A conveniently fast way of accessing South African news online has just seen the light: Newsburger. This new South African news site situated at newsburger.co.za aggregates all available South African newsfeeds where they may be accessed in one, convenient and attractive location.
Fast food has become fast news.
While coal and aluminum companies were impacted, the gold and platinum miners suffered
more as their mines are very deep – over a mile below the surface. It’s not safe to send
workers down shafts unless at least 90% power is guaranteed. One large company, Harmony
Gold estimated that the production halt prevented them from mining over 25,000 ounces of
gold3. The miner laid off 5,000 workers in February in order to return to profitability4. Uranium
production may drop as well, since many companies like AngloGold produce uranium as a by-
product of gold.
Other commodities are affected by the electricity instability as well. Last month, Xstrata
declared force majeure in contracts with vanadium and ferrochrome customers as it feared it
would be unable to deliver adequate amounts of these inputs to steel production5.
ArcelorMittal faced a similar situation, and may have to import steel to supply customers at a
higher cost6. Analysts expect a global short term steel shortage as well.
Sadly, this power problem was not new. South Africa had experienced electricity disruptions
several times over the past three years, often caused by technical problems at the nuclear
plant Koeberg7. Earlier in January, terrified tourists at Table Mountain were trapped in cable
cars in mid-air for hours due to a power outage at the plant8. Eskom warned the South
African government a decade ago that unless more power plants were built, the country could
suffer a supply deficit by 20079. Despite the growth trends, temporary excess capacity was
mothballed and maintenance was sorely neglected.
Alec Erwin, the South African Minister of Public Enterprises claims the government is the
victim of its own success in growing the economy so rapidly and connecting black townships
to the grid. However, the boom in the economy was necessary to decrease the high
unemployment rate of 25.5%10.
Now traffic crawls to a standstill when the stoplights go out, and restaurants have to close
since they can’t cook. Some industries are looking at generators or alternative sources of
power, but the price may be too high for small firms11. These companies may have to move
offshore where they can get steady electricity or shut down. A company that makes plastic
milk bottles claims it’s losing 4 million Rand per week due to the power fluctuations
(approximately USD $500,000). Complaints by CEOs of the economic damage have been
belittled by the government, as Trevor Manuel, the Minister of Finance referred to loss
estimates as "overcooked and utter garbage"12 .
As South Africa’s electricity market is dominated by Eskom, a public company, no one knows
what the real cost of electricity is. For years electricity was ample and cheaper than other
developed countries, probably due to taxpayer subsidies13. This encouraged waste by
consumers and high use by industry.
There is evidence that some large industrial customers like BHP Billiton pay less than a third
what consumers pay per kilowatt14. In 2004 when the government decided to open bidding
on new electricity generation, the private sector passed on the opportunity due to Eskom’s
control of 70% of the market.
In addition to growing demand, another problem is loss of generating capacity. During the
crisis, Eskom had an unexpected drop of 9,000 megawatts, enough power to run
Johannesburg three times over. South Africa depends primarily on coal for electricity, and the
country has a shortfall of 20 milliontons15. In addition, the Department of Minerals and
Energy has dragged its feet on issuing more mining rights so that Eskom can source more
coal.
Ironically, in 2000 Eskom had a healthy 61 day supply of coal, so they started a policy to
reduce the stockpile. It dwindled to less than three days supply in January during the height of
the crisis. Without sufficient quantities of coal, the fires aren’t large enough to generate
enough steam for efficient electricity production.
Much of the problem has arisen from Eskom’s rigid interpretation of South Africa’s affirmative
action program, black economic empowerment or BEE16. While there was much oppression
under the former apartheid system, the pendulum seems to have swung too far in the other
direction. The company notonly favored black owned vendors, but moved in 2002 to a strict
"hierarchy of procurement" in purchasing coal. Eskom started by sourcing coal from black
female suppliers, then small black owned companies, then large black firms, then companies
with pro-black practices, and then other suppliers. Only if the first supplier couldn’t
accommodate would Eskom move down the chain to lower priority vendors.
