SAICC News

African Business Roundup - March 2009

Mining:

Corporate / M&A:

Anglo American has sold nearly 20% of its minority stake in AngloGold Ashanti. Rio Tinto increased its stake in Kalahari Minerals. Simmers & Jack acquired Tau Lekoa in South Africa from Anglogold Ashanti. Ridge Mining is in talks with Aquarius Platinum regarding a possible sale. Palabora Mining negotiations regarding a possible broad-based black economic empowerment (BEE) transaction, are still ongoing. AMCOL International amended agreements to acquire an interest in a South African chromite mine. African Aura's board recommended that shareholders reject Northern's unsolicited offer.. Mvelaphanda Resources is planning to close down and delist. Randgold Resources has held talks about acquiring Moto Goldmines. PMI Gold provided an update on its US$ 20 million financing. South Africa's Mines and Energy Ministry will meet coal miners again to discuss steps to give the juniors a greater share of coal output and exports

Other: The world economic downturn is having a major impact on the African mining industry. De Beers is temporarily closing diamond mining operations in Botswana. Anglo American intends to cut 19,000 jobs by the end of the year. Lonmin plans to retrench up to another 4,000 employees and suspend operations at its Baobab shaft. Exxaro Resources has put its base metals division under review following losses at the group. Mozambique's US$ 2.5 billion Mozal aluminium smelter reported a loss of US$ 115 million for the 2008 financial year and operator BHP Billiton plans to cut more staff due to the economic slowdown. Exxaro Resources, the biggest supplier of coal to Eskom, is reviewing its project pipeline but has no plans to retrench any employees. Contract disputes over the Democratic Republic of Congo's two most valuable mining projects could be resolved soon. Sherritt announced that capital costs for its Ambatovy nickel project in Madagascar have soared to more than US$ 4.5 billion from previous estimates of US$ 3.4 billion.

The World Gold Council said gold demand pushed through the US$ 100 billion barrier in 2008. Gold production in South Africa dropped by 13.6% in 2008 to 220,127 kilograms, the lowest level since 1922. South African gold refining and precious metals company Rand Refinery, which is struggling to keep pace with investor demand for gold coins, is sourcing close to 40% of its business from outside South Africa.

MBendi's Mining News provides recent press releases for the following companies as well as an archive of more than 100,000 other news items and releases:

African Aura Resources (uranium: Cameroon, Liberia) African Queen (gold: Cazula, Mozambique) Anooraq (platinum: Ga-Phasha, South Africa) Aquarius Platinum (platinum: South Africa) AREVA Resources (uranium: Trekkopje, Namibia) Avion Resources (gold: Tabakoto, Mali) Banro Corporation (gold: Twangiza, DRC) Cassidy Gold (gold: Kouroussa, Guinea) Centamin Egypt (gold: Sukari, Egypt) Eastern Platinum (platinum: South Africa) El Nino Ventures (gold: Kasala, DRC) Etruscan Resources (gold: Mali, Namibia and Agbaou, Côte d'Ivoire) Firestone Diamonds (diamonds: Jwaneng, Botswana) First Quantum Minerals (copper, gold: DRC) First Uranium (uranium: South Africa) Goldplat (gold: Kilimapesa, Kenya) Goldrush (gold: Salbo and Ouavousse, Burkina Faso) Great Basin (gold: Burnstone, South Africa) Hana Mining (copper-silver: Ghanzi, Botswana)

Helio (gold: Konokono, Tanzania) Homeland Energy (coal: South Africa) IAMGOLD (gold: Mupane, Botswana) Jubilee Platinum (platinum: Tjate, South Africa) Kalahari Minerals (copper, base metal and uranium: Rossing, Namibia) Keegan (gold: Esaase, Ghana) Lake Victoria Mining (gold: Geita, Tanzania) Nkwe Platinum (platinum: Tabatse-Garatau, South Africa) Orezone (gold: Essakane Burkina Faso) Pan African (gold: Barberton, South Africa) Petra (diamonds: Williamson, Tanzania) Premium (platinum: Chrome Mountain, South Africa) Riversdale Mining Rockgate Capital (gold: Falea, Mali) Semafo (gold: Mana, Burkina Faso) Shield Mining (gold: Mauritania) Simmer & Jack (gold: Buffelsfontein, South Africa) South African Coal Mining (coal: South Africa) Superior Mining (uranium: Mangalisa, South Africa) TEAL (copper: Konkola, Zambia) Vangold Resources (gold: Kafunjo, Uganda) Western Metals (gold: Tanzania) Zimplats (platinum: Zimbabwe)

General Business:

Both the IMF and World Bank have scaled back their forecasts for African economic growth in 2009 with the IMF expecting growth of 3.25% and the World Bank expecting growth of 3.5%. The World Bank has approved a first phase of reforms to increase the influence of developing countries within the World Bank Group, including adding a seat for Sub-Saharan Africa. GlaxoSmithKline announced plans to expand its African presence. KBR and its former parent, Halliburton, were involved in the second largest settlement, US$ 579 million, under the US Foreign Corrupt Practices Act after paying more than US$ 180 million in bribes to Nigerian officials to secure the contract to build a gas liquefaction plant in Nigeria. We look forward to seeing other countries taking firm action against companies under their jurisdiction who bribe their way into African contracts.

