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Feb 12, 2015

The diverse turnout of delegates at this year’s Investing in African Mining Indaba, held in Cape Town this week, was an indication of the appetite for mining in Africa from increasingly more investors across the globe.

Mining Indaba group marketing director Maria Palombini told Mining Weekly Online that this year’s conference had attracted more than 7 000 delegates from 106 countries – 40 of which had not been represented at the event in the prior two years.

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Interest in Africa was starting to diversify, she said, as countries other than those already vested, such as China, India and the US, eyed a stake in the continent’s mostly untapped resources.

There was an uptick in interest, in particular, from Asian countries other than China and South American countries such as Venezuela. Further, Palombini pointed out there was a 5% rise in the number of European investors descending on the Indaba this year – the highest increase in five years.

Meanwhile, investors were leaving more optimistic of Africa’s ability to leverage a future commodity boom, particularly as African economies have, for the most part, become increasingly stable and have shown more consistent and predictable growth.

International investors were more comfortable with investing in the continent; however, they were awaiting more certainty regarding regulatory frameworks and partnerships between government and private sector. Delegates walked away feeling more confident of establishing a footprint in Africa as many of those uncertainties were dealt with or the countries showed a willingness to work towards a resolution.

 

Source: Mining Weekly

Feb 12, 2015

Nairobi is the most intelligent city in Africa according to a report released by The Intelligent Community Forum (ICF). Nairobi has been listed among the 21 most intelligent cities for a second year in a row and the only African city to make the cut. However, Nairobi missed out on the top 7 position, losing out to three cities in the US, New Taipei City, Rio de Janeiro, Ipswich in Australia and Surrey in Canada.

Communities around the world nominate cities that have the greatest capacity to create opportunities and prosper in the broadband economy. According to the New-York based think tank and CNN, 5 factors make Nairobi an intelligent city:

 

1. Mobile Money Economy

Nairobi is the biggest city with the most subscribers of mobile money and has nearly 70 percent mobile phone penetration. The mobile money ecosystem has created related enterprises and products. The report gives an example of M-Shwari savings product which has a customer base of 7 million and facilitated $14 million in loans in the last two years after launch. ICF credits the growth of the mobile money economy to the liberalization of communications sector towards the late 90's.

2. Government policies

The government's deliberate move to make ICT one of the central pillars in the Vision 2030 development plan has been lauded as progressive. The government's emphasis on ICT has been one of the key factors tech multinationals have set up base in Nairobi. "If present trends continue and gain greater momentum, Nairobi may achieve the coveted goal of developed status sooner than anyone expects," states ICF.

3. Innovation ecosystem

The Intelligent Community Forum identifies iHub as the genesis of innovation hubs that have now spread across the country. The model has allowed tech entrepreneurs develop and launch innovative products, not just in Kenya but across Africa. Multinational organizations have found a working system to plug-in and partner with. ICF gives an example of how Microsoft has partnered with Intel and a school association to create devices bundled with educational apps and affordable data plans.

4. Partnerships between the private sector and Universities

Multinational and regional tech corporations are partnering with universities to equip practical skills of students. Huawei, Intel, Microsoft, SAP, Oracle, Google, Samsung are some of the companies that have university programs.

5. Diversified economy

Nairobi accounts for 60 percent of Kenya's GDP with various sectors such as manufacturing, financial markets and tourism contributing to the economy of the country. "The beginning of a modern market economy has permitted private-sector and public-sector progress to take hold."

 

Source: Capital FM

Feb 12, 2015

 THERE was more bad news for SA’s moribund construction and engineering industry on Wednesday as Group Five reported that core operating profit had plunged 35.5% to R216m in its interim results to December last year.

The JSE-listed construction and engineering group, which also reported that net profit fell to R146m from R219m previously, said on Wednesday it had seen a "particularly weak operational performance in civil engineering". Meanwhile, Aveng, SA’s largest construction company by turnover, also said on Wednesday in a trading statement that it expected headline earnings per share to plummet by between 55% and 60% in its interim results ending December — compared with the period in 2013.

This was significantly worse than its earlier anticipated plunge in headline earnings per share for the period of "at least 45%" from previously, after it reported low levels of infrastructure spend in SA, lower mining activity, labour disruptions and problems with legacy contracts.

New Group Five CEO Eric Vemer said on Wednesday the civil engineering business was the company’s problem child, with retrenchment costs and contract finalisation costs having hurt the results. He said the group had difficulty with some projects in SA and the rest of Africa, including the commercial close-out of two renewable energy projects.

