Business and finance – Page 8

IMF wants trade unions reined in, labour brokers rewarded

Trade unions need to be reined in. That is the advice given in an International Monetary Fund report on South Africa released on Tuesday .

The report strangely recommends the use of labour brokers. Labour broking has been called “human trafficking and a modern form of slavery” as it treats workers as profit-making commodities.

Brokers are generally viewed as parasites because they make labour more expensive in a country where unemployment is rife.

It urges the government to move more quickly in implementing its National Development Plan and massive infrastructure spending proposals. It also supported lower wage demands.

Noting that South Africa’s economic growth is lower than that of other emerging countries, and is too low to cut unemployment, the IMF suggests “a social bargain” that would pull together trade unions, business, government and labour brokers.

It urges “commitments to wage restraint” by trade unions. Increases of as much as 100% were demanded this year in the gold mining sector.

As the report was released, workers in the automotive components industry were past the three-week mark in their strike for higher wages. They are demanding an increase of more than 10% and have paralysed vehicle manufacturing.

Production at the world’s biggest platinum mining company, Anglo Platinum, has been disrupted. Members of the Association for Mineworkers and Construction Union have been on strike since Friday.

At South African Breweries, workers downed tools on Monday. The Food and Allied Workers’ Union is demanding a 9.5% increase.

The IMF report flags “escalating labour tensions” as “a key domestic risk”, the Times reported.

The IMF says that more jobs would be created if economic growth were stronger and the labour market “more flexible”.

“Unemployment remains stubbornly above 20%, or more than 30% when including those who have given up looking for a job. Youth unemployment is even higher at more than 50%,” says the report.

The IMF points to recent reforms in Mexico and suggests that South Africa should do something similar to loosen the hold of trade unions on the labour market. This hold, it said, has “produced an insider-outsider system that creates too few jobs and stifles growth”.

Compared to its peers, South Africa has been falling behind.

“Since 2009, South Africa’s growth has averaged 3% compared with 5% for emerging markets and 4% for commodity exporters,” says the report.

The IMF expects South Africa’s growth to slow to 2%.

It urges the government to “resist” a proposal to restrict the use of labour brokers , noting that temporary employment was responsible for a large share of employment growth in recent years.

Trade union federation Cosatu has been vocal in its campaign to get labour brokers banned.

The Treasury yesterday skirted around responding to calls for comprehensive reform of the labour market. It claimed that the issues raised by the IMF were already part of government policies and programmes.

“At its lekgotla in August, the cabinet agreed on a number of measures aimed at reigniting economic growth.

“These measures are in part informed by the recognition that the economy can no longer rely heavily on the global economy to reignite growth and create jobs for the millions of unemployed South Africans,” said the Treasury.

It said “actions are being taken to improve labour relations in key sectors”.

The IMF sees South Africa as more susceptible to shocks.

“In recent years, South Africa’s vulnerabilities [to adverse economic conditions] have increased considerably.”

Maponya criticises BEE

Businessman Richard Maponya criticised the government and black economic empowerment in an interview published in the Sowetan on Monday.

“It (BEE) is not a real thing because it takes away the self-initiative needed from young and up and coming entrepreneurs who must wake up and want to do the things themselves,” he said at the sixth birthday celebrations of Maponya Mall in Soweto on Friday.

He said broad-based black economic empowerment (BBBEE) was a good idea in principle, but in practice it did not always work.

“I really blame our government for the economic situation because we are nearly 20 years into our new dispensation but we have not come up with a bank that would give people a risk fund.”

He also said black and white business needed to unite, but added that white business people and foreigners should not be allowed to dominate business in townships.

“Soweto has suddenly become a place where white business people want to do business, when small entrepreneurs of the area should be given an opportunity to own business here,” said Maponya. – Sapa

Data privacy goes offshore

American technology companies like Google and Facebook were put on the defensive when Edward Snowden’s allegations about U.S.-government surveillance of Internet traffic emerged this spring. Outside the U.S., some companies and politicians saw an opportunity.

Three of Germany’s largest email providers, including partly state-owned Deutsche Telekom AG teamed up to offer a new service, Email Made in Germany. The companies promise that by encrypting email through German servers and hewing to the country’s strict privacy laws, U.S. authorities won’t easily be able to pry inside. More than a hundred thousand Germans have flocked to the service since it was rolled out in August.

