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COMMODITY NEWSBRIEFS: 24 AUGUST 2015 Please note that these articles are available in electronic format and can be requested and delivered via e-Mail.

(http://intra.spoornet.co.za) Natasha.Havenga@transnet.net

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INTERMODAL COMMODITY SLUMP CUTS GRINDROD’S GROWTH ENGINE (Engineering News, 24/8/2015) Freight services and shipping group Grindrod on Friday reported a 2% increase in headline earnings, to R328-million, for the six months ended June 30, compared with the same period last year. Revenue, inclusive of joint ventures, increased by 4%, to R14.4-billion, with trading profit, again inclusive of joint ventures, stable at R943-million. Grindrod CEO Alan Olivier said in Johannesburg on Friday that the company’s operations had been challenged by the slow global economy, as well as the downturn in the commodity market, which had placed “commodity prices under significant pressure”. Lower oil prices, however, had resulted in good earnings for the group’s tanker fleet, as the demand for oil tankers had been exceeding global fleet capacity as oil consumption grew. The same was not true for the dry-bulk shipping market, weakened in part by oversupplied tonnage. This market presented a challenge to the group, with rates remaining well below the cost base. Olivier said global dry-bulk seaborne trade was likely to grow significantly slower than previously expected. Weak commodity prices also affected volume through Grindrod’s mineral terminals, despite good support from corridor partners. The movement of dry-bulk tonnage through the group’s terminals dropped by 32% for the six months under review, to 4-million tons. The Maputo car terminal also saw volumes decline, by 41.7%, to 17 063 vehicles. Olivier attributed this drop to the Olivier attributed this drop to the state of the local and regional vehicle market, adding that “there was a big push” to recover vehicle volumes at the terminal. The R125-million Richards Bay coal terminal expansion to 4.5-million tons a year should be complete in the first quarter of 2016. Regulatory delays on the Coega liquid-bulk terminal development had delayed construction on this project, with kick-off expected in the first quarter next year, said Oliver. Weaker commodity prices also impacted Grindrod’s rail businesses negatively, but this was partially offset by an order for 18 locomotives, to be delivered over a two-year period, starting at the end of this year. Grindrod’s rail construction and signalling businesses were suffering from project delays, noted Olivier. The group’s agricultural logistics business, following a bumper crop in the prior year, could not escape the impact of this year’s droughts, he added. Looking ahead, Olivier said Grindrod would continue to grow the business to become a fully integrated freight and logistics service provider, with a specific focus on Africa. However, a continued increase in demand for commodities was a key driver of the company’s business model, and Grindrod would benefit greatly from improved dry-bulk shipping rates and increased commodity prices.