Mr Vemer said that Group Five expected to derive 60% of earnings outside of SA in the next 12 to 24 months. The country made up 50% of the group’s existing order book of R18bn, with the remainder of projects from the rest of Africa and from Eastern Europe.

But Mr Vemer said Group Five’s woes were mainly because government’s R4-trillion infrastructure plan to 2027 was still in traction. "We have not seen the big projects come to market," he said, referring especially to ports and national roads.

On balance, the group said engineering and construction had performed "in line with expectations". It reported "solid" results from its manufacturing unit despite poor markets. It also saw improved earnings from its investment and concessions tolling businesses in Eastern Europe.

On the bright side the group had received a notice to proceed on the R4.6bn engineering, procurement and construction award for the Kpone independent gas-cycle power project in Ghana.

Consulting Engineers SA (Cesa) president Abe Thela told an annual media briefing on Wednesday that a lack of capacity, skills and coordination across government meant infrastructure spending had been plagued with cost inefficiencies that had gouged R200bn off the state’s R846bn spend in the medium-term expenditure framework. Added to this was a reported R30bn that was missing from the fiscus through corruption, he said.

The lack of work means that there is fierce competition in the industry, resulting in increasingly thin margins for major players. This has led the country’s construction companies to seek work elsewhere in Africa and further afield.

Cesa acting CEO Wallace Mayne said on Wednesday that "government is just not releasing enough projects to keep Cesa going. In our view the government is not technically capacitated — there are very few engineers left in the public sector." Nedbank Capital said late last month that spending on new infrastructure in SA halved last year compared with 2013.

It found that the private sector contributed 77% of the 65 new projects worth R95.4bn announced last year. This was down from 85 projects worth R187.9bn in 2013. In the public sector new projects announced last year were worth R10.5bn, significantly down on the R42.4bn spent in 2013.

Along with the rapidly declining price of mineral commodities, such challenges are likely to cause even greater uncertainty in the country’s mining, steel and construction sectors.

 

Source: Business Day

Feb 11, 2015

Top-level managers at some 500 American companies in China say that although their businesses are turning a profit, they increasingly feel unwelcome and targeted for scrutiny by the Beijing government.

According to the results of the American Chamber of Commerce’s 2015 China Business Climate Survey Report, 57 percent say they feel Chinese regulators are focusing on investigating foreign firms.  

The survey also found that 47 percent feel unwelcome doing business here. That was up from 44 percent last year. Despite that sentiment, more than 70 percent say their businesses in China remain “profitable” or “very profitable.”

 

Targeted

Since President Xi Jinping rose to power, investigation into foreign firms has become almost commonplace. China has launched a massive drive to break up monopolies, improve food safety and clean up corruption. Last year, foreign firms including Microsoft, Qualcomm, Audi, McDonald’s and others found themselves in the government’s cross hairs.

But AmCham China Chairman James Zimmerman said he does not believe the government is deliberately targeting foreign firms. “The campaigns that are supposedly targeted against foreign companies… is part of that natural progression of the law drafting and the law implementation,” Zimmerman said.

AmCham China represents more than 1,000 U.S. businesses and meets frequently with U.S. and Chinese officials to address the concerns of its members. Zimmerman has been working on China-related trade and legal issues for more than two decades. He said the reason why AmCham China has not spoken out more about concerns that firms are being targeted is because the group has been a part of China's law-building effort for 35 years.

He said he was personally involved in drafting China's Anti-Monopoly Law going back nearly two decades, and because of that, he said, "we know the government is in the process of getting that legal foundation in place." Zimmerman added that he remains concerned about Chamber of Commerce members getting caught up in that evolving Chinese process, but is convinced there is not a broad campaign against foreign businesses in China.

“It is not necessarily a targeted campaign where you have Chinese officials sitting around drinking tea and smoking and deciding ‘Hey! Let’s go after foreign companies,’” he said.

Zimmerman thinks what is happening now is part of a longer process in China of implementing new rules, such as its anti-monopoly law which went into effect in 2008, and learning how to enforce those regulations.

He also said that many of the cases have not been brought up first by the Chinese government. “The cases against foreign companies were really driven by whistle blowers internally, not by something that the Chinese government thinks up,” Zimmerman said. “Same thing with food safety, the case involving the company in Shanghai was really driven by media reports, not by the government, not by a campaign that they started.”

He said such things come up for a variety of reasons, including consumers and the media complaining, and when that happens, the government feels it needs to take action.

 

Unwelcome mat

The landscape of China’s business environment has long been difficult to navigate, with the playing field tilted heavily in favor of state-owned firms. The country has seen tremendous changes since it began its shift from a state planned economy towards a more market driven one. But the state still plays a dominating role in business.