However, it’s the quality of the coal is also a problem. The government blames wet coal,
although coal burns better wet than when dry. In actuality, Eskom purposely sources coal of
such poor quality it can’t be exported. The utility can demand a steep discount from local
suppliers17. Frequently, it’s full of rocks and is so fine it turns into mud in the rain18. Although
even the lowest grade coal has increased in price, the power company refuses to pay more
for its contracts.
Coal companies could no longer be chosen by proximity, so supplies often were trucked in
long distances by haulers chosen in the same BEE hierarchy. In addition, the hauling
companies did not necessarily have experience, they were hired due to their BEE status. One
contractor was allegedly a former interior designer. Eskom continued their penny pinching
ways, paying below market rates for hauling – especially considering the equipment
breakdowns from inadequate roads. Many of these firms went bankrupt, exacerbating the
supply crunch.
While small companies became insolvent, Eskom was very profitable. In 2006, the utility
netted R6.45 billion (about USD $840 million). Over the past three years, the directors
received R57 million in bonuses (equivalent to USD $7.44 million) while the electric grid
disintegrated.
During the crisis, Eskom continued to export electricity despite government statements to the
contrary. Over 1,500 megawatts were delivered to neighboring countries while South African
cities were suffering rolling blackouts.
Eskom has also stumbled due to lack of qualified personnel. Bowing to political pressures, the
skill shortage a union warned Eskom about was ignored in favor of racial and gender quotas.
The utility’s workforce was cut in half over the past 15 years, as technically competent whites
were denied employment. Eskom’s HR department sent out a memo in January 2008 right
before the crisis stating, "No white male appointments for the rest of the financial year."19
South Africa is suffering a "brain drain" as skilled workers – including former Eskom engineers
– continue to emigrate to countries like New Zealand and Australia. Approximately one million
whites left the nation between 1995 and 200520. Most of those whom emigrated due to high
crime and limited economic opportunity were productive workers between the ages of 20 and
40. As the core of the workforce continues to seek jobs elsewhere, the nation suffers as a
result. A South African entrepreneur explained, "Racism in any form, when introduced into the
economy, can only yield what we are now reaping. Economic chaos and failure."21
Instead of addressing the issues that suffocated supply, Minister Erwin stated that the
government will respond to the crisis by squelching demand. Eskom will be ordered to enact
large rate increases, fines, penalties and even disconnection if power use is deemed
excessive. Only a state owned utility would attempt to discourage purchasing their product.
In fact, Eskom’s Finance Director, Bongani Nqwababa told the government to deter
investment in South Africa until 2013 due to the inability to generate more power. Rio Tinto
has apparently taken the utility at their word and has announced they are rethinking the
aluminum smelter in Coega planned for 201122. Incredibly, the government claims there will
be no problems hosting the soccer World Cup in 2010.
Platinum was $1605 when the crisis started. Since South Africa produces 80% of the world’s
platinum supply, the price shot up 43% by early March to nearly $2,300 per ounce. Palladium
is often a by-product of platinum mining and can be substituted for its sister metal, so it was
trading at $600 at one point. Gold did not move up as much as platinum, less than 10%.
In addition, the ratio between gold and platinum is very skewed. It has a 15 year average of
1.52 but it reached a near record 2.379 before moderating to 2.1.
It’s true that South Africa doesn’t dominate gold production any more, as it dropped to the
second largest supplier last year at 11.1% of the market23. However, with increasing demand
from the Chinese and the Indians getting back into the market (per Le Metropole Cafe), the
price should have jumped more.
At the G-7 meeting in early February, the IMF once again threatened to sell tons of gold,
despite the fact that the U.S. Congress has repeatedly blocked past attempts24. As I
mentioned in earlier writings, central banks including the Federal Reserve have colluded to
suppress the price of gold which makes their fiat paper currencies look stronger in
comparison 25.
As I discussed last month, infrastructure development and rebuilding is a key trend in today’s
world. Not only can you invest in this area profitably, countries that fail to maintain their
infrastructure deserve
your attention. Even if a country has good mining laws and is politically stable, it has to
ensure that industry can work efficiently and move its products to market.
