Major International Business Headlines Brief::: 11 June 2020

Thu Jun 11 05:59:47 CAT 2020

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Major International Business Headlines Brief::: 11 June 2020

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ü  Firms can't cope with no deal and virus - CBI boss

ü  Renewed push for 'travel corridors'

ü  Fed warns US faces 'long road' to recovery

ü  OECD: No deal on digital tax risks trade war

ü  UK economy could be among worst hit of leading nations, says OECD

ü  Zara owner sees online sales surge 95% in April

ü  S.Africa's business confidence hits record low as lockdown batters economy: survey

ü  Nigeria to reach OPEC+ compliance by mid-July

ü  S.African pay-TV firm MultiChoice reports first full-year profit

ü  ArcelorMittal South Africa fined over hydrogen sulfide emissions

ü  S.Africa mall operator Hyprop says seeing pick up in rent collections

ü  Platinum processing continues at Amplats plant despite repairs

ü  Zambia tackles 'deliberate' undervaluation of mineral exports

ü  Guinea signs Simandou iron deal with SMB-Winning consortium

ü  Egypt's headline inflation slowed to 4.7% in May -CAPMAS

ü  South Africa's rand flat with all eyes on U.S. Fed

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Firms can't cope with no deal and virus - CBI boss

British firms do not have the resilience to cope with a no-deal Brexit after the battering of the coronavirus crisis, according to the outgoing boss of industry body the CBI.

Carolyn Fairbairn said a CBI member had likened a no-deal to "setting the shed on fire" while the house was in flames.

Brexit trade negotiations have not been going well between the UK and the EU.

A government spokesperson said the UK wanted to reach an agreement with the EU this year.

British business is not ready to withstand the additional disruption of leaving the EU without a trade deal, according to the outgoing boss of the UK's most influential business group.

Dame Carolyn Fairbairn told the BBC that any buffers to cope with the additional cost and planning of an exit from the EU without a deal had been exhausted by the Covid-19 pandemic.

"The resilience of British business is absolutely on the floor.

"Every penny of cash that had been stored up, all the stockpiles prepared have been run down.

"The firms that I speak to have not a spare moment to plan for a no trade deal Brexit at the end of the year - that is the common sense voice that needs to find its way into these negotiations."

Those negotiations are not going well. They broke up last week with the EU's chief negotiator saying that very little progress had been made on key sticking points, including future fishing rights in UK waters, and commitments to maintain a "level playing field" over regulation and competition.

The devastating impact of Covid-19 and the fight for business survival has diverted management attention away from any Brexit contingency planning, according to Dame Fairbairn, who worries that a political commitment to abandon the current transitional trading arrangements - come what may - will add to the burden on business at a critical moment.

"As one member put it to me - just because the house is on fire, it doesn't make it ok to set fire to the garden shed.

"If we have a political timescale that takes us to a brinksmanship deal in December that will be catastrophic for British business - they will not be ready.

"Small businesses were not ready last time there was a no-deal Brexit threat - this time they will not have had a moment to prepare for it."

Dame Fairbairn's comments come as the CBI confirmed she will be succeeded as Director General by Tony Danker in November.

Mr Danker is currently chief executive of Be the Business, an organisation set up to improve the efficiency and productivity of UK businesses. A former media executive, he was also a policy adviser to the Treasury.

Brexit strain

Relations between business groups and the government have been strained ever since the campaign leading up to the EU referendum of 2016, when business groups, including the CBI, warned of economic damage to the UK economy whose biggest customer is the EU.

Dame Fairbairn is hopeful that this crisis can help build bridges in the face of a common and deadly health and economic enemy.

"Government realises it needs business and business understands how much it needs government," she said.

She described the government's intervention to support workers wages during the lockdown as a "vital way for the economy to hibernate".

But the CBI on Thursday urged the government to focus on how the UK emerges from that hibernation.

In a letter to the Prime Minister, Dame Fairbairn called on the government to make employment for young workers the government's top priority, as well as ensuring the UK emerges from the crisis with a focus on investment in environmentally sustainable industries.

Dame Carolyn was set to stand down this year anyway, but agreed to extend her term until the end of the year given the ongoing health and economic crisis.

This is not the swansong she would have wanted. The UK is forecast to experience the worst economic downturn of any major European economy according to figures out yesterday from the OECD.