“We can say that we protect the email inbox according to German law,” says Jorg Fries-Lammers, a spokesman for one of the German companies, 1&1 Internet AG. “It’s definitely a unique selling point.”

The U.S. National Security Agency has acknowledged collecting email data about Americans through phone and Internet companies. Silicon Valley companies have said that they don’t give the government unfettered access to user data but that they are barred from disclosing details.

Fueled by the controversy, countries are seeking to use data-privacy laws as a competitive advantage—a way to boost domestic companies that long have sought an edge over Google, Microsoft Corp. MSFT +1.50% and other U.S. tech giants.

“Countries are competing to be the Cayman Islands of data privacy,” says Daniel Castro, a senior analyst at the Information Technology and Innovation Foundation, a nonpartisan Washington, D.C., think tank that receives funding from the tech industry.

While establishing these islands of privacy might make for good marketing, the initiatives face hurdles. Laws demanding that data be stored in-country can give domestic Internet-service providers a boost but also could raise their customers’ costs.

And creating domestic walls for online service runs into a hard reality.

“It basically ignores the entire Internet,” says Ronaldo Lemos, director of the Institute for Technology & Society, a Rio de Janeiro think tank. “This data has to circulate. It’s going to be sent to Miami, to Europe. It’s not going to be sitting idle.”

Nevertheless, some European leaders are renewing calls for a “euro cloud,” in which consumer data could be shared within Europe but not outside the region. Brazil is fast-tracking a vote on a once-dormant bill that could require that data about Brazilians be stored on servers in the country. And India plans to ban government employees from using email services from Google and Yahoo Inc. YHOO +2.38%

U.S. companies are watching such developments with trepidation.

“We should all be nervous when countries impose costly new requirements on companies as a condition of serving their citizens,” says Facebook Chief Operating Officer Sheryl Sandberg. “It means fragmenting the Internet and putting the economic and social opportunities it creates at risk.”

Google declined to comment for this article, and Yahoo didn’t respond.

It is too soon to tell if a major shift is under way. But the Information Technology and Innovation Foundation estimates that fallout from revelations about NSA activities could cost Silicon Valley up to $35 billion in annual revenue, much of it from lost overseas business. A survey conducted this summer by the Cloud Security Alliance, an industry group, found that 56% of non-U.S. members said security concerns made it less likely that they would use U.S.-based cloud services. Ten percent said they had canceled a contract.

“We talk to our sales leaders, who talk to customers every day, and this has the potential to significantly erode the trust of customers around the world,” says John Frank, a deputy general counsel at Microsoft.

It could be tough for U.S. companies to undo any damage, particularly when the extent of NSA activities is secret and other nations have been critical of the U.S. On Tuesday, Brazilian President Dilma Rousseff in a United Nations address assailed U.S. snooping on her country. Last week she canceled a planned visit to Washington.

European Commission Vice President Neelie Kroes, who supervises the European Union’s digital portfolio, has been encouraging the bloc’s companies to tout their privacy creds. “Privacy is not only a fundamental right,” she said in Estonia this summer. “It can also be a competitive advantage.”

For small German companies competing against big ones—like online-security company Symantec Corp. SYMC -1.32% and Amazon.com Inc., AMZN -0.67% which provides corporate cloud services—the NSA surveillance program “is a present from heaven,” says Oliver Dehning, chief executive of antispameuropeGmbH, which builds spam-protection software. “It’s kind of an opportunity to strike back and protect our home market.”

He turned the Snowden leaks into a marketing campaign, tweeting about the news and speaking at industry conferences about how Germans can protect themselves from spying.

Symantec and Amazon declined to comment for this article.

Some of the promises of the would-be data islands could be tough to meet.

While much of the legislation proposes that information about citizens be located in-country, that overlooks that the data may need to be transferred elsewhere.

And laws requiring domestic hosting could raise the price of computing. The in-country hosts could have trouble competing with the economies of scale enjoyed by big U.S. companies, says Jim Reavis, president of the Cloud Security Alliance. Also, it could well be less expensive to use a data center in another country than to build one at home.

Country-specific computing can have its own privacy concerns, meanwhile. Some countries pushing domestic hosting—Brazil, for example—don’t protect the privacy of citizens’ Internet data, so consumers wouldn’t be safe from their own governments’ eyes. Brazil made 715 requests for Facebook user data in the first half, according to the company.