The government is trying to change that and has launched a massive reform campaign to try to open up its markets and give foreign firms more access. Those efforts are good news for foreign companies, but even so, nearly half of those surveyed say they feel unwelcome here.

“It is hard to pin down the real reasons for that. It is a very subjective question. And it could be driven by the media, an issue that is affecting a specific company, or a separate industry," Zimmerman said.

The sentiment of feeling less welcome this year than the previous was strongest among those in the research and development industries and those in the resources and industrial sector. Companies in those sectors complain of being unfairly targeted by law enforcement and of having to compete against local firms that enjoy government funding.  

 

Online censorship

The survey also saw 83 percent of respondents voice concerns about the impact of Internet censorship on their ability to do business in China. Zimmerman said that companies are mainly concerned about how the censorship affects the flow of information, such as communicating with people overseas or buying products online.

Those are things that affect everyone, he said.

“Those are things that affect me that I find from time to time, but it seems to be more of an issue over the last six months where the Internet has slowed down or blocked in access to basic information and has impacted on what I can do in my business,” Zimmerman said.

He added that Internet censorship affects some businesses worse than others, but services industries that rely heavily on information are among the most severely hit.

 

Slowing economy

As China’s growth slows and the outlook for the global economy is full of uncertainties, a growing number of companies say they do not plan to increase investment here. The feeling that they are being targeted is also having an impact on investment plans as well.

According to the survey, the percentage of companies that see China as one of many destinations for investment and not their top priority for investment continues to grow.

The poll found that in 2010, 12 percent of companies surveyed said they saw China as one of many destinations for investment. That number grew to 27 percent this year, compared to 19 percent who say China is their top investment destination.

 

Source: VOA NEWS

 

Feb 11, 2015

This is not a joke, but it is funny.

It's also practical. 

Argentina's National Institute for Agricultural Technology (INTA) has invented a way to convert cow flatulence into usable energy, and it involves putting a plastic backpack on a cow.

In other words, cow fartpacks are here. The reason this is not a joke is because it is actually happening, but also because cows are responsible for a remarkable amount of global methane emissions, which are a major cause of global warming. It's a real problem. 

According to the EPA, cow farting (and burping, actually a lot of it is burping) accounts for 5.5 million metric tons of methane per year in the United States — that's 20 percent of total US methane emissions.

Here's how the fartpacks work: tubes run from the backpack into the cows' rumen (or biggest digestive tract). They extract about 300 liters of methane a day, which is enough to run a car or a fridge for about 24 hours.

Pablo Soranda, INTA press officer, told FastCo.Exist that the project is more about making a point than it is converting people to a way of life. 

He doesn't think we're going to live in fart-powered cities come 2070, but he can "imagine a future farm with a couple of these cows used to provide energy to satisfy the farm’s needs."

 

Source: Global Post

Feb 11, 2015

The performance of the Nigerian Stock Exchange (NSE) remained the worst among leading African exchanges as investors delay their return to the Nigerian market.

The NSE All-Share Index had recorded one of worst performances in the world in 2014 by shedding 16.1 per cent compared to a positive performance in 2013. Market stakeholders had hoped that the opportunity presented by the highly discounted equities would attract investors to the market in 2015 and lead to positive growth. However, the uncertainties over the general elections and continuous decline in price of crude oil kept many investors away from the market. Consequently, the market fell by 14.7 per cent in the first month of 2015.

THSIDAY checks revealed that with a year-to-date decline of 15.2 per cent as at Monday, the NSE remained the worst performing among the African exchanges.

The second exchange that has recorded a negative performance is Ghana Stock Exchange (GSE), which recorded a YTD decline of 4.6 per cent as at Monday. Other exchanges recorded positive performance led by Egypt with 10.7 per cent. Johannesburg Stock Exchange 4.4 per cent, while Mauritius and Kenya Exchanges boast of 4.04 per cent and 3.7 per cent growth respectively.

However, the negative performance of the NSE is not essentially due to poor market fundamentals of listed companies but the impact of the uncertain polity as investors are delaying their return and continue to monitor events leading to the general elections.

Analysts said the negative performance may continue until after the elections, contending that the postponement of the elections is not a good development for the market. For instance, analysts at WSTC Financial Services Limited, said the rescheduling of the elections was deferring both socio-political stability and reprieve for the financial markets.

"Summarily, we believe that the rescheduling of the general elections is tantamount to deferring both socio-political stability, and consequently, reprieve for the financial markets. We believe this does not in any way bode well for ailing investors' confidence and already lean capital inflows," they said.

