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The Electric Car Revolution

Trusted think tank Moody’s paints a gloomy picture on Sub-Sahara Africa potential to rise to the occasion and position itself on the coming huge advent of electric vehicles which will arouse a massive demand for its metals subsequently feeding the sovereigns GDPs.

For Botswana, a big state owned copper and nickel mine has been closed causing a backlash on government’s inability to catch the wave of metal-demanding EV revolution. International explorers, especially will the eye for copper like the ones from Austrialia, might save face for Botswana as they are currently descending on the unexplored and untapped area of Kalahari Copper Belt. The Kalahari Copper Belt is said to contain millions of tonnes of copper and silver resources inside the 1,000-kilometre belt running south west to north east and foreign companies are already pouring billions of Pula in investment. Copper is said to be highly needed for production of EVs.

But there is a lot do for the Sub-Saharan Africa sovereigns to join and enjoy the EV fiesta, according to Moody’s who were currently analyzing the shift to electric vehicles raising battery metal revenue. The US based think tank also looks at the topic of sovereigns readiness to metal demand with relation to issues of governance, infrastructure to shape realization of potential.  

“Potential is much smaller for the other sovereigns that produce the metals used in EV batteries in relation to the size of their economies, exports and government revenue.” This recent statement by Moody’s strikes home, as most of Sub-Saharan Africa nations have smaller economies, exports and government-their potential is lower despite these sovereigns producing most metals used in EV batteries.

According to Moody’s latest report, the EV transformation is driving higher demand for the raw materials used in their batteries, in particular lithium, nickel, cobalt and copper. “We expect demand for these metals to grow rapidly into the late 2020s and beyond. In this report, we identify the sovereigns that could see credit benefits from this trend, and explain some of the hurdles that will likely arise,” said Moody’s.

While the US based think tank sees Botswana and its Sub Saharan Africa counterparts to be meandering towards the posterity that comes with EV revolution, it has realized the huge potential of Democratic Republic of the Congo (DRC). Moody’s noted that if DRC’s potential is fully realized, cobalt production would total nearly 16 percent of DRC's 2018 GDP, more than half of its goods exports, and 133 percent of its government revenue by 2030.

However the think tank has seen investment challenges which might constrain credit-positive impact for DRC. According to Moody’s, very weak governance, poor infrastructure and persistent pockets of social instability in the DRC remain key challenges in ramping up metals production. “We find that while Democratic Republic of the Congo (DRC) has extremely large potential, governance and infrastructure limitations will significantly constrain the credit benefits,” said Moodys this week.

Botswana’s northern neighbor Zambia is said to be home to about 77 percent of Africa’s copper supply and is far and away the leading producer in Africa. In Sub Saharan Africa, Zambia is complimented by DRC in huge copper supply, boasting 13 percent of copper which is in the African soil. Botswana has a smaller copper-belt in Kalahari, but it is dwarfed by the gigantic production of the Central African Copperbelt of Zambia and the DRC.

Of the three metals considered for manufacturing EV batteries, DRC produces 5.8 percent of the global copper and 66 percent of cobalt. The country is not that renowned in production of nickel and lithium. The notorious in terms of poor governance DRC has 2.4 percent of copper reserves and 49.5 percent of cobalt.

Overlooking production of Sub-Saharan African countries, Chile is the world's top producer of copper and has the largest according to a 2018 Moody’s report. The same report said Indonesia and Philippines are the world's top producers of nickel, Australia has sizeable reserves. All the top African nickel and copper producers were lagging in both productions and reserves, which were less than 5 percent.

For cobalt DRC continues to be the world’s leading source of mined cobalt supplying more than 60% of global production, according to Moody’s. Its reserves, according to Moody’s, are also significant, accounting for almost half of the global total. “We expect global cobalt supply to increase more slowly than consumption and to remain limited in the near term. The rise in consumption is mainly driven by strong growth in the rechargeable battery and aerospace industries,” said Moody’s.

DRC is also on the top of estimated output value of battery-related metals by the world's top producers in 2030. Moody’s however is skeptical of DRC’s ability to improve its governance. “While its mineral resources provide significant potential for mining investment and flow on effects for the economy, the DRC's track record of very weak governance and recurrent conflict implies a material probability that much of the country's natural wealth potential will remain untapped.

Increasing global focus on the environmental and social aspects of mining provides another risk for the DRC's exploitation of its resources. The London Metals Exchange's announcement of responsible sourcing guidelines for companies mining in high risk or conflict zones illustrates that the country-specific elements of mining investment decisions will play an increasing role in driving the allocation of such investment across jurisdictions,” said Moody’s.

Also, Moody’s further states that sovereigns capable of producing more metal types for batteries have greater diversification and are subsequently less susceptible to shocks in individual markets. Moody’s mentioned Australia, China and Russia as one of those sovereigns and says they produce at least three of the four metals, and have sizeable reserve pools.

The debate of EVs surfaced this year when President Mokgweetsi Masisi promised to allow Batswana to tap into the EV revolution as a way of bringing meaningful jobs. The EV talk also reached the political debate table last month when a ruling party parliament aspirant put the strength of his argument on Botswana producing many engineers. But the opposition has always called this wishful thinking given lack or failure of investment on manufacturing let alone infrastructure and new technology development.

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Gambling Authority tender dangles as a jittery lottery quandary

30th November 2020
SEFALANA MD: CHANDRA CHAUHAN

Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.

WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.

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The uncertainty of getting the next meal in Botswana

30th November 2020
uncertainty of getting the next meal

Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.

This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time.
The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.

“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.

According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.

The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.

Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.

According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.

The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.

According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.

Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.

Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.

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Solid demand for diamonds towards the ‘gift’ season

30th November 2020
Diamonds

Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.

The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.

According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.

“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.

According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.

When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.

“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.

According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.

Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.

“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.

High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.

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