A government spokesperson said: "We've been clear that we want to reach an agreement with the EU this year and we are prepared to work hard to accelerate talks. This was what both sides agreed to in the political declaration.

"If we don't negotiate a Canada-style FTA [free trade agreement], we'll leave with an Australia-style relationship. Whatever happens we will be leaving the single market and customs union at the end of this year.

"We have taken unprecedented action to support businesses through this pandemic and to ensure the UK's economic recovery is as strong and as swift as possible. Extending the transition period would simply prolong the negotiations and create more uncertainty for businesses."--BBC

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Renewed push for 'travel corridors'

UK industry bodies have again pushed the government to allow "travel corridor" deals with other countries.

They want to know when and how ministers will agree deals with other countries so more people would be exempt from new quarantine rules for people arriving into the UK.

The business and university groups say it is vital for the economy that the UK begins to open up to trading partners.

The government said it was continuing to consider such travel corridors.

A range of organisations representing businesses across the UK have written to ministers asking them for clarity on how and when the government might relax travel restrictions.

The bosses of groups representing industry, tourism, hospitality and universities, as well as regional and national chambers of commerce said it was "vital" that the UK began to open up for trade.

This is a plea for from businesses and universities for clarity on when travel restrictions between the UK and other countries will be eased.

In a letter to the home secretary, the foreign secretary, and the transport secretary, the group made three demands.

They want more detail on how and when the government will agree travel corridors with countries with low infection rates, so passengers on certain routes will not have to self-isolate for two weeks when they arrive in the UK.

They also want to know when the Foreign Office will move away from its current blanket advice against all but essential travel abroad.

They argue a more nuanced approach is needed, based on the risk posed by individual countries.

Finally they call for a more comprehensive strategy on health screening at the border. They say businesses have to plan, so they need to know when journeys abroad might be possible again.

"As we look to recover from the economic shock that Covid-19 has delivered, it will be vital that we start to open the UK up to our trading partners," the signatories said.

The groups, which include the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC) and the Federation of Small Businesses (FSB), said that whole sectors of the UK economy "simply won't recover and thrive without international connections".

Business and tourism groups have been urging the government to relax quarantine restrictions to aid the UK economy.

In May, industry groups said the UK risks being left behind without air bridges, while tourism organisations also backed those calls.

'Under review'

A government spokesperson said: "We recognise this is a challenging period for businesses and have announced an unprecedented package of support measures to help them, while also trying to avoid a second peak of this deadly virus by managing the risk of cases being imported from abroad.

"Our focus is implementing measures which help tackle the spread of the disease and protect public health. The government is continuing to consider the travel corridors concept as a possible way of relaxing border measures and increasing travel once it is safe to do so.

"We are monitoring the global travel situation closely and keeping our advice against all non-essential travel under continuous review."--BBC

Fed warns US faces 'long road' to recovery

The head of America's central bank has pledged to continue support for the US economy for "as long as it takes".

Warning that the US faces a "long road" to recovery, Federal Reserve Chair Jerome Powell said the bank would keep interest rates near zero for the foreseeable future.

A policymaker forecast released by the Fed showed rates remaining low until the end of 2022.

"This is going to take some time," Mr Powell said.

In December, Fed policymakers said they expected the US economy to grow about 2% this year and the unemployment rate to remain around 3.5%.

But the pandemic has dramatically rewritten that outlook, prompting the loss of more than 20 million jobs in March and April in the US alone.

US recession: What can the 2008 recession teach us about this one?

Pandemic pushes US into official recession

The OECD on Wednesday said the pandemic had triggered the most severe recession in a century and warned that the global economy could contract 7.6% this year, should a second outbreak hit.

Predictions released by the Fed on Wednesday show policymakers expect the US economy to shrink 6.5% this year and the unemployment rate to be 9.3%, before falling to 6.5% in 2021.

That would still be a big increase from the 3.5% rate recorded in February.

'Aggressive action'

The Federal Reserve slashed interest rates toward zero at the onset of the pandemic and has pledged to maintain low rates until the economy is back on track.

It has pumped trillions of dollars into the financial system, buying up US Treasuries and other assets to encourage banks to keep lending and prevent a market collapse.

It has also stepped in with new programmes to lend to small and medium-sized firms and buy corporate and municipal debt.

The swift action has won widespread praise in Washington. In a hearing about the pandemic response on Wednesday, Republican Senator John Kennedy called Mr Powell a "rock star".

