Developments October 2016



Mozambique’s economic growth is likely to slow to 4,5% this year from 6.6% last year due to rapidly rising inflation and growing government debt. The IMF have recently discovered more than $1bn of previously undisclosed debt which will increase pressure on the economy. The stock of debt as at the end of 2015 is some 86% of GDP. Mozambique failed to meet a deadline to make its first payment on a $535M loan.

Botswana’s economy is projected to grow at 4% – this is down from the earlier projection of 4.4%.

Zimbabwe’s economy is in dire straits. The country has run out of US Dollars and has delayed paying civil servants and compelled banks to limit the amount of money that can be drawn from ATM’s.

Standard and Poor has assigned South Africa a BBB- foreign currency sovereign rating. South Africa joins Brazil, Bulgaria, Croatia, Hungary, Romania and Russia in descending into a recession for the next year. Earlier this year it was predicted that the South African economy will only grow by 0.5% in 2016 – however in July the IMF predicted a growth of 0.1%. Growth in 2017 is expected to be 1.1%.

The recent spat between the Minister of Finance and the Hawks Division of the SA Police is having negative implications on the economy. It is probable that South Africa’s credit rating will be reduced to junk status. The unemployment rate in South Africa remained at 26.2% for the second quarter of the year. South Africa achieved a trade surplus of R12.53bn in June.


Transnet has slowed their capital spend in line with declining commodity volumes. Coal exports declined by 5.5% from 76.3M tons to 72.1M tons. Iron ore volumes decreased by 3% from 59.7M tons to 58M tons. Manganese volumes were down 7%, chrome 1% and steel and cement 16%.

Tanzania has received a commitment from Exin Bank in China for $7.6bn to build a standard gauge railway line to link Uganda, Burundi, Rwanda and the DRC to a new Port at Bagamoyo. The Port will cost $10bn.

The International Finance Corporation is close to refinancing the Nacala rail line. The 912km line which carries coal from Vale’s Moatize mine through Malawi to the Port of Nacala has a capacity of 22M tons of which 18M tons is committed to Vale. The finance package is some $2.7bn which will be underwritten by the World Bank along with the African Development Bank and Japan Bank.


Transnet is offering a Tender for the development of an offshore supply base for the oil and gas industry. Other Tenders include a ship repair facility at the Mosgas quay.

Botswana wants to re-activate the study for the Techobanine harbour in southern Mozambique – 70km south of Maputo – for the export of Botswana coal. The project will include a 1 100km rail line.



Sinohydro and China Railway Group have agreed to finance a 240 megawatt hydropower plant in the DRC. The cost of the plant will be $660M and the power will go to the copper and cobalt production area. The new plant will help fill a 900 megawatt electricity shortfall.

The Zambian power grid is to be boosted by a $60M investment. Zambia has a generating capacity of 2 224 megawatts from Hydropower and Kariba is only 26% full compared to 48% at the same time last year. Solar power is being scaled up to 600 megawatts. Zambia plans to spend $1.9bn each year to 2025 to boost energy production up to 10 000 megawatts from around the current 1 500 megawatts.

Eskom terminated the contract to rebuild unit 3 of the Duvha power station. The boiler exploded in March 2014 due to over pressurization.

Unit 4 of the Ingula hydroelectric power plant has been connected to the grid. The plant is located in the North east of Kwazulu Natal. Costs for the project have escalated to R36bn from the initial budgeted cost of R8.9bn – questions are being asked in Parliament. All four units will be operational in 2017 producing some 1 332 megawatts.

Shumba Energy, an IPP (Independent Power Producer) has been given environmental go ahead to develop its 600 megawatt coal to power station at Mabesekwa in the North east of Botswana.

Shanghai Electrical Power and Ncondezi Energy have signed a shareholder agreement for a joint development of a planned 300 megawatt coal fired power plant in Tete.

