Local News

Euro crisis to keep weighing down platinum prices

EURO ZONE CRISIS TO CONTINUE WEIGHING DOWN PLATINUM PRICES
Harare August 1, 2012 (New Ziana)-The ongoing Euro zone debt crisis will continue to weigh down international platinum prices over the next year as demand for the white metal remains low, an international commodity analyst has said.
Platinum and its sister metal palladium are mostly used in the manufacture of motor vehicle emission control systems and jewellery.
Given the high concentration of the automobile industry in Europe which has been hard hit by the debt crisis, the metal has this year been trading at all time low prices of between $1 375 and $1 475 per ounce.
As the debt crisis took hold on leading automobile industries in Europe, many closed down while others cut back on operations.
In a recent report, Standard Bank commodity strategist Marc Ground said the demand outlook remained poor and was not likely to improve soon.
“The Euro zone is in the doldrums and it is dragging other major economies down with it, the likes of US and China, so in terms of the auto sector, I don't think we can hold out much hope there over the next year or even over the next two years,” he said.
“I think it is really all hinging now on the Euro zone and whether we are going to see an improvement in that and on that front we are not too optimistic. So I think platinum and palladium prices are going to remain under pressure for at least the next year.”
Ground said prices could start improving by the end of next year as the world’s two major economies China and the USA started improving.
But he warned that if the Euro zone crisis continued unabated, prices could fall by as much as 30 percent.
“As a worse case scenario I think if the Euro zone gets worse, if we start seeing a break up the Euro, that is going to put pressure on the Euro and then of course the dollar is going to strengthen and then prices could tumble quite precipitously.
“We could see prices fall quite significantly from here perhaps up to 30 percent even.” He said.
In 2010, global demand for platinum by the automobile industry stood at 2, 985 million ounces marginally rising to above three million ounces in 2011.
According to Thomson Reuters GFMS, by the end of last year global platinum surplus stood at 735 000 ounces.
Zimbabwe has the world’s second largest known platinum reserves in the world after South Africa.
Platinum currently accounts for about 36 percent of the country's total mineral production with at least 230 000 tonnes of the white metal having been exported in 2010.
New Ziana

Gono in U turn on indigenizing banks

RBZ SUPPORTS INDIGENISATION
Harare July 31, 2012 (New Ziana) –In a major softening of his stance against indigenization of the banking sector, Reserve Bank of Zimbabwe governor Gideon Gono on Wednesday threw his weight behind the initiative although he cautioned on the implementation matrix.
The Zimbabwe government promulgated the Indigenization and Economic Empowerment Act in 2008 which compels foreigners to dilute their shareholding in major companies and institutions across the economy to up to 49 percent in a move aimed at increasing the participation of locals in the economy.
While some sectors of the economy such as mining are already implementing the law, foreign owned banks have been given one year to dilute their shareholding.
Gono has clashed with Indigenization Minister Saviour Kasukuwere over plans to extend the indigenization exercise to the financial sector warning that it was a sensitive area which could cause upheavals in the economy.
While Kasukuwere has maintained that the law would be implemented in all sectors of the economy, Gono on the other hand has sought to protect the banking sector as its custodian.
“The RBZ board supports the implementation of Indigenization and Economic Empowerment regulations in various sectors and is of the view that they should be done in a manner that preserves confidence,” Gono said in a statement which he read on behalf of the central bank board.
“Any adverse developments in the banking sector could grind economic activity to a halt.”
The central bank board said banks, especially foreign owned ones, provided a vital link between the domestic economy and international community.
The board also called for reconciliation of the Indigenization regulations with other laws governing the country such as the Banking Act and RBZ Act.
International banks operating in the country include Stanbic, Standard Chartered and Barclays as well as regional entities such as BancABC and MBCA.
New Ziana