Last year, the South Africa was ranked the 18th most popular destination for foreign direct
investment by corporate executives. This was a major improvement over 2006, besting
Mexico and South Korea26. That opinion is likely to change sharply. I expect South Africa to
fall out of the top 25 nations in 2008 due to continued uncertainty over power generation,
despite government promises of additional electricity.
1.
http://uk.reuters.com/article/oilRpt/idUKL3193446320080131?pageNumber=2&virtualBrandC
hannel=0
2. http://www.ft.com/cms/s/0/253b5a24-ce8d-11dc-877a-000077b07658,dwp_uuid=4f00dc36-
aef2-11dc-880f-0000779fd2ac.html?nclick_check=1
3. http://www.stratfor.com/analysis/southern_africa_recurring_regional_power_shortages
4. http://www.miningweekly.co.za/article.php?a_id=127103
5.
http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSL0177028720080201
6. http://www.engineeringnews.co.za/article.php?a_id=125554
7. http://www.eskom.co.za/annreport06/info_westerncape.htm
8. http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/01/23/wcape123.xml
9. http://www.guardian.co.uk/world/2008/jan/25/southafrica.business
10. http://www.nytimes.com/2008/01/31/world/africa/31safrica.html
11. http://www.mnet.co.za/Mnet/Shows/carteblanche/story.asp?Id=3444
12.
http://www.int.iol.co.za/index.php?(click_id=13&art_id=vn20070128093211290C122218&set_i
d=
13. http://www.moneyweb.co.za/mw/view/mw/en/page662?oid=188775&sn=Detail
14.
http://www.mg.co.za/articlePage.aspx?articleid=331969&area=/insight/insight__economy__b
usiness/
15. http://www.miningweekly.co.za/article.php?a_id=125940
16. http://www.southafrica.info/doing_business/trends/empowerment/bee.htm
17. http://www.miningmx.com/energy/905300.htm
18. http://www.moneyweb.co.za/mw/view/mw/en/page38?oid=190463&sn=Detail
19. http://www.mnet.co.za/Mnet/Shows/carteblanche/story.asp?Id=3444
20. http://www.fin24.com/articles/default/display_article.aspx?ArticleId=1518-25_2003186
21. http://www.evancarmichael.com/African-Accounts/1492/SMEs–The-impact-of-the-current-
power-crisis-in-South-Africa.html
22. http://www.ft.com/cms/s/0/1c872d20-ce0d-11dc-9e4e-
000077b07658,dwp_uuid=4f00dc36-aef2-11dc-880f-0000779fd2ac.html
23. http://www.goldsheetlinks.com/production.htm
24. http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A703147
25. http://www.lonestarsilver.com/news_8-31-04.html
26. http://www.atkearney.com/res/shared/FDICI_2007.pdf
The South African government’s free market economic policies have been “disastrous” for the country under President Thabo Mbeki’s rule, the head of South Africa’s most powerful union movement and a close ally of presidential contender Jacob Zuma, said on Wednesday.
Zwelinzima Vavi, the general secretary of the Congress of South African Trade Unions, Cosatu, accused Mr Mbeki’s government of having lost sight of the concerns of the poor and unemployed during his eight years in power.
“If the world belonged to me, everything stops now,” he told the Financial Times, adding that new policies should be the result of a broad, national debate.
Business people will seize on his comments, as Mr Vavi has been a force behind Mr Zuma’s increasingly confident campaign to replace Mr Mbeki as the ANC leader at the party’s five-yearly elections starting this weekend.
Mr Zuma, the party’s populist deputy leader, is the frontrunner who has capitalised on disillusion among the party’s grassroots with Mr Mbeki’s aloof style and perceptions that he is too close to business. While Mr Zuma has courted investors and suggested that policy would not be changed radically, business remains wary of his close links to the unions and the left.
Speaking in Cosatu’s Johannesburg headquarters, Mr Vavi argued the ANC had rushed too quickly to open the economy after the end of white rule in 1994.
“We allowed the marketers to take charge of important departments and all they knew was that South Africa must be open to chilly winds of competition.” The focus should have been on labour intensive, rather than capital intensive sectors. “We have had this flirtation with neo-liberal policies that have been absolutely disastrous for our development.”
