Platinum gives South Africa fiscal boost ahead of budget, says Old Mutual
The government, led by the African National Congress and the Democratic Alliance, is trying to balance competing interests across parties and political analysts say painful tradeoffs, such as higher taxes or spending cuts, could fracture the coalition.
South Africa is, however, the world's largest producer of platinum group metals - including palladium and other precious metals as well as platinum - that have rallied this year, meaning increased mining royalties could provide relief for the government ahead of its mid-term budget.
"Given the role that PGMs play in revenue collection ... this could be a bit of a gift horse windfall to the government of national unity," Meryl Pick, portfolio manager at Old Mutual Investment Group, said during a briefing.
She said a repeat was possible of South Africa's mining tax windfall in 2021 when revenue collections exceeded budget projections by 100 billion rand ($5.7 billion), helping to narrow the fiscal deficit.
Spot platinum prices touched their highest levels since August 2014 earlier this month, extending a record second quarter rally fueled by a rise in demand and drop in supply.
Some analysts have said the rally might not be sustained, given global economic uncertainty that may affect demand.
But Old Mutual Investment Group analysts said prices were likely to keep rising on the basis of slower adoption of electric vehicle adoption in Western markets, steady demand for hybrid cars, and constrained mining supply due to years of underinvestment.
One of the major uses for platinum and palladium is to curb emissions from vehicles that run on fossil fuels.
Old Mutual has more than 400 billion rand of assets under management and its funds have a significant allocation to resources and mining shares.
The commodity rally has also buoyed South Africa's other markets. South Africa's MSCI index is up more than 32% since the start of the year - double the around 16% gain in the wider MSCI EM index. (.MIZA00000PUS), opens new tab (.MSCIEF), opens new tab
($1 = 17.5475 rand)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
an hour ago
- Reuters
Nigeria's Bature Brewery taps into $7 billion beer market
LAGOS, July 29 (Reuters) - To the sound of Afrobeats in an open air pub at its headquarters in Lagos, Nigeria's Bature Brewery is working to wean more customers off the big brands and onto its locally inspired craft beers. Globally, the craft beer market is forecast to triple to more than $250 billion by 2033, research from Business Research Insights finds, as craft producers win over customers from the brands of the major international companies AB Inbev ( opens new tab, Guinness ( opens new tab and Heineken ( opens new tab. "We know there is more demand," Bature co-founder Kevin Conroy said. "Our goal is to get to 500 locations selling our products by the next 18 months. We are aiming to be doing 100,000 litres per month by next year." The 500 locations compare with 70 now. Bature Brewery, which began operations in Abuja in 2017 and is the biggest of Nigeria's craft brewers, produces 22,000 litres monthly, including locally-inspired flavours such as Harmattan Haze, Lagos Lager, and Mango Disco. Its efforts to persuade more people to drink its beer, which costs up to six times more than mass market bottled beer, include investing in draft dispensers in hotels, bars and restaurants. To help ensure supply, Bature has installed diesel power and a water treatment plant to tackle sometimes erratic power and water supplies, and it has also installed new fermentation vessels and other equipment at its Lagos plant. Other challenges in Nigeria include the devaluation of the naira that has raised the cost of imported raw materials. Bature is seeking to appeal to local tastes with local ingredients, including coffee sourced from Taraba State for its Black Gold stout, which won a taste category at the 2023 World Beer Awards. The world's biggest stout producer Guinness first brewed in 1962 in Nigeria, which is its second biggest market for Guinness after the United Kingdom. In Nigeria, the total beer market is valued at $7 billion annually, according to data gathering platform Statista. Conroy says he expects to remain relatively small. "We're going to be a small craft brewery compared to the big guys, but we believe we can make the best beer and we can keep growing in our own way and do things in our own style," Conroy said. Even 1% of a $7 billion market would be $70 million. "I will be very happy with 1% of the market. Even half of that will be great," Conroy said. Among those drinking at the Bature Brewery and enjoying the live band, Colin Egemonye, a businessman, is one satisfied customer. "The flavour is beautiful," he told Reuters.