Neil Birrell, chief investment officer at Premier Miton, said the Fed's statement on Wednesday was "affirmation of central banks everywhere doing what they need to do".

Analysts credit the Fed's aggressive response with helping to drive a rally in financial markets, which have rebounded sharply from their lows.

Mr Powell on Wednesday said financial conditions had improved, thanks to the Fed's efforts to keep markets from freezing up.

He defended the bank's plan to continue asset purchases at the current levels, despite criticisms that such moves primarily help wealthy investors.

"We don't take those gains for granted," Mr Powell said.

No change in interest rates at this meeting, and it seems most of the Fed's policy makers expect no change before 2023.

One of the documents released alongside the policy statements is a summary of the expectations of the Fed's policy makers.

It doesn't identify individuals, but it does give us some indication of what they're thinking, if not exactly who is thinking it.

None expect rates to rise this year or next. There is at least one who thinks there will be a rise of a full percentage point in 2022. But the majority think that won't happen.

On growth the most optimistic thinks this year will see a contraction of 4.2%. One expects a pretty hideous figure of 10%.

Most expect a return to growth next year. But if you take the median - the one in the middle if you rank them - it will be 2022 before this year's losses are fully recovered.

The cumulative picture for that projection is an economy 1.6% larger in that year than it was last year.

That suggests, for that period, more than two years of lost growth, at the rate they think is likely over the long term.--BBC

OECD: No deal on digital tax risks trade war

The head of the Organisation for Economic Cooperation and Development has said countries must agree on an approach for taxing tech giants, or they risk a widespread trade war.

The warning from Angel Gurría comes as an increasing number of countries, including the UK, impose new levies on digital sales.

Last week, the US launched a probe of the taxes, saying they unfairly target American companies.

That process could lead to tariffs.

For more than a year, the OECD has been overseeing talks aimed at reaching a multilateral deal.

The US, home to internet giants such as Amazon, Google, and Facebook, has said it supports that process, but its position on the issue diverges significantly from the interests of other members.

Treasury Secretary Steven Mnuchin has said taxes should be based on income, not sales, and should not target a specific industry.

Last year the US threatened tariffs on $2.4bn worth of French exports, including cheese and champagne, after the country moved forward with its digital services tax, a 3% tax on revenues from digital services provided by large companies.

They were postponed this winter, after France said it would hold off collection, pending the OECD negotiations, which are supposed to conclude by the end of this year.

But many other countries have moved to introduce their own version of the tax, including the Czech Republic and Thailand just this week. In the UK, a 2% tax on digital sales came into force in April.

'Last thing we need'

Speaking to the BBC, Mr Gurría said "we have to" reach an agreement.

The alternative is "you will have another trade war, except this time only not just between France and the US, which almost happened and we managed to avoid, but... with dozens and dozens of countries."

"That's the last thing we need at this time, the time of Covid. We already know how much it costs to the world in terms of wellbeing when you have trade tensions," he said.

Trade war

Under US President Donald Trump, the US has taken an aggressive trade stance. He has imposed tariffs on foreign steel and aluminium and billions of dollars worth in Chinese goods.

The International Monetary Fund last year estimated that the US-China trade war would reduce global growth by almost 1% in 2019.

The UK has started trade talks with the US.

After the US announced its probe last week, it declined to comment on how its digital services tax might have an impact on those negotiations.--BBC

UK economy could be among worst hit of leading nations, says OECD

The UK is likely to be the hardest hit by Covid-19 among major economies, the Organisation for Economic Co-operation and Development has warned.

Britain's economy is likely to slump by 11.5% in 2020, slightly outstripping falls in countries such as Germany, France, Spain and Italy, it said.

If there were a second peak in the pandemic, the UK economy could contract by as much as 14%.

"The crisis will cast a long shadow over the world," the OECD added.

It said that in what it called a "single-hit scenario", with no second peak, there could be contractions of 11.4% in France, 11.1% in Spain, 11.3% in Italy and 6.6% in Germany.

In its latest assessment, the OECD found that the UK's largely service-based economy meant that it had been particularly badly hit by the government's lockdown restrictions.

The services sector, including financial services, hospitality and tourism, makes up about three-quarters of the UK's GDP.

In response to the think tank's report, Chancellor Rishi Sunak said the UK was not the only one to suffer: "In common with many other economies around the world, we're seeing the significant impact of coronavirus on our country and our economy.