Investment and Projects:

The World Bank warned that foreign direct investment in developing economies is set to fall to US$ 400 billion this year from US$ 580 billion last year because of tighter liquidity and a slowdown in developed countries. Micro financial services group Trustco became the first company to float on the JSE's new Africa board. Libya's central bank agreed to buy an extra US$ 326 million of convertible bonds issued by UniCredit. African Bank issued a R 550 million senior unsecured floating rate bond. The inhabitants of Adi-Hamushte in Gala-Nefhi sub-zone in Eritrea have become beneficiaries of a reliable potable water supply. USAID launched a new basic education programme in Senegal.

Trade:

Starting in May 2009, all vehicles being imported into Uganda will have to be inspected at source in order to ensure that they justify the price being asked for them and are roadworthy. Nigeria is losing out on benefits from the African Growth and Opportunity Act (AGOA) because many of its products fail to measure up to international quality standards. The government of Nigeria has removed the bank guarantee requirement for exporters, giving them unfettered access to Negotiable Duty Credit. The government of Rwanda is considering other alternatives to road transport in an effort to cut down on the high cost of importing and exporting goods. The trade ministers from South Africa and Saudi Arabia signed an MoU establishing the South African - Saudi Business Council. Kenya and Turkey have signed a number of protocols aimed at increasing co-operation and bilateral trade.

Oil and Chemicals:

Corporate / M&A: The new CEF press office website website provides information on a key player in the African energy sector as well as on its associated companies including PetroSA.

Upstream: Global Petroleum and Tower Resources announced consent from the Ugandan authorities to its farm-in agreement with Neptune Petroleum. Noble struck oil at Block 'O' offshore Equatorial Guinea. E.ON Ruhrgas acquired a 29% interest in the NW Demiatta exploration license from Shell Egypt. Providence confirmed the Aje field offshore Nigeria as a commercial discovery. Somaliland is to hold a first bid round for hydrocarbon exploration. Delta Hydrocarbons is to sell its Sfax exploration permit and the Ras El Besh concession in Tunisia. In the Business Opportunities section of the MBendi website, Esso Exploration and Production Nigeria invites companies to pre-qualify for three contracts on OML 133-Erha North In-field Drilling (Phase 2).

Gas: Possibly the most promising economic news in this newsletter comes from Nigeria which could triple its output of liquefied natural gas in a few years if planned projects are not cancelled or delayed due to the global economic crisis. Nigeria and Algeria have begun talks in Abuja towards finalising the MOU on the implementation of the Trans Sahara Gas Pipeline project expected to deliver gas from Nigeria to Mediterranean and European gas market passing through Niger and Algeria. Total has expressed an interest in investing in the project. Meanwhile, Shell is providing Nigeria's state oil company with US$ 1.69 billion to fund the latter's participation in joint venture gas projects. Further north, Dana Gas made a fifth significant discovery in Egypt. Sasol's decision to apply for carbon credits for the natural gas pipeline from Mozambique to Secunda has been opposed by Earthlife Africa.

Downstream: CEF subsidiary, PetroSA, expects the capital expenditure costs of its planned Coega refinery to fall by about 25% because of the unfavourable global economic conditions.

Chemicals: Sasol declared force majeure on a Germiston, South Africa chemicals plant where four tankers exploded in January. We have been pleasantly surprised at the popularity of the new Chemissa website which provides information on the Southern African chemical sector and is updated on an almost daily basis with new information.

MBendi's Oil and Energy News provides recent press releases for the following companies as well as an archive of more than 100,000 other news items and releases:

Afren / Oriental Energy (Ebok Field, Block OML 67, offshore Nigeria) BP (Plutonio, Angola) BP / Dresser-Rand (Angola) Circle Oil (Morocco) Dana (Egypt) Gasol / Teekay (LNG, West Africa) Dominion Petroleum (Mihambia-1, Tanzania) EnerGulf (DRC and Namibia) Eni / Sonangol (onshore Angola) Epsilon Energy (Ethiopia) First Australian Resources (FAR) / Petrosen (Senegal) Halliburton / BP (Angola) Hardy Oil and Gas (Nigeria) Heritage Oil (Kingfisher-3A, Block 3A, Uganda)