Because Germany has strict privacy laws, Email Made in Germany says customers who send email to fellow subscribers can be assured the U.S. and German governments will have a difficult time accessing the users’ messages. Customers see a bright-green check mark next to messages sent by fellow subscribers. A gray check appears next to messages from other email providers. That means Germans can ensure their privacy only for email to people on German soil.

Even some companies that seek to profit from fears about U.S. snooping acknowledge that law-enforcement agencies in other countries want to catch up with Washington’s capabilities.

“In the long run, there won’t be any difference between what the U.S. or Germany or France or the U.K. is doing,” says Roberto Valerio, whose German cloud-storage company, CloudSafe GmbH, reports a 25% rise in business since the NSA revelations.

“At the end of the day, some agency will spy on you,” he says. – WSJ

Kenya to host first yuan clearing house in Africa

Kenya wants to host a clearing house for China’s yuan currency – a bold African first that would deepen the continent’s ties with Beijing, already a big investor from The Cape to Cairo.

Such a venture would not eclipse the dollar in Africa anytime soon, however, because the yuan is tightly managed and traders are wedded to the greenback’s flexibility.

Africans can already get quotes for their currencies against the yuan . A clearing house would cut the need for dollar settlements, speed things up and reduce costs.

But the real prize for Kenya, or any other African host, would be the symbolism of being the continent’s business gateway with Asia’s economic emperor, even if business starts modestly.

Such an exchange would also be the first outside Asia.

Its prospect is a measure of China’s challenge to Africa’s traditional partners in Europe and the United States and reflects the increasing attractions of a continent with some of the world’s fastest growing economies.

“Even if the benefits to business have probably been slightly overblown by diplomats on both sides, I don’t think you can understate the symbolic aspect,” said Shilan Khan, Africa economist at London-based Capital Economics.

China’s ties with Africa have expanded fast.

In 2012, the total volume of China-Africa trade reached $198.49 billion, a rise of 19 percent over the previous year, Chinese government figures show. China accounted for 18.1 percent of Africa’s total trade volume in 2012, up from 3.8 percent in 2000.

“The proposal is basically to consider Kenya favourably given that the financial market is deep here,” Kenyan Finance Minister Henry Rotich told Reuters in August, citing rivals such as Nigeria, which already holds some reserves in yuan.

South Africa had a financial centre that dwarfs Kenya’s and has been mooted as a potential host, though officials there have not said they are pursuing such a plan.

“We are sort of competing and at the end of the day, the Chinese government is the one to decide where this clearing house will be,” Rotich said, making his pitch for east Africa’s biggest economy which aims to become a financial hub.

Early signals look good for Kenya.

“We are very positive about this clearing house and I think it is very important for Kenya to set up a financial hub here and to process the Chinese currency renminbi,” China’s ambassador to Kenya, Liu Guangyuan, told Reuters on the sidelines of a conference in Nairobi on Wednesday.

The value of potential business through such a clearing house was still a subject of discussion, he said.

Kenya’s daily turnover of foreign exchange is $330 million to $370 million, sometimes rising to $500 million.

Highlighting Nairobi’s enthusiasm for a clearing house based in Kenya’s central bank, President Uhuru Kenyatta made his bid for Beijing’s backing during a visit to China in August.

Business between Kenya and China is growing, even if Europe is still a bigger trade partner. Kenya’s Equity Bank, for example, has opened a branch in Nairobi for Chinese business executives, complete with Chinese tellers serving them.

“Everyone is trying to clinch a deal to directly clear and settle yuan transaction with the People’s Bank of China,” said an official at a Chinese state think-tank that often advises Beijing on policy, speaking about Africa’s clearing house plans.

In the meantime government officials in Niger have reportedly found evidence of bloated costs in oil deals with China National Petroleum Corporation (CNPC), leading the government to seek renegotiations on sections of

its contracts with CNPC. In Chad, CNPC operations have been suspended due to alleged “gross environmental negligence”, reports The New York Times.

Gabon, in another controversial move, will also be reclaiming Sinopec assets in 2015, because of breaches of contract, according to Macau- Daily Times

In August Chad’s oil minister Djerassem Le Bemadjiel told state radio that the Chadian government had “found flagrant violations of environmental standards by […] CNPC.

Not only do they not have facilities to clean spilled crude, there were also intentional spillages in order

reduce costs”, reported Reuters.