"The unprecedented action we've taken to provide lifelines that help people and businesses through the economic disruption will ensure our economic recovery is as strong and as swift as possible."

Shadow chancellor Anneliese Dodds said: "Today's evidence from the OECD is deeply worrying, showing the UK was particularly exposed when the coronavirus crisis hit.

"The government's failure to get on top of the health crisis, delay going into lockdown and chaotic mismanagement of the exit from lockdown are making the economic impact of this crisis worse."

The central finding of the OECD forecasts is that the expectations or hopes of a rapid bounceback in the economy - a so-called V-shaped chart - is not now happening.

As Secretary General Angel Gurria put it to me, it will be "U-shaped", the question is how long will be the period at the bottom of this "U".

This pattern is not affecting all countries equally.

And in the event of there being no further peak, the prediction is that the UK is the worst hit this year, though just a little bit worse than Italy and France.

For those who like a glass half full, it also predicts the strongest growth in the UK at 9% for 2021. But that is a rather hollow prize.

The reason why is that the UK economy is peculiarly exposed as a trading economy with significant service and tourist sectors.

But it is also a nation that has been among the hardest hit by the underlying pandemic.

This hit comes despite a much-praised rapid response deploying tens of billions to keep millions of workers on payrolls.

The OECD also mentions the pandemic economic impact being "compounded" by the looming plausible failure to sign a trade deal with the EU and new trade barriers with the European Union at the end of the year.

It recommends temporarily extending the UK's stay in the single market. That is advice that the government has shown no inclination to follow so far.

The bigger point is that the OECD is subtly pointing to the fact that one rescue package is not enough.

Late last week the Germans announced a massive 4% stimulus to the economy, including a thumping cut to VAT, and significant subsidies for the purchase of cars.

The league table is an invitation to do more. And we will soon enough get actual hard economic data, as opposed to forecasts such as this, when the monthly GDP figure for April - entirely locked down - is published on Friday.

Global impact

The OECD said the pandemic had started to recede in many countries and activity had begun to pick up, but it does not expect a convincing recovery. It sees the outlook for public health as extremely uncertain.

OECD chief economist Laurence Boone said the pandemic would have "dire and long-lasting consequences for people, firms and governments".

She added: "Extraordinary policies will be required to walk the tightrope towards recovery. Even if growth does surge in some sectors, overall activity will remain muted for a while."

The OECD looked at two scenarios for how the pandemic might unfold, depending on whether there is a second wave of contagion or not before the end of this year.

If that does happen, two countries - France and Spain - would suffer even deeper declines in economic activity than the UK this year.

The report describes both outlooks as sobering, but either way, the deep recession now unfolding will be followed by a slow recovery.

In the more severe case, the global economy could shrink by 7.6% over this year, the OECD says.

That figure is significantly worse than predictions put forward by other agencies, such as the International Monetary Fund and the World Bank, which have warned about the high level of uncertainty attached to their forecasts.

By the end of 2021, the report says that five or more years of income growth could be lost in many countries. It says the impact on livelihoods will be especially severe among the most vulnerable groups.

The OECD also says the pandemic has accelerated the shift from what it calls "great integration" to "great fragmentation".

That is essentially a setback for globalisation, reflected in additional trade and investment restrictions and many borders that are closed at least while the health crisis persists.--BBC

Zara owner sees online sales surge 95% in April

Inditex, the owner of Zara, said online sales surged 95% in April as its stores were closed during the coronavirus lockdown in much of Europe.

The company said it expected part of the shift to be permanent, with a quarter of sales expected to be online in 2022, up from 14% in 2019.

Even so, the firm booked its first-ever quarterly loss as sales overall dived.

Sales fell to €3.3bn (£2.9bn) for the first three months of the month, down from €5.9bn a year earlier.

That led to a quarterly loss of €409m for the Spanish firm, which also owns the Bershka and Pull & Bear brands.

"Lockdown is accelerating existing trends, forcing retailers to acknowledge the digital age has dawned," said Sophie Lund-Yates, from stockbroker Hargreaves Lansdown.

"The Zara owners were already working towards improving their online capabilities but lockdown has ushered in a new urgency."

She highlighted Zara's success in managing its stock levels.

Inventory fell 10% in April, she said, "in stark contrast to the likes of M&S or Primark who have been lumbered with swollen piles of stock".

The shares rose 2.3% in Madrid trading.

