 launch service procurement contract.

 

“We submitted an incredibly compelling offer for the national security
community and the U.S. taxpayer,” Smith said. “Blue Origin’s offer was based
on New Glenn’s heavy-lift performance, unprecedented private investment of
more than $2.5 billion, and a very competitive single basic launch service
price for any mission across the entire ordering period.

 

“We are proceeding with New Glenn development to fulfill our current
commercial contracts, pursue a large and growing commercial market, and
enter into new civil space launch contracts,” Smith said. “We remain
confident New Glenn will play a critical role for the national security
community in the future due to the increasing realization that space is a
contested domain and a robust, responsive, and resilient launch capability
is ever more vital to U.S security.”

 

The Pentagon plans to open another competition for a Phase 2 launch service
procurement later in the 2020s.

 

“We don’t think that this is the last round of innovation that we’re going
see, and though we’re excited for the next five years of Phase 2, we’re
looking ahead to Phase 3 five years from now, and are just wondering what
new leap-ahead, lower-cost technologies might be on the forefront to make
assured access to space not just assured, but cheaper,” Roper
said.-spaceflightnow.com

 

 

 

 

 

 


 


 


 

 


 

INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


Zimbabwe

National Heroes Day

Zimbabwe

10  August 2020

 


Zimbabwe

Defence Forces’ Day

Zimbabwe

11  August 2020

 


Old Mutual Zimbabwe

AGM

virtual

12  August 2020 | 3pm

 


CBZ

AGM

Virtual

14  August 2020 | 6pm

 


Lafarge

AGM

Virtual

18 August 2020  | 12pm

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
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any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


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