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STEEL S AFRICA LIFTS JULY CRUDE STEEL OUTPUT 41% Y/Y (Engineering News, 24/8/2015) While world crude steel production for the 65 countries reporting to the World Steel Association dropped 3.8% year-on-year to 133-million tons in July, South African output rose 41% year-on-year to 645 000 t. China’s crude steel production for July narrowed 4.6% year-on-year to 65.8-million tons, while Japan’s output dipped 4.9% to 8.8-million tons and Indian crude steel production increased 1.2% to 7.7-million tons. In the European Union, Germany produced 3.6-million tons of crude steel in July – an increase of 4.7% compared with the same month in the prior year – while Turkey’s output narrowed 10.4% to 2.5-million tons and steel output from Russia dipped 2.8% to six-million tons. Ukraine produced 1.9-million tons of crude steel, a decrease of 24.1% compared with the same month in 2014, while the US delivered seven-million tons of the metal – a 9.1% year-on-year decrease. Elsewhere, Brazil’s crude steel production for July narrowed 3.1% to 2.9-million tons, while, in the Middle East, Iran’s production decreased 1.3% to 1.3-million tons for the month. The July crude steel capacity utilisation ratio for the 65 countries was 68.4% – 4.2 percentage points lower than in July 2014. COAL GRINDROD PUSHES AHEAD WITH RICHARDS BAY EXPANSION (MiningMx, 24/8/2015) Grindrod would complete the Phase 1 expansion of the Richards Bay Terminal (RBT) by the first quarter of 2016 at a cost of R125m according to CEO Alan Olivier presenting the group’s interim results for the six months to end-June in Sandton today. The RBT is a JV between Grindrod’s Navitrade (which owns 49.9%) and RBT Resources (50.1%) and plans are to develop a fully mechanised coal export terminal at Richards Bay. The eventual throughput capacity is planned at 20 million tons (mt) annually and is intended to service BBBEE (broad-based black economic empowerment) mining companies – in particular junior miners. The terminal will be able to handle magnetite as well as coal. The current Phase 1 expansion will take throughput capacity from 3.2mt/year to 4.5mt/year but Olivier cited current export volumes and coal prices expected over the next three to five years as challenges to further expansion along with the negotiation of handling tariffs acceptable to exporters. He commented “the most critical thing is the support we are getting for the development of this facility from Transnet.” But, on July 14, Transnet acting CEO Siyabonga Gama would not commit to a firm Transnet strategy regarding the future expansion of coal exports through Richards Bay for which it has several options. Interviewed after presenting Transnet’s results for the year to end-March Gama commented, “We remain in discussions with the Richards Bay Coal Terminal on maybe working with them on Phase Six and also with RBT Grindrod over how they plan to expand capacity at their terminal. In November last year Transnet commercial GM Divyesh Kalan commented, “We believe the extra capacity to be provided of 4mt/year through the RBCT and the expansion of the RBT Grindrod Navitrade terminal is sufficient to meet the export requirement of new black entrants. Transnet has signed a memorandum of understanding with RBT Grindrod.” Asked precisely what support Transnet was providing Olivier replied, “They have publicly and in discussions committed to supporting our development. They are negotiating with the miners to facilitate the movement of coal through our terminal. “The plan which has been agreed with Transnet is to take it to 20mt/year although there is not a commitment to go to 20mt/year. “The next phase will be to take it to 8mt/year which would be at relatively low cost. To go to 20mt/year means heavy capital expenditure and you would need very strong support for the throughput to get there which is not available today. “ ICHORCOAL MAKES BID FOR UNIVERSAL (Mining Weekly, 24/8/2015) International coal producer IchorCoal intends to make an all-cash offer of A$80-million to acquire the shares in ASX-listed miner Universal Coal that it does not already own. The international mining company, led by CEO Nonkululeko Nyembezi-Heita, is focused on thermal coal production in South Africa. It recently increased its shareholding in Universal to more than 29.99%, following the conversion of 71.2-million noncumulative convertible preferred shares. Universal currently holds a number of thermal and coking coal projects, including the Kangala mine, which produced 1.7-million tonnes of saleable coal in the 2015 financial year. In a document lodged with the ASX, IchorCoal noted that the consolidation of its interest in Universal, along with its own existing coal mining interests in South Africa, would provide the most robust platform to manage uncertainty in current market conditions.

