Here is a short summary of the major economic news of the past two weeks in South Africa.
The Cap40 team will now regularly publish 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 strengthens its presence in the aerospace industry
State-owned South African aerospace company Denel Aerostructures, has won a R260 million contract to manufacture parts of the military air transport Airbus A-400M. This contract runs for six years and is the fourth won by Denel Aerospace in the manufacturing of pieces for the A-400M.
From 2015 onwards, the South African parastatal will supply the German assembling plant with 20 ship sets a year (a ship set being a complete set of the parts required for a single aircraft).
Denel Group CEO Riaz Saloojee highlighted that the contract would benefit the entire branch of aero-spatial manufacturing in South Africa, creating direct and indirect jobs and sending a strong signal to the entire global aerospace industry about the performance, know-how and skills present in the country.
The strikes in the metals and engineering sectors start to impact the economic activity
220,000 workers from the metals and engineering sectors are on strike since the 1st of July to demand wage increases of 12 to 15%. Negotiations between the sector trade union Numsa and the employers represented by Seifsa have so far failed to put an end to the conflict.
The proposition for an immediate 10% wage increase and future increases of 9 and 8% the following years proposed by the employers has been rejected by Numsa. Seifsa said the economic conditions would not allow the employers to raise the wages further or stop the contracting of labour brokers, another demand of the striking workers.
The two-week strike has already impacted the industrial activity, particularly in the automotive sector. General Motors announced the 3rd of July it would temporarily suspend its production, while the construction of two Eskom electrical plants by the civil engineering firm Murray & Roberts has been halted.
The financial rating agency Moody’s warned that the economic downturn caused by this new long-lasting strike could lead to a new downgrade of South Africa’s grade.
Sagem to equip South African army with high-technology cameras.
The public military company Denel Land System announced it had granted a contract for cameras equipping the South African combat vehicles to the French company Sagem, subsidiary of Safran.
The three types of high-tech infra-red cameras will be manufactured in France, while the integration and maintenance will be operated by Sagem’s local partner Afrimeasure.
The South African Infrastructure Development Act has come into effect.
The Act, signed by President Zuma on the 30th of May, is the legal arm of the Infrastructure Development Plan and aims at ensuring and accelerating its faithful implementation. One of the core components of the act is the set-up of a Presidential Commission with the power to expropriate land necessary for strategic projects (strategic integrated projects, SIPs).
New National Transport Master plan to be presented in March 2015.
The Transport Minister Dipuo Peters said she wished to present the National Transport Master Plan (Natmap) to the Cabinet in March 2015. The Natmap aims at drawing a roadmap for the development of transport infrastructure in South Africa until 2050.
The long-delayed transport plan was initiated in 2007. It aims at enhancing passengers and freight transports in cooperation with strategic sectors such as the mining industry and agro-industry, with a strong support from the private sector.
The Indian public mining companies seek a reinforcement of their presence in Mozambique.
After the Indian company Tata Steel first entered the Mozambican market in 2007, International Coal Ventures Limited (ICVL), a consortium of five Indian state-held mining and engineering companies, said it planned to present a US$200 million bid to acquire the mining assets of the Anglo-Australian mining company Rio Tinto, after preliminary talks have been held.
Rio Tinto controls 100 percent of the Zambeze and Tete Oriental coal mines and 65 percent of the Benga mine, where the Indian company Tata already owns a 35 percent stake. The mines have estimated reserves of 200 million tons of coal.
Sasol, ENI and ENH to launch a feasibility study on the construction of a GTL facility in Mozambique.
In its effort to enable the Mozambican economy to benefit from its large resource endowment and add value to its natural and mineral resources, the state oil and gas company ENH seeks to enable the domestic production of diesel, synthetic fuels, polyethylene and other gas derivatives.
A protocol was signed in June between the state-owned Mozambican company ENH and the Dutch petroleum company Shell for the launch of feasibility study for the construction of a Gas-to-Liquid (GTL) plant.
ENH, the South African company Sasol and the Italian Group announced last week a study on the feasibility, viability and potential benefits of the set-up of a second GTL plant in the Rovuma basin (Northern Mozambique) would be launched.
Namibia demands to sell diamonds independently from De Beers.
The Namibian government wishes to set-up a company able to sell diamonds produced by Namdeb, the joint-venture it shares with De Beers for the extraction of diamonds in Namibia, considered as the world’s highest quality gems.
Guided by neighbouring Botswana’s example of Okavango Diamond Co., which started to sell diamonds on its own as part of a 10-year commercial agreement with De Beers, Namibia expects to obtain selling rights from De Beers as part of the renewal of the commercial contract linking the two parties.
This would allow Namibia to take example on Gaborone, which became a place of assembling and selling of diamonds at the detriment of London, therefore increasing the national benefit of the production to the country.