African entrepreneurs seek their Chinese dream

From a windowless room in a dilapidated Hong Kong high-rise, Ali Diallo sells Chinese electronics to retailers across Africa. The modest surroundings belie the multi-million dollar business the West African trader has built in the five years since he moved to the city.

The 39-year-old from Guinea is part of a growing number of African entrepreneurs thriving in southern China, as trade between the world’s second-largest economy and fastest-growing continent soars.

Sitting in a small room cluttered with cardboard boxes destined for Nigeria, Diallo welcomes the latest delivery of Chinese-made mobile phones to his office in Chungking Mansions — a bustling labyrinth better known for budget hotels and no-frills restaurants.

The building is also the go-to place in Hong Kong for African buyers in search of cheap electronics, with phones selling from around $8 each.

“In China there are opportunities for people who can start from scratch and build up their own business. Obviously not in one day but through hard work and networking you can do it,” says the trader, whose company sees an annual turnover of $11 million a year through the sale of phones and tablets alone.

Trade between China and Africa hit new highs of nearly $200 billion last year, according to official Chinese data, driven by Chinese industry’s appetite for African raw materials.

The African traders in southern China are the flipside of this deepening relationship. Entrepreneurs like Diallo have made Chungking Mansions one of the most important passageways for Chinese gadgets air-freighted to Africa.

According to Gordon Mathews, professor of anthropology at the Chinese University of Hong Kong, up to a fifth of all mobiles in Africa have passed through the building’s corridors in recent years.

But while this 17-storey hive is the storefront, the engines behind this trade lie in the industrial heartland of neighbouring Guangdong province in southern China.

This mecca for low-cost manufacturing has drawn entrepreneurs from across Africa, creating one of the largest black communities in Asia.

In the provincial capital Guangzhou, at least 20,000 Africans live in the city, research from local Sun Yat-sen University shows.

Though their number is a fraction of the million Chinese now living in Africa, these migrants are playing a pivotal role in their new home.

“Traders bring with them vast skills and capital, supporting large amounts of Chinese manufacturers… If all the African traders were to vanish it would have an enormous effect on the south China economy and business people realise this rather strongly,” says Mathews.

Many traders work in and around a downtown neighbourhood dubbed “Little Africa”, or more insensitively “Chocolate City” by the local media. Along its winding central alley, a restaurant serves Tilapia with fufu — a staple Congolese meal of fried fish and cassava — as well as traditional Chinese fried rice and steamed fish.

A few kilometres away at Canaan Export Clothes Trading Centre, a vast complex where Igbo is spoken as often as the local Cantonese language, Lamine Ibrahim loads thousands of jeans into bags destined for Africa.

He is one of several hundred Africans who has forged a deeper connection to the city by marrying a local Chinese woman — a relationship founded on love but also economic prudence.

“For (communication) with the Chinese people… she can do. I buy my car, she is there, I open my own factory, she is there. So if I have no wife it’s not easy,” says the Muslim trader from Guinea in broken English.

Five months ago Ibrahim and his wife Choi Zoung-mai — renamed Maryam Barry after converting to Islam — opened their first factory hiring 43 Chinese workers. With this latest investment they hope to secure a bright future for their four-year-old son who speaks fluent Mandarin as well as French, English and Fula.

While there are several success stories, not all African entrepreneurs make it in China — for some rising costs and intense competition make it difficult to stay afloat. But this migrant community, which began forming in Guangzhou in the 1990s, has built a network of groups to support each other’s ambitions.

This is vividly apparent in the handful of African Pentecostal churches that have sprung up across the city. Tucked away on the ninth floor of a building behind Guangzhou railway station, 150 worshippers crowd into Royal Victory Church.

“Our prayer is that you will prosper,” the pastor preaches to cries of agreement from a mostly male congregation drawn from Nigeria, Cameroon and Ghana.

The African entrepreneurs who are flourishing in Guangzhou are succeeding where many foreigners fail. Not only are they navigating the notorious Chinese bureaucracy but at times overt racism in a country where prejudices can run high.

This can range from mild snubs from taxi drivers who refuse to pick up black customers to more serious accusations of traders being unfairly targeted by police when they conduct raids for illegal immigrants.

Even so others report good relations with the Chinese. “Many traders feel much more comfortable working in China than they do in Europe,” says Roberto Castillo, a Lingnan University researcher in Guangzhou.