Island Oil & Gas (Zag basin, onshore Morocco) Mart / Midwestern / Suntrust Oil (Umusadege, onshore Nigeria) Melrose (West Dikirnis, Egypt) Neptune / Tower Resources (Uganda) Petronas (Mozambique) Providence (Aje field, offshore Nigeria) RWE Dea (Ruby-3, offshore West Nile Delta, Egypt) RWE / El Paso (Egypt) TransGlobe (Hana West, Egypt) Tullow (Jubilee, Ghana) Uganda Global Petroleum / Tower Resources / Neptune (Uganda) VAALCO (Ebouri, Gabon)

Electrical Power / Telecoms:

Independent power producer Ipsa is struggling to sell the four gas turbines previously intended for its Coega project near Port Elizabeth. Eskom plans to issue R 150 billion worth of bonds to help fund its multibillion-rand capital expansion programme. CAIA added a new section on their web site providing information on electricity saving.

Ericsson and Orange Guinea Conakry are deploying 100 mobile phone base stations in Guinea that use power from solar panels and diesel batteries. Blue Label Telecoms expanded its global footprint by acquiring a US-based company and has concluded an agreement with Telkom's wholly owned Nigerian subsidiary, MultiLinks. Vodacom group and UK-based Vodafone have been given the South African Competition Tribunal green light to continue with a merger, whereby Vodafone acquires a further 15% in the South African mobile operator for R 22,5 billion.

Agriculture and Food:

The Uganda Coffee Development Authority (UCDA) has embarked on a training programme for coffee farmers and quality controllers who aspire to the specialty market. Kenya is grappling with a failed maize harvest due to widespread drought and traders have been authorised to import and sell maize to ensure there are enough supplies of the staple food. The Tanzanian flower industry, a major revenue earner, has been hard hit by the global economic crisis. The government of Zambia has announced that it will not issue any export permits for maize and mealie meal. Ghana's main producers of salt are to meet to discuss and finalise a strategy document. Afgri plans to retrench more than 22%, of the agricultural company's production division. The Nutrition Improvement Program of DSM Nutritional Products Ltd is the first sponsor of Fortaf's African food fortification program.

Finance:

The World Bank approved US$ 25 million for private sector development in Mozambique; US$ 50 million to modernise financial markets in Central Africa and US$ 8 million in emergency funds to rehabilitate power supply in Central African Republic. The EU granted Nigeria 600 million euros for trade and regional integration. Burkina Faso received US$ 61 million for road rehabilitation from the African Development Bank (AfDB) while Burkina Faso received US$ 61 million to finance the rehabilitation of key roads. The Irish Red Cross announced that it would more than double the amount of emergency cash it is sending in a bid to halt the spread of cholera in Zimbabwe. Registered MBendi users can request an African finance spreadsheet from our website.

African Statistics:

South Africa's economy has contracted for the first time in a decade, with output sliding 1,8% in 4Q2008. South Africa's farming income is up 49.2% since 2002. Retail trade figures for December 2008 have dropped by 0.1% compared to the same period in 2007 while wholesale trade sales increased by 5,9% compared with 2007, while growth for the same period in 2007 was 6,3%. Motor trade sales for the fourth quarter of 2008 decreased by 1,7% compared with the fourth quarter of 2007. The total number of foreign travellers who visited South Africa was 974 975, an increase of 9,5% as compared with the December 2007 figure of 890 391. During December 2008, 460 659 arrivals were recorded for South African residents while the total number of those departing was 593 656.

Tanzania's rate inflation eased to 12.9%. Angola's inflation increased to 13.28% in January from 13.18% in December, largely due to an increase in food prices. Ghana's fiscal deficit reached US$ 1.8 billion in 2008, about 15% of GDP. Algerian consumer prices rose 4.5% last month from a year earlier, pushed higher by an 8.2% increase in food costs. The Bank of Ghana raised its prime interest rate by 150 basis points to 18.5% after inflation surged to a 5 year high. Rwanda's headline annual inflation rate eased slightly to 20.38% in January. We publish a monthly page of African Exchange Rates.

Politics:

Zimbabwe's coalition government is struggling to make headway on the economic front while ZANU-PF militants continue their lawless behaviour. Sudan and Darfur's most active rebel group, the Justice and Equality Movement, signed a declaration of good intentions in Doha. Qatar has been mediating talks between Khartoum and the rebel group. The joint African Union-United Nations peacekeeping mission to Darfur reported that its police unit will conduct the first night patrols at a new community policing centre constructed between two large camps. The ICRC warned of a worsening humanitarian situation in the central region of Somalia. Rwandan troops have begun pulling out of Congo. South Africa and Mexico are set to advance South-South relations by consolidating bilateral political, economic and trade relations