Zim economy in crisis -Gono

ZIM ECONOMY IN CRISIS –GONO
Harare, July 31, 2012 (New Ziana) –Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono declared on Wednesday that the Zimbabwean economy is in a crisis with all economic pointers spelling doom for the country.
Gono said this while presenting the mid-term monetary policy statement.
“Governors are not supposed to use the term crisis, but today I proclaim that we are in a crisis,” he said.
“There is need for action now. The economy is in dire straights.”
He said the revision of economic growth figures from 9.4 percent to 5.6 percent by Finance Minister Tendai Biti two weeks ago, painted a gloomy picture for the economy.
Gono said financial institutions, which were critical in reviving the economy, were struggling to play their role due to under capitalization while the bulk of the available funding was being channeled towards consumption and not to productive sectors of the economy.
In the period ending June, the central bank noted that loans towards agriculture, manufacturing, transport, mining, and distribution sectors had declined while individual loans shot up by over 100 percent.
“If you study trends across the world, these are the makings of a crisis,” he said.
Gono said a high external debt of over $10 billion as well as sanctions imposed on the country continued to negatively impact on the ability of the economy to perform.
The United States and the European Union imposed sanctions on Zimbabwe over a decade ago after the country embarked on a land reform programme meant to correct colonial imbalances.
Gono reiterated that promulgation of the indigenization regulations had also dented confidence on the banking sector, which had a critical role to play in economic recovery.
Other challenges which were affecting the economy, he said, included indiscipline in the policy reversals and inconsistencies, financial sector indiscipline and limited fiscal space on the part of government.
New Ziana

Zim narrowly misses tobacco production target

ZIMBABWE NARROWLY MISSES 150 MILLION KG TARGET OF TOBACCO PRODUCTION
Harare July 31, 2012 (New Ziana) –Zimbabwe narrowly missed the production target for tobacco when at least 140 million kilograms of worth $514.3 million were sold in the just ended selling season, up 12 percent from last year.
Statistics obtained from the Tobacco Industry and Marketing Board (TIMB) on Tuesday show that the country narrowly missed the target of 150 million kgs.
But while auction sales ended last Friday, there is still room to close the gap as contract sales are still going on while a mop up sale will also take place on August 22.
The TIMB has said contract sales would continue until further notice.
TIMB has also said mop up sales, held to allow farmers to sell their remaining crop, may be held for more than one day depending on volumes delivered.
Of the 140 million kgs sold this season, 88 million kgs went through the contract system while 52 million kgs went under the hammer through the three auction floors.
The golden leaf was sold at an average price of $3.67 per kilogram which was higher than last year's $2.75 per kilogram.
Volumes of rejected tobacco went down to 5.56 percent from 6.95 percent last year as farmers appear to be gaining more knowledge on packaging their crop.
Tobacco is one of Zimbabwe's major agricultural exports, accounting for 10.7 percent in the half year to June.
Major export destinations for the country's golden leaf include China, UK, South Africa, Indonesia, United Arab Emirates, Mauritius and Russia.
New Ziana

POTRAZ to sink US$24 million in constructing 43 base stations

POTRAZ TO SINK $24 MILLION IN USF SECOND PHASE
Harare July 30, 2012(New Ziana) -The Postal and Telecommunications Regulatory Authority (POTRAZ) says it will spend at least $21 million from the Universal Services Fund (USF) to construct 43 new base stations in underserviced areas throughout the country.
The USF is a pool of money into which the country’s licensed telecommunications companies contribute two percent of their annual revenue.
The fund was established to finance the expansion of telecommunications services in outlying areas which are underserviced.
POTRAZ has collected US$41.3 million since the country adopted multiple foreign currencies in 2009.
POTRAZ director general Engineer Charles Sibanda said the process was at the tendering stage.
“We have set aside $24 million for the USF second phase to be used to construct 43 base stations,” he said.
The first phase of the USF project saw at least eight base stations being constructed in under serviced areas.
Other purposes of the USF include assisting in the training of personnel in the provision of postal and telecommunication services and contributing towards research and development in the field of postal and telecommunication services.
POTRAZ liaises with relevant government Ministries, Members of Parliament and other stakeholders in the postal and telecommunications sectors in identifying least serviced areas in each province for possible funding excluding Harare and Bulawayo.
Targeted areas are then surveyed with the participation of licensed operators before funds are disbursed for any project that is meant to bring universal access to the public living in underserviced areas.
New Ziana

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