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GRAIN PRICE OF FOOD TO RISE AMID DROUGHT (Business Report, 24/8/2015) A devastating drought in key agricultural provinces of South Africa has left farms in ruin and affected crop production leading to fears of an imminent hike in food prices and inflation. The drought, the worst in more than 20 years, has pushed most productive farms in Mpumalanga, Free State and North West into despair and forced farmers there to cut back on jobs. Industry observers said the country's maize belt had been left in tatters and South Africa was now importing maize from overseas. The observers claimed that he price of staple foods such as meat, maize, bread and cereal would climb to record highs in the months to come. Grain SA said the country had been forced to import maize from other countries to meet domestic consumption. Just last week, more than 750 000 tons of yellow maize were imported from Argentina while 3 100 tons of white maize were brought in from Zambia. CHROME & MANGANESE SOUTH32’S FY EARNINGS JUMP 41% (Moneyweb, 24/8/2015) South32, the miner spun out of BHP Billiton in May, said full-year earnings rose 41% helped by its aluminium and alumina operations. Underlying earnings were $575 million in the year ended June 30, compared to a proforma $407 million a year earlier, the Perth-based miner said Monday in a statement. South32, the world’s biggest manganese ore producer, had record output of alumina in Brazil, metallurgical coal and manganese alloy in Australia and manganese ore from South Africa. A cost-cutting program also boosted earnings, it said. The company will seek to reduce costs by at least $350 million a year for the next three years, and is continuing a review of South Africa manganese operations that may lead to a further reduction in planned production, it said. “Cost cutting and asset sales are likely,” Evan Lucas, a market strategist at IG in Melbourne, said by phone. “There’s got to be questions about manganese assets and what they are going to do with them.” The producer’s profits are being shielded from the full sting of faltering demand in China that’s eroding earnings for its competitors. The world’s biggest buyer of metals accounts for about 11% of its sales, while BHP and Rio Tinto Group rely on the nation for about a third of their revenue. Rio’s first-half underlying profit plunged 43%. TRANSNET See article “GRINDROD PUSHES AHEAD WITH RICHARDS BAY EXPANSION” under heading COAL GENERAL TIME RUNNING OUT FOR S AFRICA TO SECURE CONTINUED PARTICIPATION IN AGOA (Engineering News, 24/8/2015) The US is growing increasingly impatient with South Africa over its apparent foot-dragging allowing American meat products into the country. South Africa’s continued participation in the African Growth and Opportunity Act (Agoa) – which allows millions of dollars of South African exports into the lucrative US market duty-free — largely depends on it lifting health restrictions on US beef, pork and chicken imports. The US Congress earlier this year extended Agoa – which was due to expire in September – for another ten years for the 38 other eligible African countries. But it specifically made South Africa’s continued participation dependent on lifting the restrictions on US meat imports and also dropping legislation that would force foreign owners of security companies to sell at least 51% of the companies to South Africans. South Africa has until September 30 to effect these changes or risk losing some or all of its Agoa benefits which have been highly beneficial to many South African exporters, especially auto manufacturers. Citing concerns about outbreaks of various diseases in US livestock, South Africa has banned all chicken imports for 15 years, all pork imports for 12 years and all beef imports for three years. But the US claims these fears are exaggerated. After long negotiations South Africa agreed, in Paris early in January this year, to accept an annual quota of 65 000 t of American chicken. Laird Treiber, economic counsellor at the US embassy in Pretoria, said that his government expected South Africa to take a few months to implement this agreement. But nearly eight months later it has still not done so, and is now citing new concerns about an outbreak of avian flu in some US states as a reason not to lift the ban. On Friday, August 11, several US government agencies held a public hearing in Washington, as demanded by Congress, to determine whether South Africa had met the conditions of Congress for continuing participation in Agoa. South Africa clearly did not satisfy the US government. US

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officials demanded concrete evidence and not just the assurances which South African officials gave. Treiber explained in an interview later that the US wanted to see the meat imports actually entering South Africa before the Administration reported to Congress on September 30 on whether South Africa should remain in Agoa. At an online briefing for African journalists this week about the annual Agoa Forum to be held in Gabon next week, US Assistant Secretary of State for Africa, Linda Thomas-Greenfield, said she thought the chances were good that SA would comply and so remain in Agoa. However, other US official sources warned that her assurances should not be taken as a guarantee that SA’s continued participation in Agoa was assured. That was still seriously under review as the US had not yet seen any movement by South Africa on any of the four issues of concern to Washington – the imports of chicken, pork and beef and the local ownership requirement of the private security company bill. RAND SINKS MOST SINCE 2011 AS COMMODITIES TUMBLE (Moneyweb, 24/8/2015) South Africa’s rand tumbled the most since 2011 on concern the plunge in commodity prices will deepen as China’s economy slows. The currency of Africa’s most-industrialized economy led declines in emerging-market exchange rates, hurt by lower prices for resources that account for more than half of its exports. Losses have been exacerbated by concern over growth in China, the top destination for South Africa’s raw materials, and the prospect of higher US interest rates. The rand is among the “commodity-linked, high-yielding currencies where a lot of foreign funds were parked,” said Nizam Idris, Singapore-based head of foreign-exchange and fixed- income strategy at Macquarie Bank. “A lot of these flows are being reversed right now. Lower Chinese growth means weaker demand for commodities as they are the world’s largest consumer of raw materials by far.” The rand weakened 3.4% to 13.41 a dollar as of 06:35am in Johannesburg, the most since September 2011, data compiled by Bloomberg show. It fell to 14.07 earlier, the lowest on record, and has dropped 14% this year. A rebound could be in the offing as the rand’s slump has pushed its 14-day relative-strength index above the level that indicates it’s oversold. The RSI climbed to 81 on Monday, the highest since May 2013 and above the 70 level that some traders see as a sign the currency has depreciated too much, too fast. Even so, the slide underlines the challenges faced by President Jacob Zuma’s administration in reigniting investment and growth in an economy running an electricity shortage and persistent fiscal and current-account deficits. South Africa faces more than 60,000 job losses this year in industries ranging from mining to aviation, according to a report by the Solidarity labor union. “It’s a vicious cycle for commodity-related currencies like the rand as weak commodity prices would feed into weak jobs market, weighing on the economy,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan in Taipei. “It’s hard to see any strong rebound for now.” CURRENCIES AND PRICES