Ojukwu Emma, president of the local Nigerian community, says the main problem for Africans trading in China are the increasing clampdowns on visas. He says it is getting harder for African residents in the city to renew visas, or for those travelling back and forth to gain re-entry.

“You cannot allow foreigners to come in and not give the foreigner confidence to stay. Once you are out to the world, you must be open,” says the businessman who has lived in the city for 16 years.

But for now booming Sino-African trade continues to draw new waves of African entrepreneurs, drawn to the shores of Guangzhou in search of the Chinese dream. – AFP

BRICS agree on structure of bank

The BRICS bloc of large emerging economies have agreed on the capital structure for a proposed development bank that aims to reduce their reliance on Western financial institutions, the Wall Street Journal reported.

Officials from Brazil, China, India, Russia and South Africa agreed to set up the bank with a total capital of $50 billion, shared equally among them, it quoted an unnamed senior Indian government official as saying.

The decision was made at a meeting in New Delhi in the first week of August, the newspaper said. The move would likely end disagreements over the funding and management of the bank as China had earlier proposed total bank capital of $100 billion and sought a bigger share, it said.

The bank would support the financing needs in emerging and developing nations for roads, modern-day port facilities, and reliable power and rail services.

Officials have previously said the BRICS aimed to inject an initial $50 billion into the bank, but there was disagreement over whether each state should contribute $10 billion or if contributions should vary by the size of their economies.

China’s economy is about 20 times the size of South Africa’s and four times as big as Russia’s or India’s. Other key issues, such as proposals within the group to offer a stake to developed nations, needed further discussion, the Indian official said. The group is considering offering a stake of 40-45% to non-BRICS nations, the official added.

That would help the bank get a higher credit rating and enable it to raise cheaper funds from the market, the newspaper said. The bloc has yet to make a decision on where the bank would be located, the official added.

Those issues are likely to be discussed when finance ministers from the group meet on the side-lines of the annual meetings of the World Bank and International Monetary Fund in Washington in October, the official added.

The five countries represent a fifth of global GDP but have struggled to find common ground that would convert their economic weight into joint political clout. – Reuters

BRICS makes its presence felt

Total trade within the BRICS (Brazil, Russia, India, China, and South Africa) grouping amounted to $6.1 billion last year, President Jacob Zuma said on Tuesday.

“This represents 16.8 percent of global trade,” he told delegates at the BRICS business council meeting in Johannesburg.

“The presence and influence of the BRICS grouping continues to be felt.”

Zuma said the strength of BRICS was amplified by the fact that these countries accounted for 43 percent of the world’s population.

“Indeed, we are all gathered here because we see value in the BRICS partnership in many respects.”

In 2012, South Africa’s total trade with BRICS countries stood at R294bn, up from R264bn in 2011.

Total trade with Brazil grew from R18bn in 2011 to R20bn in 2012, and with Russia from R3bn in 2011 to R5bn in 2012.

Zuma said total trade with India, South Africa’s sixth largest trading partner, grew substantially from R53bn to R67bn.

Trade with China grew from R188bn in 2011 to R201bn in 2012.

“All these impressive statistics… should provide you with the determination and confidence to deliver on the imperatives…” he told delegates.

Trade and Industry Minister Rob Davies said the council meeting was intended to deepen the partnerships to enhance co-operation and development on the African continent.

BRICS council South African chairman Patrice Motsepe said it was crucial that the commitment to increase trade and investment was seen, and “quantifiable”.

“There’s a new sense of urgency,” Motsepe said.

He emphasised “value-added trade” and common objectives being sought.

“BRICS is not about excluding other countries,” said Motsepe.

“We want to see investments quantify… It is important to build on the BRICS partnership.” – Sapa

Solidarity threatens strike at Lonmin

Platinum producer Lonmin faces possible strike action from minority unions that were left out of a recognition agreement it signed last week with the Association of Mineworkers and Construction Union (Amcu).

Trade union Solidarity says it is considering staging a strike at the mine in a bid to have its recognition at the company restored.

The union has declared a dispute with Lonmin over the issue and has taken the matter to the government labour mediator, a step towards legal strike action.

Ironically, Lonmin, the world’s third-largest producer of platinum, signed the agreement with Amcu in part to avert a threatened strike.

Solidarity general-secretary Gideon du Plessis says they have no choice but to strike.

Amcu president Joseph Mthunjwa says the agreement accommodates other unions.