Cash-rich

Inditex said it would spend €900m a year for the next three years on big, centralised stores and its online platform. It will close more than 1,000 smaller stores in the process.

It expects most stores to open by the end of the month, it said.

The firm has a big advantage over many High Street competitors, thanks to its cash reserves.

It has €5.8bn, compared with €6.7bn last year.--BBC

S.Africa's business confidence hits record low as lockdown batters economy: survey

(Reuters) - South Africa’s business confidence hit a record low in the second quarter, a survey showed on Wednesday, as a coronavirus-led lockdown stalled an economy that was reeling from a recession even before the COVID-19 pandemic.

The Rand Merchant Bank (RMB) business confidence index (BCI), compiled by the Bureau for Economic Research, was at 5 points for the second quarter, the lowest level since the first survey in 1975 and down from 18 points for the first quarter.

Africa’s most industrialised economy, which entered its second recession in two years in 2019, has been largely shut down since late March, when the government imposed severe restrictions to stem the spread of the novel coronavirus.

The country began phased easing of the lockdown in May.

“COVID-19 has drastically changed the already-weak economic landscape and perhaps, in some cases, permanently,” RMB chief economist Ettienne le Roux said.

“We are likely only beginning to fully appreciate the complexity of the economic impacts of this pandemic.”

Firms will likely continue to face an income squeeze as costs rise, while weak demand weighs on prices, and many will have to find new ways of doing business, according to the survey.

It also said that the BCI plunge to five was consistent with a “never seen before” contraction in economic growth.

South Africa’s central bank expects the economy to shrink 7% this year, but economists expect an even deeper recession as well as deep job losses.

The survey showed that business confidence declined across all sectors, but retail confidence held up relative to the other sectors because of the sale of essential goods.

Nigeria to reach OPEC+ compliance by mid-July

LONDON (Reuters) - Nigeria did not fully comply with a pact by oil producers to rein in output to balance markets but will make additional cuts to make up for the lapse by mid-July, the head of the Nigerian National Petroleum Corporation Mele Kyari said on Wednesday.

Nigeria had exceeded its quota for production cuts under an OPEC+ deal by a little less than 100,000 barrels per day (bpd) in May, Kyari said in an online interview with Dubai-based research firm Gulf Intelligence.

Africa’s top oil exporter aims to reach full compliance by “maximum, middle of July”, Kyari said, adding the country will by that point need to cut an additional 40,000-45,000 bpd in order to compensate for its earlier over-production.

Kyari said there had been technical challenges to reining in Nigeria’s output but the country was fully committed to the cuts.

The Organization of the Petroleum Exporting Countries, Russia and other producers agreed in April to cut supply by 9.7 million barrels per day (bpd) in May and June to support prices as coronavirus lockdowns caused demand to collapse.

The group, known as OPEC+, agreed on Saturday to sustain those cuts, equal to about 10% of global supply, through July.

It also demanded countries such as Nigeria and Iraq, which exceeded production quotas in May and June, compensate with extra cuts in July to September.

In a webinar with Nigerian oil industry stakeholders later on Wednesday, Kyari said that an oil price estimate of $27 per barrel for Nigeria’s revised budget could be on the low side as prices are recovering from two-decade lows.

“There’s a hope and expectation that with all the rebalancing that’s going on we could reach $42-$45 before the end of the year, which could compensate for the low prices in March and April,” he said.

Kyari said that Nigeria aimed to cap production costs at $10 a barrel by 2021 in order to remain competitive: “if you can’t do this, you walk away, this is not a business of subsidies.”

S.African pay-TV firm MultiChoice reports first full-year profit

JOHANNESBURG (Reuters) - Africa’s largest pay-TV group MultiChoice reported its first full-year profit as a stand-alone company on Wednesday, in the middle of a range it forecast last week.

The company, which serves 19.5 million households in 50 countries on the continent, was spun off by parent company Naspers last year, and initially struggled with losses in its operations outside its home market, South Africa.

But it said on Wednesday that during its first full-year since the split from Naspers, it had benefited from favourable foreign exchange movements, cut costs and improved the performance of its businesses elsewhere in Africa.

CEO Calvo Mawela said the company was pleased with its performance, but that it faced “unprecedented times”.

“Our healthy balance sheet positions us well to weather the uncertainties in our markets going forward,” he added.

The company said its headline earnings per share - the main profit measure in South Africa - stood at 128 cents ($0.0774) in the year to March 31.

