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Gloves are off for the global mining industry – PwC


2014 was expected to be a tough fight for the global mining industry with commodity prices down and short-term volatility increasing. The initial scorecard for the largest 40 miners was mixed and now the gloves are off for the industry with widespread government intervention, internal industry conflicts and rising shareholder activism, according to PwC’s annual Mine report released this week.

According to a new analysis of the 40 largest global miners from PwC, the industry trimmed spending and largely managed expectations through higher production and unexpected help from currency devaluations and lower input costs, despite continued headwinds from weak commodity prices.

Michal Kotze, Head of PwC’s Africa Mining Centre of Excellence, says: “The success of cost-saving initiatives became more apparent in 2014 as operating costs decreased 5%. While the mining industry had been indicating for the last two years their intention to reduce capital spending, such reductions were actually realised in 2014 as expenditures on significant projects declined 20%.

“A key measure of the industry’s investment agenda, capital velocity, slowed to just over 12% with further decreases expected in 2015 and for the first time, the total asset base shrunk 1%.”

The report analysed 40 of the largest listed mining companies by market capitalisation.  Two of the three new entrants in this year’s Top 40 were Chinese companies and one was North American. The financial information for 2014 covers the reporting periods from 1 April 2013 to 31 December 2014, with each company’s results included for the 12-month financial reporting period that falls into this time frame.

While commodity prices decreased across a number of commodities and drove lower revenues, the report found this was partially offset by increased volumes, particularly in iron ore where supply expanded on the back of large expansion programs of the past few years.

“The decline in the iron ore price is having a significant impact on the top 40 miners. While slower demand from China is making headlines, the price declines are more related to the current oversupply in the market.

“With few exceptions, market supply and demand trends result in miners operating on the assumption that lower commodity prices will continue and the focus will therefore remain on containing operating costs and maintaining capital discipline,” adds Kotze.

Mine also found, for the second year, the majority of the largest mining companies came from emerging markets Brazil, Central & Eastern Europe, China, India, and Saudi Arabia, rather than OECD markets, with another two top entrants from China and a lower overall decline of only 7% – compared to an OECD drop of 21% – in market capitalisation. This decrease was despite a lower adjusted profit contribution from companies in the emerging markets.

Andries Rossouw, PwC Assurance Partner, says: “Mining companies from emerging markets tend to focus on mining in their own jurisdictions whereas those in the OECD tend to have more diverse global portfolios. This divide, coupled with the wealth of new development potential in emerging markets and differing shareholder expectations, continues to create divergence.”

“How the industry will grow in the years ahead will be impacted by a number of factors, including the ability of tier 1 assets to produce substantial quantities at costs significantly below average; the demand for commodities from China and other emerging markets; the impact of changing tax, environmental and beneficiation regimes; and the willingness by the industry to enter into greenfield projects, instead of only developing smaller brownfield projects,” concludes Rossouw.

Distributed by APO (African Press Organization) on behalf of PricewaterhouseCoopers LLP (PwC).

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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