The feasibility study on the Mbeya coal to power project at Kibo Mining in Tanzania is positive.

Africa Energy Resources advise that their Sese project in Botswana can be increased from 300 megawatts to 450 megawatts.

Work on the Kariba Dam wall is set to commence in February 2017. The main work will be focused on re-modelling the plunge pool. The pool is some 90m deep and is undercutting the foundations of the wall. Repairs to the six spillway gates are set to commence in July 2017 and continue up to 2024. Costs are estimated at $294M which will be released in batches – the funders being the World Bank, EU and African Development Bank and the government of Sweden..


Exxon and Qatar Petroleum are considering buying stakes in natural gas discoveries off Mozambique made by Anadarko and Eni.

Sasol is investing $1.4bn in growing Mozambique gas. Twelve new gas and oil wells in Temane and Pande will be installed and a 5th gas train to produce petroleum. All drilling will take place at Inhassoro and Temane on shore.

The Rovuma Basin in Mozambique has gas reserves of 85 trillion cubic feet. Discussions are taking place with ENI and the Mozambique government on developments in the basin. It is expected that it will take five years after the Final Investment decision, before production takes place. Samsung is looking at producing production platforms.

The Mozambique State Oil company has signed a 20-year LNG sales contract with BP. The gas will come from the South Coral field – a floating platform will produce 3.3M tons of LNG per year.

The Tanzanian government has asked the BG Group to speed up the plan to build a $30bn onshore LNG export terminal. The project which has a number of partners including the Tanzania Petroleum Development Corporation, plans to have the terminal in operation by 2020 at Lindi. Tanzania has discovered further gas deposits. A deposit of 2.17 trillion cubic feet was discovered in February, raising the estimated recoverable natural gas reserves to more than 57 trillion cubic feet.

The draft environmental impact report on the Ibhusesi Gas Project has been updated to a final environmental Impact report.


The Strategic Fuel Fund of South Africa is looking to purchase Chevron South Africa. Chevron’s assets include a 110 000 barrel per day refinery in Cape Town and a network of branded Caltex petrol stations countrywide.

Tanzania plans to complete a crude oil pipeline from Uganda to the Port of Tanga in 2020 at a cost of $3.5bn.

Uganda has reserves of 3.5bn barrels near Hoima, close to the DRC border. The pipeline will be 1 443km long and three oil firms will participate in the project – Total, CNOOC and Tullow Oil. Uganda had plans to build a refinery – however the Russian consortium contracted to build the refinery has walked away from the project

Kenya has announced that they have plans to revive its obsolete oil refinery. The refinery is some 50 years old and belongs to the Kenyan Government. The country plans to start production at 2 000 barrels per day, ramping up to 10 000 barrels per day when the pipeline to the terminal at Lamu Port is completed. It is estimated that Kenya has reserves of 300 to 600M barrels.


Toyota South Africa are investing R1.6bn to facilitate the production of two new models.

New vehicle sales for the first half of 2016 were 10.4% lower than for the same period last year and showed a 17% drop in July when compared to last year’s sales. Vehicle sales into Africa have plummeted 54% – some 14 723 units have been sold compared to 32 080 units for the same period last year. Exports to Africa in 2013 were 78 787 units and in 2014, 61 839 units. In 2015, 42 594 units were exported and in 2016 it is predicted that about 20 000 units will be exported.

The Coega Development Corporation has signed an agreement with Beijing Automobile International Corporation (BAIC) for the establishment of a CKD vehicle manufacturing plant in the Coega Industrual Zone. The development is some R11bn and the plant will have the capacity to produce 40 000 to 50 000 units per year in the initial phase. It is expected that construction of the plant will begin at the beginning of next year.


RBCT has a new sample lab at the coal terminal.

Three companies producing coal in Mozambique have scaled back their operations due to poor market conditions. The companies are all in Tete. Some 4 000 jobs have been shed.

