Press review: South-African economic news from September 1st to September 13th.

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.

 

Airbus partners with South Africa’s National Aerospace Centre for research on fuel cells.

The European leader of the aircraft industry and the National Aerospace Centre (NAC) announced that they would jointly fund the research undertaken by the University of the Western Cape’s (UWC) Hydrogen South Africa (HySA) on the application of the use of fuel cells in commercial aircrafts.

This partnership aims at gaining an understanding of how fuel cells could be used in airliners to replace gas turbines used to generate on-board electrical power while the aircraft is on the ground.

The use of this emission-free technology would pave the way to lighter aircrafts, emission-free and noise-free ground operations and would contribute to the industry’s commitment to halve 2005 CO2 emissions levels by 2050.

The NAC highlighted that fuel-cells were set to become a game-changer in the aerospace industry and noted that South Africa would be able to place its manufacturing sector in a leading position to benefit from the opportunities that will emerge from this research program.

 

The Airport Company of South Africa (ACSA) reaches new milestone.

The public company disclosed its financial results for the financial year 2013/14, featuring a 7% increase of its turnover (ZAR 7.1 billion) and a 7% increase of its net result (ZAR 1.7 billion). ACSA is in charge of the management of 9 airports in South Africa, including the international airports of OR Tambo in Johannesburg, King Shaka in Durban and Cape Town International Airport. It also operates the airports of Mumbai and São Paulo and is involved in Ghana.

 

Sasol increases its domestic profitability but records losses abroad.

The public South African petro-chemical company Sasol increased its turnover by 19.3% (ZAR 202.7 billion), thanks to its dynamic domestic activities (+12.4%, ZAR 41.1 billion) and its chemical products department (+178.2%, ZAR 8.4 billion).

The depreciation of the Rand, the increase in chemical products prices and the reduction of its costs enabled Sasol to increase its net profit by 12.2%, reaching ZAR 30.4 billion.

However, the public company’s results are affected by significant losses in its international activities, with operational losses of ZAR 6.9 billion, therefore questioning the international development strategy of the group. Internationally, Sasol is particularly active in Mozambique where it has launched a feasibility study for the construction of a GTL plant in the Rovuma basin in partnership with ENH and ENI.  

 

South African pharmaceutical company Aspen Pharmacare reaps record profits.

The financial results of the largest South African pharmaceutical company, ranked 5th worldwide, disclose soaring turnover and net result, increasing respectively by 53 % (ZAR 29.5 billion) and 42% (ZAR 5 billion).

This performance is in particular due to Aspen’s foreign activities, now contributing 76% of the turnover (45% in 2010). The new acquisitions undertaken in 2013/14, at a level of ZAR 20 billion, enabled it to increase its sales by 181% in Europe and 142% in Asia.

Aspen is the second largest South African employer in France.

 

The Moçâmedes Railroad project (Angola) will be completed in October 2014.    

After the rehabilitation of the Benguela Railroad, (1,334 km) by China Railway Construction, the Chinese company China Hyway will complete the rehabilitation of the railway linking the Namibe port to the inland city of Menongue, both located in southern Angola. The 860 km long railway will serve 56 stations and the Cassinga iron mine. Another Chinese company, CNR Dalian, will supply the locomotives in use on the line.

 

The Angolan government grants onshore exploration and production rights to public company Sonangol.

Four blocks were granted to the company for the prospection, exploration, development and production of hydrocarbons in the central regions of the Lower-Congo and Kwanza basins.

The country is heavily dependent of hydrocarbon production, accounting for more than 95% of its exports and 70% of its tax revenues.

 

Sese integrated coal mine and power project approved by Botswana’s government.

Botswana’s Department of Environmental Affairs approved the Environmental Impact Assessment (EIA) study for the 300 MW Sese project.

The approved Sese project encompasses a coal mine, a coal processing plant, a 300 MW power plant, water, pipeline and road infrastructure upgrades, and an ash disposal facility.

This coal-fired plant comes in addition to the two existing coal-fired plants of Morupule A and B and the two diesel power plants of Matshelagabedi and Orapa.

 

The gas power plant of Ressano Garcia (Mozambique) has been inaugurated.

Financed among others by Standard Bank and the Agence Française de Développement, the 175 MW plant aims at securing the supply of power in Mozambique (currently net importer of electricity). The plant will produce 12% of the country’s power supply by 2015.

The $ 270 million project is owned at 49% by Sasol and 51% by EDM, the Mozambican national utility.

Alongside the construction of the plant, an upgrade of the Temane treatment facility and the construction of a trans-frontier pipeline have been undertaken in order to cope with Mozambique’s rising electricity demand (+14% year-on-year) and diversify the country’s energy mix in order to decrease the grid’s critical dependence upon hydroelectric power.

 

British company Ncondezi to build a coal-fired plant in Tete province (Mozambique).

The power plant, located in the Tete province, will be adjacent to Ncondezi’s coal mine. A power purchase agreement (PPA) has been signed between the British company and the national utility EDM. This off-take agreement is however conditioned to the introduction of a strategic partner accepted by EDM.

The financial closure, scheduled for Q1 2015, conditions the launch of the construction works. The plant should be operational in 2018. Three contractors have been pre-selected for the supply of the engineering and construction, but the tender is still open for the operating and maintenance phases.

 

China and Zimbabwe partner following Robert Mugabe’s visit to China.

The Chinese company Sino Hydro will undertake an upgrade of the hydroelectric power station of Kariba South (North of Harare). The project aims at increasing the generating capacity of the plant from 750 MW to 1,050 MW. The upgrade is financed at 90% by the Export-Import Bank of China through a subsidised loan.

Zimbabwe’s generating capacity is currently 1,200 MW, for a domestic demand of 2,200 MW.

In addition to this project, the Chinese government reaffirmed its commitment to help Zimbabwe establishing special economic zones (ZESs) in order to incentivise foreign direct investment in Zimbabwe. Future investors would benefit from special tax rebates and would be exempt from legal requirements relative to “indigenous” ownership.

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