According to them, although they expect market reaction to elevated political risks to create attractive entry points, they hold a cautious view on equities.

"Except for a significant reversal in the international prices of crude oil in the near term (which looks most unlikely), we expect the lull in the equities market to remain, at least, in the pre-election period, given a strong positive correlation between the performance of the Nigerian equities market and investors' perception of domestic risks. In addition, we reckon that expectations of depressed corporate earnings and low dividend pay-out (on account of regulatory headwinds in the banking sector) will further subdue prices in the equities market in the near term," they said.

However, the Managing Director of Crane Securities Limited, Mr. Mike Eze said discerning investors should use the opportunity of the low prices of equities to increase their stakes in the equities market.

"Not undermining the implication of the current political tension on the market, investors should scan through the market and invest in some of the stocks with good fundamentals but have been highly discounted due to the long bear run," Eze said.

 

Source: THISDAY Nigeria

Feb 11, 2015

Despite the challenges faced by the mining industry in Africa, mining continues to be the most important channel for foreign investment for several countries on the continent.

“Well-considered investment provides opportunities for real social gains. The ideal outcome is for mining to help countries become more resilient,” Rio Tinto diamonds and minerals CE Alan Davies told delegates at the Mining Indaba in Cape Town.

 “We have the opportunity to create immense value together. There is no good reason why Africa should not make this the African century – and mining can play its part as a catalyst in that transformation,” he added. He cited Rio Tinto’s multibillion-dollar Simandou project, in Guinea, as an example of how people could benefit from investment, with the project aimed at accessing one of the world’s largest untapped iron-ore resources.

The government of Guinea had been working with Rio Tinto to develop the project, which would also include the development of the new 650 km Trans-Guinean multi-use railway line, which would link south-east Guinea with the coast along the Southern growth corridor. A new deep-water port in Moribaya would also be the first in the country to provide access to large cargo ships.

“The potential for benefits are enormous; to bring iron-ore to market, to build rail, roads and a transport route. Fertile but undeveloped farmlands will be developed. The port will offer Guinea greater opportunities to develop its economy,” stated Davies.

Meanwhile, at Richard Bay Minerals, a subsidiary of Rio Tinto in South Africa, a business development centre had been established, while a construction programme had provided training for 81 people during 2014 to help ensure “sustainability beyond the mine”.

Davies said Africa’s vast and predominantly young population was an enormous opportunity for the continent and that the children of today would be the continent’s future truck drivers, miners, operations managers, industry chief executives and political leaders.

 

Source: miningweekly.com 

Feb 11, 2015

MEA Risk LLC is pleased to announce the upcoming release of Shield & Alert (S&A).  S&A will leverage Critical Incidents Tracker and local, regional and remote Analysts to deliver security alerts and ratings of risk at the local level for clients traveling to or working in Africa. S&A is currently working to expand global coverage at the worldwide level.

Premium corporate security features are available for governments, companies and other organizations. Individuals will be able to download the app for non-Premium features.

Organizations (and their employees and customers) that would benefit from S&A include but are not limited to:

Governments (diplomats, embassy & consular staff)

Oil, gas and mining companies active in Africa

Industries

Military

Airlines, travel agencies and hospitality industry

Multinational institutions

Academic institutions

International media

Individual travelers

The first regions covered upon app release will be the Maghreb, the Sahel, Egypt and East Africa. Southern, Central and Western Africa regions are being developed and tracking will be available shortly after first release. Worldwide S&A will be rolled out progressively starting in the second half of 2015.

Key Feature: S&A will feature 24-hour coverage to alert clients on incidents that are taking place within the city of their location or beyond. The use of GPS will enable S&A to identify user location, then push the relevant information, such as the location and the severity of the incidents that happened or happening around them. Tracking and alerting occurs on the continuous basis.

App clients will be able to set their coverage area to expand or reduced it from its default 200 miles radius. Alerts will be released the moment they are recorded into MEA Risk’s flagship Critical Incidents Tracker database. Users can tweak their settings so as to hear audio alerts for specific profiles, such as a being alerted for any terrorist act rated 2.5 or above within 50 mile radius of current location.

The incidents tracked and subject of alerts include but not limited to terrorism, riots and demonstrations, police and military interventions, disease outbreaks, political crises, and other categories that could constitute a risk to individuals and organizations.

In an effort to leverage crowd sourcing, S&A will feature reporting capabilities that anyone can use. The Reporter feature will allow users to record an event they are witnessing, and report it either for worldwide broadcasting or to the attention of their corporate managers or security department.