Coal of Africa reports that they have received EIA authorisation from the Department of Energy Resources for their Makhadi project in Limpopo.

International Coal Ventures of India is considering building a thermal power station at its Benga coal mine in the Tete province of Mozambique.

Vale stopped transporting coal on the Sena line following the attack on coal trains by gunmen.

Resource Generation has succeeded in securing finance of R5.52bn to complete construction on their Boikarabelo Coal mine in Limpopo. It is expected that the first saleable product will be available in the last quarter of 2018. The mine will be the second largest mine in the Waterberg area and will provide coal for the domestic market as well as exports.

Tanzania has banned coal imports and this will unlock coal development within the country. Edenville is well positioned to move the Rukwa project into production. Edenville also holds a mining licence over the Mkomolo deposit and is reviewing quotes for the mining and development of the area.


The Minister of Mines in Zambia has announced that the country could double copper production next year from a projected level of 750 000mt this year. Other commentators advise that this statement is wildly optimistic. Power supply and the current price of copper are negating factors.

Sentinel Copper of Zambia exceeded production by 53% over the quarter due to steady operational power supply.

Metal Tiger PLC has announced significant copper mineralisation in the Mahumo Concession in the Kalahari copper belt in Botswana. There are indications of a large deposit of copper.

Ivanhoe Mining has announced a significant discovery at its Kamoa project in the DRC. The ore body is thicker and richer producing copper concentrate of 53%.

Gecamines has announced that China Nonferrous Metals may inject some $2bn to develop a new copper asset.

Copper output in the DRC has fallen 14% in the first half of the year to 466 250 tons. The DRC produced 990 000mt in 2015, down from 1,03M tons in 2014.

A study has shown seven potential near surface copper mineralisation sites in the Condordia project near Okiep in South Africa.


The Botswana Government is relooking at the Bamangwato concession. Three months ago the government underwrote a $100M facility to keep the nickel production going. The government will make a decision shortly on shutting down the operation or keeping it going.


Seaborne trade in iron ore has increased 5% in the first half of this year and is projected to continue for the balance of the year, rising in 2017. Brazil’s seaborne trade rose 7% and Australia 4%. By contrast Kumba’s production was cut by 21% to 17.8M tons. Steel production over this period fell 2.5% and Kumba’s export sales declined. Kumba production has dipped some 15%. The company produced 8.9M tons of ore in the second quarter of this year. Kumba has introduced ultra-high density media separation plants (UHDMS) at their Sishen and Kolomela mines. The technology provides saleable product from discard material.


A new chrome recovery plant has been commissioned at Amplats. The cost of the plant is some R400M and it will be in production in June 2017.


Transalloys will sell two ferromanganese smelting furnaces to Gulf Manganese in Kupang, Indonesia for $1M. Gulf Manganese will supply 30 000mt of high grade ore to Transalloys for three years. The smelters will be shipped in November 2016. The furnaces have not been in use for some time. They are medium carbon furnaces and Transalloys has shifted its focus to high carbon ferroalloys.


MRC plans to sell its 56% stake in Transworld Energy Resources to Keysha Industrial on the Xolobeni Heavy Minerals project on the Wild Coast of South Africa.

Kibaran is going ahead with its Epanko Project in Tanzania after raising some $10.9M through share placement. They plan to produce 40 000 to 60 000 tons per year.

Armadale Capital has discovered high grade flake graphite at its Mahenge Liandu project in Tanzania.


Pre-stripping and surface work is being undertaken at the Gamsberg site in the Northern Cape.


South Africa intends to import about 1.1M of white maize this season. The country’s production of white maize this year is forecast at 3.097M tons. South Africa consumes 10.5M tons per year, of which 48% is white maize and the balance yellow maize. South Africa is set to double production of white maize next year if rains from the La Nina weather event end the current drought. The country will probably produce 6 to 6.5M tons of white maize next year if rains fall. This year, some 3.1M tons are expected to be harvested


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