By Linda van Tilburg
- ArcelorMittal South Africa may cut more than 2,000 jobs as part of a widespread effort to cut costs. The company says in a statement that the country’s steel industry is suffering from high costs for electricity and raw materials and has been hit by the weaker local economy. It expects earnings to fall by at least R650m. Arcelor Mittal says that due to the difficult domestic economic environment, the South African steel industry continues to face significant challenges and more significant measures may become necessary. The company’s shares tumbled by as much as 17% in the biggest intraday drop in 14 months, ending the day on the JSE almost 16% lower.
- On global markets the S&P 500 surged above 3,000 points for the first time, and US treasuries rose along with gold, after US Federal Reserve chair Jerome Powell signalled an openness to rate cuts. Powell said uncertainties around trade tensions and concerns on the US economic outlook have increased in recent months. The Rand strengthened by 1% ending just above R14 to the dollar on the back of the news. The currency opened yesterday morning at R14.19. The JSE all-share also climbed by more than 1 % yesterday with mining stocks faring well. Gold Fields jump by more than 5%, while Harmony Gold, Sibanye Stillwater and Implats ended 3% higher.
- Lesetja Kganyago will serve another five years as governor of the Reserve Bank and two deputies from his existing team will join him, ending uncertainty about the top management at one of the nation’s key economic institutions. Monetary Policy Committee members, Fundi Tshazibana, who served as an adviser to Kganyago, and Rashad Cassim, the institution’s head of research, will become the bank’s deputy governors from August. Kganyago’s return is likely to ease investor concerns that the Reserve Bank will become more pliable to political pressure.
- Staying with new appointments, former Absa boss, Maria Ramos has been included in an interim board of directors at the Public Investment Corporation announced by Finance Minister Tito Mboweni. Also, for the first time, union representatives will serve on the PIC board. The new appointments will give the continent’s biggest fund manager more independence by breaking from tradition by appointing the deputy as chair of the PIC. The board is an interim arrangement, appointed for a year, as a commission of inquiry into its governance is set to make findings this month. In the hot seat at the commission at the moment is the former CEO of the PIC, Dan Matjila.
- Bloomberg reports that President Cyril Ramaphosa’s honeymoon is officially over. South African business leaders are becoming frustrated with the pace of reform in South Africa, and his cabinet choices and spending pledges have not helped. Martin Kingston of the South African unit of Rothschild said that very tough decision needed to be taken and they have not seen any willingness to take those decisions. Kingston’s sentiments were echoed by three CEOs of large companies and another senior business associate leader, all of whom have declined to be identified. Chief among the business leaders concerns were the appointments to head the education and labour ministries.
- In the latest in the ping-pong match between Public Enterprises Minister, Pravin Gordhan and Public Protector Busisiwe Mkhwebane, Gorhan filed an urgent bid to interdict remedial actions in the PP’s report. This is after Mkhwebane recommended that the President, the Speaker, State Security Minister, National Prosecuting Authority and the Police Commissioner should take action against Gordhan in connection with the so-called rogue unit. The urgent application may be heard on 23rd July and Gordhan has also applied that the entire report be declared unlawful and that it should be set aside.
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