That compares to a loss of 353 cents a year earlier, and a rise of between 107 cents and 147 cents it forecast last week.

Subscriber growth slowed slightly, to stand up 5% year-on-year. MultiChoice said consumers were increasingly under financial pressure in many markets and also cited drought-related electricity shortages in southern Africa and one-off sporting events that did not recur.

It reduced losses in its divisions outside South Africa by 800 million rand, and cut 1.4 billion rand in costs throughout the year, it said. Its board recommended a final dividend of 565 cents.

Its shares pared losses following the announcement and were trading 1% lower by 1201 GMT.

($1 = 16.5467 rand)

ArcelorMittal South Africa fined over hydrogen sulfide emissions

JOHANNESBURG (Reuters) - ArcelorMittal South Africa will pay a fine of 3.64 million rand ($219,658) relating to charges of exceeding hydrogen sulfide minimum emissions standards at its coke plant in 2016, it said on Wednesday.

“While we acknowledge that emissions at our Vanderbijlpark plant exceeded permissible H2S levels for a period of time in the past, steps were taken to address the problem but unfortunately the initiatives implemented did not adequately resolve the problem,” said Kobus Verster, chief executive of ArcelorMittal South Africa.

($1 = 16.5712 rand)

S.Africa mall operator Hyprop says seeing pick up in rent collections

JOHANNESBURG (Reuters) - South African shopping mall operator Hyprop Investments said on Wednesday that rent collections were increasing as outlets reopened and customers slowly start returning after more than two-months of lockdown.

Non-food brick-and-mortar retailers are among the worst hit by a government order to close all stores in a bid to prevent the spread of the coronavirus. The country’s oldest department store chain operator Edcon entered into bankruptcy protection in April.

Retailers were allowed to resume operations from May 1 but footfall is still significant down.

“Rent collections are improving as these negotiations are concluded with individual tenants and should return to normal levels once all are finalised,” Hyprop said in a statement.

Hyprop collected 43.6% of rent for April and 54.6% for May.

The company, which owns upmarket Hyde Park Corner mall and Rosebank mall in Johannesburg, said it is currently in talks with 86 of its national and larger retailer groups in South Africa and has concluded negotiations with 37% of these.

Its liquidity is strong and it has 1.6 billion rand ($96.22 million) in available cash resources, it said.

Hyprop, which counts Edcon as one of its tenants, said it has 47,762 square meters of exposure to the company, or 6.7% of its gross leasable area in South Africa.

Edcon’s administrators have identified about 1,360 square meters of that as non-viable space, it said.

“We have leasing strategies in place for this space as well as for any additional vacancies resulting from the business rescue process,” Hyprop said.

The administrators have proposed selling parts or all of Edcon, with 15 suitors interested in its assets.

($1 = 16.6289 rand)

Platinum processing continues at Amplats plant despite repairs

JOHANNESBURG (Reuters) - Anglo American Platinum (Amplats) will still receive concentrate and deliver metal to customers despite the closure of a unit of its Anglo Converter Plant (ACP) last week when a water leak was detected, the company said on Wednesday.

The Johannesburg-listed miner, one of the world’s largest platinum producers, last week closed the Phase B unit at the ACP processing and refining plant after detecting a water leak in the high-pressure cooling section.

“[Amplats] will continue to receive concentrate from third parties and joint ventures ... and will continue to deliver metal to customers,” the miner said in a statement without providing further detail.

Amplats said that repair work on the single cooler tube at the unit, part of a chain of processing facilities, would be completed next week with no impact expected on full-year refined production guidance of between 3.1 million and 3.6 million platinum group metal (PGM) ounces.

The company last month completed repairs to the Phase B unit in Rustenburg, North West Province, after a blast shut processing facilities and it declared force majeure to suppliers of concentrate.

The repairs enabled the lifting of the force majeure, though repairs to the Phase A unit are not expected to be complete until the latter part of 2020. [nL8N2CN1MJ]

The damage to the processing facilities forced Amplats to cut its production outlook in March.

Zambia tackles 'deliberate' undervaluation of mineral exports

LUSAKA (Reuters) - Zambia on Wednesday said mines ministry officials will, starting next month, personally collect samples from mine sites around the country to prevent mining companies seeking to undervalue their production to pay less taxes.