Mthunjwa says past agreements did not allow for any other minority unions to be recognised. – SABC

Egypt: Suez bottleneck could boost oil price

Egypt is a key bottleneck in the global oil industry. Should the current turmoil in the North African country get any worse, a potential oil spike could damage any nascent economic recovery.

After last week’s bloody crackdown by the Egyptian army, fears of a disruption of oil supplies to the West have boosted the oil price. Brent crude prices were propelled to a four-month high of $111.23 on Thursday. If the turmoil gets worse – or unrest spreads to other countries – the risk premium currently factored into the price of crude is likely to increase further.

Egypt is not a major energy exporter, producing a nominal amount of the world’s oil and gas. The North African country appears at number 54 on the list of the world’s largest oil exporters, producing about 0.9pc of the world’s oil and 1.8pc of global natural gas supply.

However, Egypt plays a vital role in international energy markets through the operation of the Suez Canal and the Suez-Mediterranean (Sumed) pipeline. These are vital pieces of infrastructure in the global oil market.

Last year, about 7pc of all seaborne traded oil and 13pc of liquefied natural gas (LNG) travelled through the Suez Canal, according to data collected by the US Energy Information Administration (EIA).

The Suez Canal, a 101-mile link between the Red Sea and the Mediterranean, and the 200-mile Sumed pipeline are strategic routes for Persian Gulf oil and gas shipments to Europe and North America.

Closure of these two routes would add an estimated 2,700 miles of transit from Saudi Arabia to the United States around the Cape of Good Hope, increasing costs and shipping time.

Hopes are high, however, that both the canal and pipeline will continue to operate as normal. Maritime insurers appear to be relaxed about the situation at the moment, but one, Skuld, has warned ships’ crews not to go ashore.

“Members are advised to ensure that ships and crew calling at Egyptian ports or transiting the Suez Canal remain on alert and take suitable precautions to ensure their safety,” Christian Ott, Skuld’s vice-president, head of claims, said. “Given the announcement of the state of emergency, and the continued situation on the ground, vessels and crew need to exercise particular caution if any crew step ashore – even for short periods of time.”

The rest of the country’s oil industry remains relatively unaffected. Despite the worrying headlines, most oil and gas production takes place offshore and is operating relatively undisturbed.

The largest player is BP, which produces about 15pc of the country’s oil and 30pc of its gas. “Operations and production are unaffected,” a BP spokesman told Reuters after more than 500 people were killed last week in a security crackdown. “We are monitoring the security situation in the areas where we have offices. All our people are safe and accounted for.”

Royal Dutch Shell is also a major producer in the country. “To ensure the safety and security of our staff, Shell offices in Egypt are closed for business today and into the weekend, and business travel into the country has been restricted. We will continue to monitor the situation in Egypt,” a Shell spokesman said on Friday.

However, perhaps the most exposed company to the country is BG Group. Egypt was the energy company’s largest producing country in 2012, delivering 20pc of the company’s total production.

BG’s production is also unaffected so far, but the group withdrew 100 expatriate staff and dependants last month. About half of the gas that Egypt produces is exported, with the rest servicing Egypt’s domestic market. This is one reason why sector watchers are hopeful that disruption will be minimal. Whoever holds political power will not want the lights to go off.

The Egyptian uncertainty will continue to boost the oil price, but the situation in neighbouring Libya is also a concern. Workers at ports in Libya have been on strike for a number of weeks, with the protests resulting in a drop in Libya’s oil exports.
“If the blockade of these oil terminals continues, the state will be obliged to use its power, and all the forces at its disposal, including the army,” the Libyan prime minister, Ali Zeidan, said on Friday.

“The situation in Libya is also threatening to escalate: the government appears to be running out of patience in view of the revenue losses due to strikes,” Commerzbank said last week. “After striking workers at the export terminals had announced that they planned to sell the oil themselves, the government threatened to deploy the army to prevent this from happening.”

Brent crude prices eased on Friday, following five straight days of gains. However, prices are likely to stay at or above $110 (£70) a barrel until there are signs of tensions easing. But if the situation in Egypt and Libya worsens, all bets could be off. – The Telegraph

Motor industry workers to strike

More than 30 000 assembly line workers in the motor manufacturing industry are expected to down tools today. This after wage talks between the seven biggest manufacturers and metalworkers’ union Numsa deadlocked.

The National Union of Metalworkers of South Africa (Numsa) is demanding a 14% pay increase, while employers are offering between 7.5% and 8.5%.