Daily Mail
3 hours ago
- Daily Mail
Wall Street veteran who predicted 2008 meltdown issues urgent warning of 'economic heart attack' for US
Billionaire hedge fund titan Ray Dalio, who famously predicted the 2008 financial crash, has sounded a stark alarm over America's spiraling debt. Dalio warned that without swift action to slash the federal deficit, the US could face an 'economic heart attack' in the next three years. 'If the US doesn't cut the deficit to 3 percent of the GDP, and soon, we risk facing an economic heart attack in the next three years,' Dalio wrote on X. 'The good news is that these cuts are possible.' The national debt is nearing $37 trillion — equal to 99 percent of GDP — and the Congressional Budget Office projects it could hit 150 percent by 2055. Dalio, founder of Bridgewater Associates — the world's biggest hedge fund — said a 4 percent adjustment to spending and tax revenues could stabilize the economy and even lower interest rates. 'We know this kind of balance is possible because it happened between 1991 and 1998,' he wrote, pointing to previous bipartisan deficit deals. However, Dalio warned that squabbling between Republicans and Democrats will put off the necessary cuts and only serve to see the national debt and its interest payments grow even more. 'My fear is that we will probably not make these needed cuts due to political reasons, and will have even more debt and debt service encroaching on our spending that will ultimately lead to a serious supply-demand problem.' Dalio has repeatedly warned that economic decisions made by the White House will end in economic catastrophe. In April the billionaire spoke against Trump's decision to launch a global trade war via tariffs on America's trading partners. 'Some people believe that the tariff disruptions will settle down as more negotiations happen and greater thought is given to how to structure them to work in a sensible way,' Dalio wrote in a post on social media site X. 'I am now hearing from a large and growing number of people who are having to deal with these issues that it is already too late.' Dalio has joined a group of other bankers, analysts, and executives who believe the US is heading for a perilous economic moment. JPMorgan's CEO Jamie Dimon warned last month that the US economy was on shifting 'tectonic plates' and warned that inflation could once again rear its ugly head. 'You have all these really complex, moving tectonic plates around trade, economics, geopolitics, and future factors, which I think are inflationary: military, restructuring of trade, ongoing fiscal deficits,; he told the Morgan Stanley US Financials Conference. The co-founder of Home Depot Ken Lagone also raised concerns about US debt, and said it is a 'scary' indicator for the state of the economy. The billionaire said he hoped Washington would heed his warning that 'we have to be mindful of the importance of our status in the world economy and the world markets. 'If we fritter that away, we're in trouble,' the 89-year-old said. 'Four weeks ago, we couldn't float a 20-year bond. They were unbiased. That's a dangerous signal. That's the beginning,' Langone said referencing recent crises in the bond market. As well as rising debt interest payments, the federal government is also seeing the squeeze from bigger demands on Medicare and Social Security as the population ages and lives longer.
The Guardian
4 hours ago
- The Guardian
Gorilla habitats and pristine forest at risk as DRC opens half of country to oil and gas drilling bids
The Democratic Republic of the Congo (DRC) is opening crucial gorilla habitats and pristine forests to bids for oil and gas drilling, with plans to carve up more than half the country into fossil fuel blocks. The blocks opened for auction cover 124m hectares (306m acres) of land and inland waters described by experts as the 'world's worst place to prospect for oil' because they hold vast amounts of carbon and are home to some of the planet's most precious wildlife habitats, including endangered lowland gorillas and bonobo. This year the government has launched a licensing round for 52 oil blocks; these are in addition to three blocks previously awarded. Of the total area, 64% is intact tropical forest, according to the spatial mapping and analysis in a new report by Earth Insight. This expansion of oil and gas development is at odds with DRC's commitments to protect biodiversity and climate protection, experts warn. In July 2022, the DRC government launched tenders for 30 oil and gas blocks, but this was later cancelled, with the government citing late submissions and a lack of competition. 'The world's worst place to prospect for oil is up for auction, again,' said Prof Simon Lewis from University College London, who led the team that first mapped the central Congo peatlands. 'No credible company would bid for oil in the DRC's forests and peatlands, as there is probably not enough oil to be commercially viable, and it will be expensive oil in financial, social and environmental costs.' Earlier this year the government announced the flagship Kivu-Kinshasa Green Corridor conservation initiative, but now 72% of that area overlaps with planned oil blocks, according to the report, written in collaboration with DRC-based group Notre Terre Sans Pétrole [Our Land Without Oil], Corap, and Rainforest Foundation UK. The Cuvette Centrale – which is the world's largest tropical peatland complex – is included in the newly designated oil blocks. This vast swampy area is the size of Nepal and home to rare wildlife including forest elephants, lowland gorillas, chimpanzees and endemic birds. It stores approximately 30bn metric tonnes of carbon in peat. In recent years there have been various international efforts to secure funding to protect DRC's forests. The most significant tranche of money was a $500m (£417.6m) forest protection deal signed on behalf of the Central African Forest Initiative (Cafi) at Cop26. The 10-year agreement – running from 2021 to 2031 – aimed to cut deforestation and promote the regeneration of 8m hectares of degraded land and forests. So far, just $150m has been transferred to the DRC, well behind the nearly $400m that should have been delivered by now according to the terms of the agreement. Discussions are ongoing about how to increase the speed of money being released. A source said the lack of international funding to make it more profitable to keep forests standing than felled is making countries such as DRC more likely to look for oil and gas deals. They described it as a 'collective failure'. In addition to conservation impacts, an estimated 39 million people live within the area being sold off for oil, including many Indigenous peoples and forest-based communities who depend on healthy forests and rivers for survival. 'Imagine: 39 million Congolese people … and 64% of our forests could be directly affected by the awarding of these oil blocks,' said Pascal Mirindi, campaign coordinator for Notre Terre Sans Pétrole. 'And all this while the government is promoting the Kivu-Kinshasa ecological corridor. Where is the logic? Where is the coherence? We are reminding our leaders that the Congolese people are the primary sovereign. We will not remain silent while certain people organise themselves to sell off our future.' The report calls on the DRC government and international partners to cancel the 2025 oil tender and invest in development models that respect Indigenous and community rights. 'Oil and gas development in these fragile ecosystems would have devastating impacts on biodiversity, communities, land rights and the global fight against climate change,' said Anna Bebbington, a research manager at Earth Insight. The DRC government did not respond to request for comment. Find more age of extinction coverage here, and follow the biodiversity reporters Phoebe Weston and Patrick Greenfield in the Guardian app for more nature coverage
