Anglo exits SA gold mines; Corona fear fades; Data shows Eskom damage; Ramaphosa report card; Investec’s green focus

By Linda van Tilburg

  • South Africa’s fading gold industry has a new champion as AngloGold Ashanti has sold its last remaining assets to Harmony Gold Mine. The $300m deal marks the exit from South Africa of AngloGold, the company created by Ernest Oppenheimer a century ago. AngloGold has sold and closed many of its mines in South Africa and leaves gold mining in the country after 22 years on the JSE. It heralds a new era as Harmony backed by Patrice Motsepe’s African Rainbow Minerals become the nation’s No.1 gold producer. AngloGold said the deal, part of its plan to shrink its portfolio and focus on assets with higher returns so it can shift its primary listing to London or Toronto, included selling Mponeng mine, the world’s deepest gold mine. The acquisition of the Mponeng mine and surface assets will help Harmony replenish its South African reserves and boost output by about 350 000 a year to 1.8 million ounces. Harmony shares climbed as much as 7.9% in midday trade and ended the day 3.66% higher.
  • The string of negative economic data this week led to a fall in the rand against the dollar at midday but it strengthened somewhat towards the end of the trading day to R14.81 to the dollar. The All Share Index rose by 1.34%, its best trading day the past week as fears over the coronavirus faded. The biggest winner of the day was MTN with a 6% jump after it announced a rise in profits of 50% in 2019. Anglo American gained 4.72%, Glencore 2.69% and BHP 1.31%.  The announcement by Tiger Brands that it expected headline earnings per share from total operation to decrease between 30 and 70% in the six months to the end of March this year, led to a 5.58% drop in its share price.
  • How much Eskom has hurt South Africa’s economy is starting to show up in official data. Data released yesterday indicated that retail sales in December fell 0.4% year-on-year which is less than the 1.5% that markets expected. Production by South African manufacturers fell the most in five and a half years in December; it was revealed by Statistics South Africa. The unemployment rate stayed at the highest level in at least a decade with trade and manufacturing sectors shedding the most jobs in the fourth quarter, a period during which retailers often employ extra temporary staff. Mining production is expected to show a drop of 3.5% according to Bloomberg, the most since the previous December. Their economist says it is an Eskom story, but also one of weak domestic demand. “That miners and manufacturers were forced to shut their operations earlier than expected, contributed to the decline.”
  • Today is President Cyril Ramaphosa state of the nation address in Parliament two years after he pledged a new dawn of reforms, economic growth and jobs. Bloomberg has drawn up a report card for the two years which indicated that the economy has shrunk more often than it has expanded since 2018; unemployment has increased with the jobless rate now almost double the national average; direct investment into South Africa rose to a five year high in 2018 but has since levelled off. With regard to the state-owned enterprises; Bloomberg says Ramaphosa has kept his promise to address governance issues most notably with his appointment of Andre de Ruyter as Eskom CEO. In dealing with corruption, so far former State Security Minister Bongani Bongo is the only high -profile person who has been arrested, while Bloomberg said Ramaphosa has delivered on his promise to start rebuilding the South African Revenue Service, dismissing Commissioner Tom Moyane and replacing him with Edward Kieswetter. Analysts point to the Mining Charter, spectrum allocation and private electricity generation, saying these reforms have stalled. More details of his Bloomberg report card on the Biznews website.
  • Investec says it is upping its climate investment and is increasing its focus on environmental, social and governance issues to bolster its profits and address concerns raised by investors over climate change. The South African and UK lender says it is getting ready to list a renewable-energy fund later this year. “The urgency around work on climate change is as high as it has been at any time,” Chief Executive Officer Fani Titi said. “In the next round of corporate disclosures you will see much more detailed disclosure around climate exposure.” Last year, FirstRand Ltd., Africa’s biggest bank by market value, committed to disclosing its fossil fuel-related assets. Standard Bank Group Ltd., the second-biggest bank by market capitalisation, had earlier in 2019 agreed to table climate risk-related resolutions at its annual general meeting.