The motor industry-dependant Eastern Cape, with its three manufacturers, Volkswagen, Mercedes-Benz and General Motors, is expected to be hard hit.

CEO of the Nelson Mandela Bay Business Chamber Kevin Hustler says, “The concern always around the automotive trade is that it is an anchor industry in the Nelson Mandela region and parts of the Eastern Cape. A strike right now is a threat to production as well as local and international orders.”

He says, “If the strike continues for a protracted time, the greater the effect will be for businesses themselves and the economy as a whole. At this time South Africa is affected quite strongly by lack of confidence by both business and foreign investors. This does not bode well for building confidence in international markets.” – SABC

Mystery of US unchanging national debt

The Treasury Department’s Financial Management Service (FMS), which publishes both the US federal government’s official Daily Treasury Statement and its official Monthly Treasury Statement, is reporting that in July the federal government ran a deficit of $98 billion but that the federal government’s debt remained exactly $16,699,396,000,000 for the entire month.

The FMS said that the deficit went up $98 billion ($97,594,000,000) in the Monthly Treasury Statment for July, which it released on Monday.

At the same time, the FMS said the debt stayed at exactly $16,699,396,000,000 in its Daily Treasury Statements, which are published every business day. The Daily Treasury Statements show the daily value of the federal government debt that is subject to a legal limit set by Congress.

At the static $16,699,396,000,000 level that the Treasury reported for every day of July, the debt was just $25 million below the legal limit of $16,699,421,000,000 that was set in a law passed by Congress and signed by President Barack Obama.

If Treasury’s daily statements were to declare that the government had borrowed an additional net $98 billion to cover the $98 billion deficit the Treasury declared in its monthly statement for July, the Treasury would be conceding that the government had already surpassed the legal limit on the debt–and has been violating the law by continuing to borrowing additional money.

Instead, even as the Treasury was running up the $98-billion deficit it reported in the July Monthly Treasury Statement, every one of the 22 Daily Treasury Statements published for July said the Treasury had closed out the previous business day with exactly $16,699,396,000,000 in debt.

The Daily Treasury Statement for Aug. 12, released Tuesday afternoon, says the debt remained stuck at exactly $16,699,396,000,000 during the first 12 days of this month, too.

On May 17, the first day the Treasury reported that the debt had hit exactly $16,699,396,000,000–and was thus just $25 million below the legal limit–Treasury Secretary Lew sent a letter to House Speaker John Boehner saying he was beginning to implement what he called “the standard set of extraordinary measures” to prevent the Treasury from exceeding the legal limit on the federal debt.

Since Lew sent that letter–announcing that he would use “extraordinary measures”–the debt has remained stuck at exactly $16,699,396,000,000 for 87 straight days.

That includes all 31 days in July when Lew’s Treasury says it was running a $98 billion deficit.

When Lew stops using “extraordinary measures” to keep the debt at exactly $16,699,396,000,000, the government will have another debt-limit crisis. – CNSNews.com

Russia to give SA nuclear training input

Russia’s State Nuclear Power Corporation, Rosatom, which is busy positioning itself in case South Africa decides to build new nuclear power plants, has signed an agreement with North West University that will see it getting involved in training nuclear industry specialists for the country.

Rusatom Overseas, a Rosatom branch that specialises in the promotion of the corporation’s projects abroad, last week signed a memorandum of cooperation with North West University, the only institution in South Africa that offers postgraduate degrees in nuclear engineering.

The memorandum envisions the development of collaboration programmes in research, exchanges of experts, joint seminars and the writing of textbooks. A joint working group is to draw up a list of projects for collaboration.

“We are pleased to announce the signing of the MoU with our Russian colleagues,” said Professor Herman van Schalkwyk, rector of the Potchefstroom Campus of North West University. “We recognise that nuclear energy remains an important option for South Africa.

“The intention is to explore the potential for future collaboration, ranging from education to specific technical projects in nuclear engineering, hydrogen technologies, energy, etc.”

Jomart Aliyev, director-general of Rusatom Overseas, said the memorandum would promote the development of technical education in South Africa, while giving local researchers and scientists the opportunity to find out more about modern Russian technologies.

Joint research and scientific developments, he said, would “provide a solid foundation for the development of Rosatom’s business relations in South Africa”.