The app will also feature outgoing distress alerts. The S&A’s Travel Registry feature will enable users to alert specific contacts about a potential trouble they may be facing. S&A will send the user’s contacts the distress message, along with the exact GPS coordinates.

S&A is built for the Apple iOS and Google Android platforms. Most features will function only with GPS capabilities and Internet access enabled in mobile smartphones.

MEA Risk expects the Beta version to be available on iOS in mid-March 2015, with the Android app to be released shortly thereafter.

Feb 11, 2015

Standard Chartered remains committed to expanding its presence in Africa to tap the vast potential of the continent's high-growth economies, the firm's executive director told CNBC.

"Seven of the 10 fastest growing countries in the world are in Africa. It has huge consumer potential. Last year, the African consumer spent over a trillion dollars, which is more than consumers spent in India," V Shankar, who is also CEO of Standard Chartered Europe, the Middle East, Africa and the Americas explained to CNBC's "Access: Middle East" on the sidelines of the World Economic Forum in Jordan.

Last year, the London-based bank made revenues of $1.6 billion from the continent, a figure it's looking to double in the next five years. "We are planning to add a hundred new branches, we said by 2015,and we've already added 27 last year".

Sub-Saharan markets are attracting interest from bankers around the globe, inspired by lackluster economic growth and saturation in many developed economies. Other heavyweights of the likes of JPMorgan and China's ICBC have been bolstering their presence. For Standard Chartered, new business is being discovered in both wholesale as well as consumer banking.

A recent report by the European Investment Bank (EIB) underscored the nascent state of the industry in Sub-Saharan Africa, describing banking systems as "still underdeveloped, with low and inefficient intermediation and limited competition".

Shankar is aware that political risks remain in many of the markets the bank operates in. But recent strides by the likes of Sierra Leone and Kenya are keeping him positive that Africa's time has arrived. Setbacks, as currently evident in Mali, were to be expected. "Now here's the good story about Africa. Governance is improving and the political stability is increasing".

Dubai a 'Remarkable Story of Turnaround'

StanChart had a front-row seat to the Dubai bubble that burst spectacularly in 2009 by being one of the lenders to the now infamous Dubai World. Economic indicators have recovered since, in part due to more tourist arrivals as the Arab Spring rages in neighboring countries

"Dubai has been a remarkable story of turnaround. It's benefited from the Arab Spring, and the three levers that drive Dubai's economy are in very robust shape: travel, tourism and transportation, and logistics and trade"

Shankar showed little concern about outstanding debts. The bank's own estimates identified $48 billion in debt maturities between 2014 and 2016.

"I'm optimistic for (the) following reason: a large chunk of that debt is actually owed to Abu Dhabi. One should hope that that will be renewed and refinanced, and there is also fantastic demand for Dubai debt in the bond markets"

Meanwhile, tightening sanctions on Iran, historically an important trade partner for Dubai, have hit trade and forced several banks to closely examine dealings with Iranian clients. In 2012, the US government accused StanChart of violating US sanctions on Iran by hiding some $250 billion in transactions. The suit was eventually settled with Standard Chartered paying out $667 million to the US government.

"Look, the reality of the situation is, we got it wrong, then unequivocally apologized, we learned a lesson. It is time to move forward. We as bankers must up our game, that is the reality."

The bank stopped business with Iran in 2007, and what remained would not last for long. "To the extent that we have anything left it is very minuscule and is remnants of business done pre-2007 and it will be phased out very shortly…as and when we get repaid".

 

Source: CNBC Africa

Feb 11, 2015

The European Investment Bank (EIB) and the Eastern and Southern African Trade and Development Bank, or the PTA Bank on Tuesday launched a 160 million-euro lending program to support investment across eastern and southern Africa.

Under the deal inked in Kenya's capital Nairobi, agribusiness, energy, manufacturing and service sector industries will access a seven-year loan in local currency, or a 15-year loan in US dollars or euros from PTA Bank.

EIB Vice-President Pim Van Ballekom said the new program reflects a shared commitment to support private sector in Africa. "The new lending program is the largest ever engagement to support business investment in Africa by the EIB. This will help firms in 12 countries to create new jobs and explore new business opportunities in key sectors," Ballekom said, adding that it will support investment by larger companies for the first time.

The program is being managed in the region by the PTA Bank.

"We are delighted to join forces with the EIB to give a much needed boost to increased investment in the real economies of eastern and southern Africa, which is key to job creation and economic transformation. The program is a strong addition to other lending programs we have launched with other funding partners," said PTA President Admassu Tadesse.

EIB is the world's largest multilateral finance institution. Last year, it provided 1.1 billion euros for investment in sub- Saharan Africa.

 

Source: Xinhua

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