Mr Mbeki and his finance minister, Trevor Manuel, have won plaudits abroad for their macroeconomic policies, which have led to the most sustained period of economic growth.
Mr Vavi said he liked Mr Manuel “as a friend” and for having disproved the sceptics who suspected that the ANC would wreck the economy on taking power. But, he added, that he had failed the poor. Mr Zuma was right, he added, to reassure investors that policy would not be set on the whims of the president but by the party, and to say, “I do not have horns and a tail.”
At the same time he said, “you need to reassure the marginalised . . . that their plight will be made the priority, that someone will listen to their cry”.
Mr Vavi was scathing about the culture of Mr Mbeki’s government, which he accused of failing to listen to alternative voices.
“People are afraid to express their views without attracting a counter-punch that says you are a racist, an extreme leftist or told you have infantile disorders.”
He said that Mr Mbeki’s allies liked to suggest the union movement was seeking to lead South Africa into Zimbabwe-style chaos. But “we are not asking for hyper inflation, we don’t ask for high deficits, we say that money ought to be spent and invested correctly”.
Unemployment, officially at 25 per cent, but informally estimated to be near 40 per cent, was a “national emergency”, Mr Vavi said.
Central Student Representative Council (CSRC) secretary-general Mshengu Kwazi was reacting to meetings held at the campus to discuss the recent rape of an American exchange student at on the Howard College campus.
Kwazi said meetings had ended in chaos and the deputy dean of students was man-handled on Monday by "some white academics".
"This because he was not giving pre-determined answers on the rape case… We regard it as nothing but a shameful expression of political frustration by a brood of fangless vipers."
Kwazi added that the meeting on Wednesday was similar. "If the deputy dean was white he wouldn’t have been man-handled…. those who came on behalf of the university were not attacked and we
believe this was because they were of another race."
Kwazi said the CSRC was upset by the behaviour of varsity management and the fact that its views were being sidelined.
"The dramatisation and distortion of our views at the meeting yesterday (Wednesday) proved to us that there are still remnants of apartheid in our institution – that will do anything to pursue their
politically-naked agenda of silencing and threatening those who are not shy to speak about their demonic tendencies," Kwazi said in a statement.
"These are the very same remnants that continue to ensure bad publicity of our institution – that is why every time they call a meeting, they also mobilise the media and attack the university.
"We are convinced that these barbaric styles of expressing anger are due to the fact that they are not comfortable with serving under the leadership of a black vice-chancellor," he said.
Kwazi said following the rape on November 13, a few meetings were held which resulted in "racist tendencies manifesting from the incident".
Police Inspector Michael Read said the rape took place at the university’s Howard College campus residence.
The girl was taken to King Edward VIII Hospital where she was treated, and anti-retrovirals administered.
"A number of our students have been victims of rape attacks and robberies but there has never been any commotion as we are witnessing now. In fact, two weeks prior to the incident in question, another student was raped and she unfortunately committed suicide thereafter," Kwazi said.
He said the institution was not speaking out on black students who were being raped.
"This latest incident has been blown out of proportion," Kwazi said.
He said "racial statements" made during meetings had also convinced the CRSC that the university was still living with remnants of apartheid.
The cause of his death is unknown but he had been ill for some time at a residential home in South Africa.
He illegally declared independence from Britain in 1965 and his white minority government led the country for 14 years amid international scorn and sanctions.
Following a bitter bush war with black nationalists, his government was overthrown by Robert Mugabe in 1979, leading to the creation of Zimbabwe.
Ian Smith’s supporters continued to laud him as a political visionary and a man who understood the uncomfortable truths of Africa.
To his detractors, however, he was an unrepentant racist.
Mr Mugabe’s deputy information minister, Bright Matonga, described Ian Smith as a man who brought untold suffering to millions of Zimbabweans.
"We offered him the hand of reconciliation which he never accepted. Good riddance," Mr Matonga was quoted by AFP news agency as saying.