Russian President Vladimir Putin said after a meeting with South African President Jacob Zuma in Sochi in May that Russia was ready to assist South Africa in building up a comprehensive nuclear power engineering industry.

South Africa’s Koeberg nuclear plant is the only nuclear power-generating facility on the African continent.

South Africa’s Integrated Resources Plan (IRP) for 2010 to 2030, a 20-year projection on the country’s electricity supply and demand, envisages 9 600 MW of additional nuclear capacity by 2030. The plan is due to be reviewed soon.

Speaking at the Africa Energy Indaba in Johannesburg in February, Energy Minister Dipuo Peters said South Africa planned to expand its use of nuclear power in a safe and secure way as a key part of the country’s move towards a diversified, low-carbon energy mix.

“If we are serious about diversification towards a low carbon economy, we cannot belittle the role that natural gas and nuclear power can play in the realisation of that 2030 low-carbon energy vision,” Peters said.

Rosatom is ranked fourth in the world for nuclear electricity generation, accounting for 17% of the world nuclear fuel market. It conducts 45% of the world’s uranium enrichment services, and is ranked the second in the world for uranium reserves and fourth for uranium production.

The company last year opened a marketing office in Johannesburg, only its third such office after Ukraine and Singapore, and sent a high-level delegation to Durban to take part in the 5th BRICS (Brazil, Russia, India, China and South Africa) summit in March-April. – gov.za-Itar-Tass, with additional reporting by SAinfo

SA destined to go nuclear

South Africa is destined to get more nuclear power stations as means of electricity generation as part of the Integrated Resources Plan.

It is envisaged that 9 600 megawatt of electricity will be generated in this manner by 2030 but nuclear power stations are not universally welcomed, especially after the Fukushima disaster in Japan.

These issues will be on the agenda of the Nuclear Industry Association’s (Niasa) annual convention starting in Port Elizabeth on Wednesday but even more significant is that Thyspunt, a 90-minute drive from Port Elizabeth is the preferred site for South Africa’s second nuclear-fuelled electricity plant.

Over the past six years, the proposed nuclear power station for Thyspunt has been opposed on several grounds. These include environmental, cultural and agricultural.

A third draft Environmental Impact Assessment is due to be released by Eskom in October which will then re-ignite the public participation progress.

Those opposing the building of a nuclear power station at Thyspunt are very concerned about the lack of transparency in the process.

“This site was selected by the previous regime by the apartheid Government. It would have been really great if we could start the selection process again in the new South Africa which would have been more inclusive and would look more at the situation that it is at the moment,” says the Thyspunt Alliance’s Trudi Malan.

She says that they are greatly concerned by the fact that it seems that Eskom is not really paying attention to what they are being told about this specific site at Thyspunt.

The Niasa convention will also be looking at the potential economic developments surrounding the implementation of the nuclear programme in South Africa.

The technologies used are foreign based but the potential for job creation is based in the construction phase creating cautious optimism for organised business.

“We have companies that are in the energy space and in the engineering and manufacturing space. We advocate for them to get an opportunity on such a big plant. It is complicated in one sense but it still works with bolts and nuts and pipes and valves. The point is also to demystify such a plant that it is not as complicated sometimes as it gets presented,” says Nelson Mandela Bay business Chamber’s Mandla Madwara.

A second nuclear power station for South Africa is not a done deal yet and indications are that the court will probably have the last say as those opposing nuclear power say they will take it all the way. – SABC

Petrol hike increases taxi fares

The South African National Taxi Council (Santaco) has announced an increase in taxi fares which will be effective from the end of this month.

An increase of between 10% and 20% comes in the wake of the latest fuel price hike. Petrol rose by 32 cents a litre and diesel by 33 cents a litre. In June, the fuel price rose by 84 cents and diesel 78 cents a litre.

Santaco’s Bafana Magagula says local routes will be increasing by between R1 and R5 and long distance routes by R10 and R50.

In June, Sanatco introduced an index which will be used by associations to calculate taxi fares. The Taxi Fare Index is based on a computer programme that models the costs of taxi operations. The index will be released quarterly to the media and to Santaco members.

Consumers in general are under pressure as fuel hikes push up the cost of other consumer goods.

Industrial Development Corporation (IDC) Economist Lumkile Mondi, last Monday said that the volatile rand and relatively higher oil prices are to blame.

The expected e-tolls in Gauteng and possible interest rate hikes are other looming cost pressures for the consumer.