Press review: South-African economic news from October 13th to October 24th.

Here is a short summary of the major economic news of the past two weeks in Southern Africa.

The Cap40 team regularly publishes news from the French consulate in Pretoria in order to give you fresh insights on the most important economic matters in the country and region.

 

South Africa and France sign an intergovernmental agreement on nuclear cooperation.

After a forty-year long cooperation on the peaceful use of nuclear power, the two countries, represented by Tina Joemat-Pettersson, Minister of Energy, and Laurent Fabius, Minister of Foreign Affairs, agreed on further parternships in the field of skills development, localisation of nuclear technology as well as R&D in South Africa.

This agreement is in line with the Integrated Resource Plan (IRP), which sets targets for a balanced energy mix blending the use of coal, renewable energies, gas and nuclear power.

In preparation for the rollout of a generating capacity of 9,600 MW of nuclear power, South Africa signed a similar cooperation agreement with Russia and could sign further agreements with countries such as the US, Japan, South-Korea and China.  

 

De Beers maintains its diamond exploration activities in South Africa.

The South African subsidiary of the British company Anglo-American will continue to invest in exploration activities and expansion projects in order to sustain its production levels in spite of the exhaustion of the capacity of the Voorspod mine in the Free State.

“The economic crisis of 2008 was the only reason the company pulled back from exploration spend, but exploration in close liaison with South Africa’s Department of Mineral Resources is now gaining momentum”, said De Beers Consolidation Mines CEO Philip Barton.

 

South Africa and Russia in talks to support platinum prices.

The two countries, who hold together 80% of the reserves of the platinum-group metals, have decided to coordinate in order to contain the decrease of the platinum prices.

Potential actions undertaken by the two largest platinum-producing countries include the creation of a commercial block aiming at coordinating their exports and the purchase of stockpiles by central banks.

 

Investments in infrastructure will account for 5% of government spendings for the next three years.

The South African federal government will spend an annual R230 billion in infrastructure investments. The main projects include the Moloto Corridor Project, linking Mpumalanga and Gauteng with integrated rail transport infrastructures, the upgrade of the railway line used to transport Mpumalanga’s coal production to Richards Bay, the Independent Power Producer Procurement Programme and the upgrade of the country’s sea ports.

 

The South African government launches a comprehensive plan for “ocean economy projects”.  

The plan will be implemented in the framework of the Operation Makhisa, which promotes growth and job creation in line with the targets set by the National Development Plan.

The ocean economy projects will focus on four areas, namely marine transport and manufacturing, offshore oil and gas exploration, aquaculture and marine protection services.

A target of thirty exploration wells drilled offshore has been set for the next ten years. “Over the next 20 years, this work could lead to the production of 370 000 barrels of oil and gas per day. The result would be 130 000 jobs and a contribution of US $2.2 billion to GDP,” said President Zuma.

 

Cabinet discloses the financial implications of Eskom’s recapitalization plan.

In its medium term budget policy statement, the South African government noted that the recapitalization of Eskom would be financed by the cession of non-strategic state assets (the sale of a part of the state’s stakes in the telecom operator Vodacom is envisaged).

The government emphasized that Eskom’s recapitalization plan would have no effect on the state’s deficit as funds will be allocated only once available.

Finally, further measure could be implemented in order to improve the match between electricity tariffs and production costs, in line with the recent 12.7% increased approved by Nersa for 2015.

 

Suspicions of collusion in the automotive industry.

The Competition Commission suspects 82 components suppliers for the automotive industry of collusive conducts. These include price fixing, market division and collusive tendering allegedly conducted since 2000. An investigation has been launched by the Competition Commission.

 

MEDEF international organises a mission in Angola.

The African branch of the largest union of French employers will meet Angolan decision-makers in November.

This mission follows the Angola president’s visit to France earlier this year. The energy, construction, water, ICT, transports, health and training sectors have been identified as the main priorities of the delegation.

The specific needs formulated by the Angolan governments include the following sectors: digital security, e-health, e-education, e-government, distribution, water and waste treatment, rail transports, road security, postal services, cattle value-chain and forestry.  

 

Orange and Ericsson to partner in Botswana.

The mobile operator Orange Botswana and the Swedish manufacturer Ericsson signed a multi-year agreement in order to improve Orange’s coverage and network offer in the country.

 

Japanese companies to partner with Mozambique for power generation.  

The national utility Electricidade de Moçambique (EDM), signed a contract with the two Japanese companies Tokyo Electric Power Services (TEPSCO) and Oriental Consultants Japan (Oriconsul) for the construction of a 100 MW open-cycle gas power plant supplying electricity to the city of Maputo.

The $166 million contract will be financed by the Japan International Cooperation Agency.   

 

Chemba hydroelectric project approved by Mozambican government.

The Mozambican government approved the resolution allowing the construction of a 1000 MW hydroelectric power plant on the Zambezi River. A public-private partnership will be signed between EDM and the Mozambican company Sheza for the construction and operation of the plant.

 

Norway grants financial aid to Mozambique.

The Norwegian and Mozambican governments extended three existing partnerships and signed a new agreement. The additional financial assistance granted by Norway accounts for $5.3 million.

This partnerships aims at improving the electricity distribution network in the Zambezi and Cabo Delgado regions.

Further agreements between the two countries could be signed regarding the Tete-Maputo corridor, for an amount reaching $90 million.

 

Contruction works on the Kariba dam are about to be launched.

In May 2014, the Zimbabwean authorities had called international lenders for an emergency rehabilitation of the Kariba dam, which risks collapsing.

The $290 million construction works will be financed by the European Union ($100 million), the African Development Bank ($75 million), the World Bank Group ($75 million) and the Swedish authorities ($30 million). The $10 million remaining will be financed by a Zimbabwean-Zambian consortium, the Zimbabwe River Authority.

 

Zimbabwean utility and Chinese company sign a $1.3 billion contract.

Zimbabwe Power Company, the Zimbabwean national utility, signed a $1.3 billion contract with the Chinese company Sinohydro for the extension of the generating capacity of the Hwange hydroelectric power plant. The capacity will increase from 920 MW to 1520 MW. The project will be financed at 90% by Eximbank China.

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