The BBC’s James Robbins says that to the end of his days Ian Smith was convinced that Rhodesians, black and white, would have fared better under his leadership than that of Robert Mugabe and his Zanu-PF party.
He died believing he had been vindicated by Zimbabwe’s current crisis, with its massive inflation and unemployment.
Steeped in the colonial values of his Scottish immigrant father, our correspondent says Mr Smith was a born leader with a distinguished war record as an RAF fighter pilot.
He helped to found the right-wing Rhodesian Front, which came to power in 1962, and when the-then prime minister, Winston Field, baulked at the prospect of seizing independence, the party turned to Mr Smith, who gave them what they wanted.
He became prime minister of the then self-governing British colony of Rhodesia in 1964. The following year he made his Unilateral Declaration of Independence and years of civil war ensued.
Ian Smith denied this was caused by the actions of his regime and insisted there was nothing wrong with five million blacks being ruled by 200,000 whites.
In the end, Mr Smith maintained, it was not his enemies who beat him, but apartheid South Africa’s threat to cut Rhodesia’s lifeline.
Margaret Thatcher’s UK government brokered a peace deal in the Lancaster House talks in 1979 and a black-majority government took over Zimbabwe.
Ian Smith remained a key player in Zimbabwean politics until seats reserved for whites were abolished in 1987.
When in retirement he failed to create a united opposition to Robert Mugabe, Mr Smith was finally relegated to the sidelines.
The marches are in protest against poor working and living conditions, concerns for workers’ safety, and the negative effects of the huge hike in food prices, the union said in a statement.
The workers will also protest against the lack of schools, clinics and "non-partial justice systems" available to them.
"In light of the two recent [road] accidents in Piketberg and De Doorns in the Western Cape claiming the lives of farmworkers, workers will also demand safer transport, as well as stronger monitoring of the compliance of the Occupational Health and Safety Act by farmers."
Workers, through Fawu, will hand over memorandums of demand to, among others, the departments of labour, agriculture and land affairs, justice, and trade and industry, as well as Agri-SA and the Transvaal Agricultural Union.
Marches will be held in Paarl, Upington, Ficksburg, Groblersdal, Rustenburg and Port Elizabeth from 9am.
Fawu said it will also demand an agricultural-sector truth and reconciliation commission to get to the bottom of abuse and murders of farmworkers and farm dwellers, and expropriation of sections of farms to be used for building schools, clinics and other important social-services delivery points.
Fawu further wants a negotiating platform to be set up to discuss and reach binding agreements on addressing the plight of farmworkers and farm dwellers, and a stop to all evictions, legal or illegal, until agreement is reached on this.
In Johannesburg, Gauteng’s most influential region, not a single branch voted in favour of President Thabo Mbeki’s bid for a third term. More than half of Johannesburg’s branches have completed their nomination processes. The region produces a quarter of ANC’s Gauteng delegates going to the elective national conference in Polokwane.
Meanwhile, nothing has come of reports of Mbeki’s imminent nomination by the ANC’s Sandton branch.
An insider said yesterday the Sunday afternoon branch general meeting "did not materialise" as delegates "failed" to pitch.
Commentators are looking to the ANC’s nomination process, which closes on November 26, for an early indication of the state of the Zuma-Mbeki race.
To add to Mbeki’s re-election woes in Gauteng, businessman Cyril Ramaphosa has secured more presidential nominations than Mbeki has in the province. Ramaphosa has five nominations, while Mbeki and another presidential hopeful, Tokyo Sexwale, have three each.
With just more than a quarter of the 354 branches in Gauteng having finalised their preferences for the ANC’s top posts, Zuma has already secured 57 presidential nominations.
Gauteng is the ANC’s fourth- largest voting bloc at the national conference, after Eastern Cape, KwaZulu-Natal and Limpopo.
Steven Friedman, senior research associate at policy think-tank Idasa, said the Gauteng picture was a bigger problem for Mbeki than the news for Zuma that he was losing the nomination race in Eastern Cape.
"This must weigh heavily for Mbeki, and surely will make him pause for thought. The question of how important it is for him to beat Zuma has to arise. What happens to his legacy? What if he ends up losing, what if he ends up winning but only by 52% or 54 % of the vote ?" Friedman asked.