The ministry said some mineral exporters deliberately submit low-grade samples to the state laboratory, causing an undervaluation of mineral exports and depriving the government of mineral royalty tax revenue.

“The loss of revenue could amount to hundreds of thousands, or even millions of dollars per export, depending on the discrepancy in mineral grade between the sample and the consignment being exported,” Barnaby Mulenga, permanent secretary at the ministry of mines, said in a statement.

The change, which takes effect on July 1, means the ministry will no longer accept samples submitted by exporters and is the latest push by Zambia’s government to squeeze more revenue from the mining sector.

Mining accounts for more than 70% of Zambia’s foreign exchange earnings, an income that has become even more critical as the COVID-19 pandemic hits the economy.

Africa’s second-largest copper producer, Zambia is also trying to diversify its revenue base by boosting its gold production, and making copper mining companies account for the gold they produce as a by-product.

Companies operating in Zambia include First Quantum Minerals, Glencore, Barrick Gold and Vedanta Resources.

None of them had any immediate comment.

Guinea signs Simandou iron deal with SMB-Winning consortium

CONAKRY (Reuters) - Guinea on Tuesday signed an agreement with a consortium for the development of its giant Simandou iron ore reserve, another step towards the realisation of a project which it hopes will bring a $15 billion windfall over the 25-year lifespan.

The deal includes the construction of a 650 km railway from Guinea’s mountainous forest region to the coast, and a deep sea water port, which will unlock the development of blocks 1 and 2 of the rich Simandou iron reserve.

It is expected to be minerals-rich Guinea’s largest industrial mining project to date.

“This is an important step in the development of the Guinean mining sector.” Mines Minister Abdoulaye Magassouba said, adding that it will help diversify the country’s mining output which until now heavily depended on aluminium ore and gold.

The consortium - which includes Société Minière de Boké (SMB) and Singapore’s Winning Shipping as well as Guinean government interests - won a $14 billion tender last November to develop the blocks at Simandou, the largest known deposit of its kind holding more than 2 billion tonnes of high-grade ore.

Egypt's headline inflation slowed to 4.7% in May -CAPMAS

CAIRO (Reuters) - Egypt’s annual urban consumer price inflation rate slowed to 4.7% in May from 5.9% in April, the official statistics agency CAPMAS said on Wednesday.

The North African country of 100 million people is facing tough economic repercussions from the spread of the new coronavirus, which essentially shut down its vital tourism sector from mid-March.

Egypt also imposed a nightly curfew, closed schools and universities, and shut restaurants and cafes to slow the spread of the disease.

The May inflation rate dropped on the back of an 0.3% decline year-on-year in food and beverage costs, CAPMAS data showed, reflecting a drop in demand during the Muslim holy month of Ramadan, when it normally surges.

Month-on-month urban inflation registered 0%, CAPMAS said.

“From a monetary policy angle, this is considered good news because it ensures stability for interest rates going forward. However, month-on-month inflation could start going back up in June and July,” said Allen Sandeep, head of research at Naeem Brokerage.

The International Monetary Fund in May approved $2.77 billion in emergency financing to help Egypt grapple with the new coronavirus pandemic through its rapid financing instrument.

Egypt then subsequently reached a staff-level agreement with the lender for a one-year, $5.2 billion standby loan, which the IMF’s executive board is expected to consider in the coming weeks.

South Africa's rand flat with all eyes on U.S. Fed

JOHANNESBURG (Reuters) - South Africa’s rand traded flat early on Wednesday as caution before a U.S. central bank policy decision kept investors on the sidelines.

At 0650 GMT the rand was flat at 16.6300 per dollar, having reached 16.5770 in Asia before falling back as the global optimism that had driven it to a near three-month high continued to give way.

The U.S. Federal Reserve is not expected to cut interest rates when it meets later in the day, but it is seen taking steps to curb a recent rise in bond yields. Its forecasts for the U.S. economy will also be close watched.

“Any unexpected addition to the Fed’s stimulus program and a more dovish than expected statement or a less-bearish-than-before outlook on economic recovery prospects would re-ignite the risk-on rally of late,” ETM Analytics said in a note.

“Further out, the ZAR-case remains a bullish one with a strong H2 expected on account of the local unit’s stretched undervaluation versus the dollar and eventual economic recovery prospects.”

Bonds inched up in early trade, with the yield on the government issue due in 2030 down 2 basis points to 9.095%.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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 Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has 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 companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of 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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