Economy & Business News - 20 May 2024

20 May 2024

ECONOMY & BUSINESS

• BPSA intends to roll out several new sites during 2024. After a hundred years of doing business in the South African market, petroleum giant BP Southern Africa is planning to expand its network of service stations around the country and revamp its more than 500 forecourt stores. BP Southern Africa (BPSA) spokesperson Hamlet Morule said the company’s main focus will shift to improving the look and feel of its service centres and the expansion of its forecourt convenience store network. (Source)

• The Fraser Institute Survey ranked South Africa 64th of 86 jurisdictions assessed on their attractiveness as investment destinations. South Africa has slipped on an authoritative global index that assesses mining jurisdictions based on their attractiveness as investment destinations. the Fraser Institute’s survey of mining companies found that while South Africa’s policy score had increased by 11, the country was now ranked 64th among 86 mining jurisdictions it assessed. South Africa’s drop to 64th is 11 positions lower than in 2022, though only 62 mining jurisdictions were assessed in that year. The country’s overall score on the Fraser Institute’s Attractiveness Index shrunk from 59.72 in 2020 to 41.84 in 2023.The Fraser Institute ranked Utah in the US as the top mining jurisdiction for investment, followed by Nevada, also in the US, and the Canadian province of Saskatchewan. According to the index, investors in South Africa’s mining sector are increasingly concerned about uncertainty regarding environmental regulations, protected areas and labour legislation. (Source)

• The ‘Global Critical Minerals Outlook 2024’ highlights that, following two years of dramatic increases, the prices of critical minerals fell steeply in 2023, returning to levels last seen before the pandemic. A new International Energy Agency (IEA) report describes the sharp decline in critical mineral prices over the past year as a double-edged sword, cautioning that, while it has been a boon for lean energy deployment and affordability, it is a bane for critical mineral investment and diversification. “Materials used to make batteries saw particularly significant decreases, with the price of lithium dropping by 75% and the prices of cobalt, nickel and graphite falling by between 30% and 45% – helping drive battery prices 14% lower.” As a result of falling prices, the market size for key energy transition minerals contracted by 10% to $325-billion in 2023, despite demand growth. Detailed project-by-project analysis in the report suggests that announced projects are sufficient to meet only 70% of copper and 50% of lithium requirements in 2035 in a scenario in which countries worldwide meet their national climate goals. Markets for other minerals look more balanced, the reports states, if projects come through as scheduled. (Source | Source)

• New Peugeot bakkie plant. Multinational motor company Stellantis is preparing to start construction of its R3 billion bakkie assembly plant in the Eastern Cape, the company announced this week. It said the greenfields site in the Coega special economic zone near Gqeberha had been cleared in preparation for development. The Coega plant, which will initially make Peugeot Landtrek bakkies, is expected to be completed next year and begin commercial production in early 2026. Initial annual capacity is expected to be 50 000 vehicles, growing later to a potential 100 000. The latter number could include vehicles besides Landtrek. (Source)

• Unemployment increases. South Africa’s unemployment rate rose 0.8% to 32.9% in the first three months of year, according to Stats SA, as tens of thousands of jobs created in sectors such as manufacturing, agriculture and mining failed to offset losses in finance, construction and community and social services, which includes government services, education, social work, and other community development. (Source)

• Civil cases for debt. The total number of civil summonses issued for debt decreased by 12,1% in the first quarter of 2024 compared with the first quarter of 2023. The total number of civil judgements recorded for debt decreased by 2,4% in the first quarter of 2024 compared with the first quarter of 2023. The total value of civil judgements recorded for debt increased by 4,3% in the first quarter of 2024 compared with the first quarter of 2023. (Source)

• Anglo rejects second BHP offer and plans to restructure. Anglo American has rejected a second, higher offer from Australian mining giant BHP, whose first proposal for an all-share merger was rejected by Anglo’s board in April. BHP raised its offer by 15%, increasing Anglo shareholders’ share in the merged group from 14.8% to 16.6%. However, it left the structure of the deal unchanged as it continued to insist Anglo unbundle its key South African subsidiaries Anglo American Platinum and Kumba Iron Ore to its shareholders before the merger itself could come into effect. Meanwhile, Anglo has announced that it plans to divest or demerge from its platinum, steelmaking coal and diamond businesses in an orderly fashion to optimise value. (Source)

• SA expats in UK face new tax regime. A proposed change by the UK government of its tax regime to one taxing foreign income and gains on a residence basis will have significant consequences for South Africans planning to emigrate to the UK. The change would cause the scrapping of the centuries-old nondomicile tax regime that provided tax relief to foreigners domiciled in the UK. (Source) 

• Retail sales measured in real terms (constant 2019 prices), increased by 2,3% year-on-year in March 2024. The largest contributor to this increase was general dealers (6,4% and contributing 2,8 percentage points). Seasonally adjusted retail trade sales increased by 1,4% in March 2024 compared with February 2024. This followed month-on-month changes of 1,0% in February 2024 and -3,3% in January 2024. (Source)

• Numsa agrees steel sector wage deal. Employers in the steel sector have signed an above-inflation multi-term wage deal with the largest union, potentially setting a precedent for future labour agreements and raising operational costs for the embattled sector. The National Union of Metalworkers of SA, which represents most workers in the Metals and Engineering Industries Bargaining Council, was in favour of the deal which secures wage increases of 7%, 6% and 6% a year over each of the three years, beating the prevailing consumer inflation rate of 5.3%. (Source)