Another insider said that the ANC Youth League in Gauteng had been "instrumental" in ensuring the upsurge of support for Zuma in the province.
The league remains Zuma’s key backer, while KwaZulu-Natal is regarded as his strongest constituency.
Mbeki’s main support base is Eastern Cape, while his lobbyists are also pursuing the ANC Women’s League’s nomination .
Gusti Coetzer, of Leaders Unlimited, said there was a world-wide shortage of talented people and South African recruiters were "fishing in the same pool" as their competitors elsewhere in the world.
Speaking at the Labour Market conference in Midrand last week, Coetzer said the workforce had become globally integrated.
"There is a world-wide shortage of top people and executives can now pick and choose jobs.
"While job satisfaction and the quality of the company play a major role in attracting talent, ultimately the remuneration package and how it is structured remains the deciding factor.
"Mobility has created a world without boundaries where top executives can select who they want to work for. To think that South African executives who are working for multinationals are going to come back out of a sense of patriotism is completely unfounded," Coetzer said.
A more realistic approach to the skills shortage would be to nurture local talent by improving the country’s educational institutions.
She told the conference that in a recent Global Talent Index Survey, South African business schools were ranked 27th out of 30 (ahead only of business schools in Iran, Nigeria and Indonesia). More disturbing was the finding that South Africa’s proclivity to attract talent was ranked last.
She said among the things senior executives looked at when being head-hunted in South Africa was the company’s record in attracting and retaining staff.
Coetzer said it was not true that South African executives were overpaid.
"Salaries and benefits like performance bonuses and share options are set internationally and top men and women in the boardroom earn much the same across the world because of the global fluidity of the workforce," she said.
Among the prime jobs on which recruitment efforts were focused, were chartered accountants to be employed as chief financial officers. There was also a huge shortage of qualified engineers.
Project managers, supply chain and logistic managers, and research and development staff were also difficult to recruit.
She said it was imperative that South African universities reversed the appalling pass rates notched up in the engineering disciplines.
"Recent figures show that between 1998 and 2004, of the 50 570 students who were enrolled at tertiary institutions, only 8 900 graduated, which represents a pass rate of only 17,7 percent."
She also revealed that only about 700 engineers entered the economy yearly, while the demand for new engineers would be about 11 000 by 2010.
While black economic empowerment had generally been embraced, the sector that needed to be commended was financial services, where 52 percent of analysts were black.
The Minister of Provincial and Local Government on Monday announced that he had informed all provinces and municipalities to halt the planned replacement of the name.
Sydney Mufamadi said his actions were in compliance with an order granted by the Pretoria high court that instructed him to "communicate" with all provinces and municipalities that the replacement of the name on road signs be "provisionally prohibited".
This came after the Freedom Front Plus filed an urgent court application in August this year which prevented the council from re-naming any signposts in the city or anywhere else in the country.
Shock request in Parliament: please stop whites and foreigners from buying state land.
In a shock request in Parliament, Department of Land Affairs’ deputy director-general Sipho Sibanda called on Parliamentarians to implement a two-year moratorium on the sale of state land to foreigners and white people, a newspaper has reported.
The Times said Sibanda told Parliament on Wednesday: "A moratorium of about two years, prohibiting the disposal of state land to foreigners, and to nationals who do not qualify for redress under the national land policies and legislation, should be put in place."
Responding to questions, Sibanda said regulating foreign ownership of land was justifiable because more than 63% of the value of all houses was in the hands of companies and foreigners.
While many ordinary South Africans felt richer as they watched their home values rise, the vast majority of people were excluded from the recent property boom.
Many blame foreign buyers for fuelling property prices beyond the reach of many South Africans, though others point out that foreign purchasers help build positive investment sentiment about the continent.
There has been a strong move to keep foreign buyers out of the market, however it appears that white South Africans are also being moved to the centre of the land and property ownership debate.
In 2004, government initiated an investigation into the ownership of land by foreigners. The report, available on www.realestateweb.co.za, was presented to Parliament this week, said the Times.