ALSI: 3 mnth to 21 Aug 15

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(Mail & Guardian, 24/8/2015)

JSE AS AT 17:02PM 21 AUGUST 2015

All Share Index 21/08 49,028

- 733.31 - 1.47%

Industrials Index 21/08 42,207

- 558.67 - 1.31%

Financials Index 21/08 43,099

- 630.62 - 1.44%

Top 40 Index 21/08 43,405

- 744.83 - 1.69%

Industrial 25 Index 21/08 62,745

- 1,002.27 - 1.57%

Financial 15 Index 21/08 16,116

- 271.01 - 1.65%

Resources 10 Index 21/08 35,327

- 476.03 - 1.33%

Alt-X Index 21/08 1,451

+ 1.60 + 0.11%

WORLD INDICATORS

FOREX

Rand/Dollar 06:45 13.3731

+ 0.43 + 3.32%

Rand/Pound

06:45 20.9447

+ 0.71 + 3.51%

Rand/Euro 06:45 15.3145

+ 0.68 + 4.67%

COMMODITIES

Gold (usd/oz) 06:42 1,158.47

+ 23.37 + 2.06%

Platinum (usd/oz)

06:42 1,016.70

+ 5.70 + 0.56%

Brent (usd/barrel) 06:42 44.64

- 2.52 - 5.34%

WORLD MARKETS

Wall St (DJIA) 21/08 16,460

- 530.94 - 3.12%

Germany (DAX)

21/08 10,125

- 557.63 - 5.22%

Japan (Nikkei) 06:45 18,705

- 730.40 - 3.76%

(Business Report, 24/8/2015)

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(TFR Commercial Management: Business Performance Dept)

Petrol/ Diesel Price

YR2015

07-Jan-

15

04-Feb-

15

04-Mar-

15

01-Apr-

15

06-May-

15

03-Jun-

15

01-Jul-

15

05-Aug-

15

02-Sep-

15

07-Oct-

15

04-Nov-

15

02-Dec-

15

COASTAL

95 LRP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00 1293.00 1334.00 1283.00

95 ULP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00 1293.00 1334.00 1283.00

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Diesel 0.05% (c/l) 997.49 895.49 969.49 1090.09 1085.09 1134.09 1138.09 1062.27

Diesel 0.005% (c/l) 1001.89 899.89 973.89 1096.49 1091.49 1137.49 1141.49 1067.67

Illuminating Paraffin (c/l) 697.728 595.728 668.728 690.828 685.828 727.828 733.828 663.828

Liquefied Petroleum Gas

(c/kg) 1829.00 1679.00 1833.00 1918.00 1935.00 2035.00 2091.00 2002.00

GAUTENG

93 LRP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00 1352.00 1301.00

93 ULP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00 1352.00 1301.00

95 ULP (c/l) 1124.00 1031.00 1127.00 1289.00 1289.00 1336.00 1377.00 1326.00

Diesel 0.05% (c/l) 1028.09 926.09 1000.09 1122.79 1117.79 1166.79 1170.79 1094.97

Diesel 0.005% (c/l) 1032.49 930.49 1004.49 1129.19 1124.19 1170.19 1174.19 1100.37

Illuminating Paraffin (c/l) 747.928 645.928 718.928 743.828 738.828 780.828 786.828 716.828

Liquefied Petroleum Gas

(c/kg) 2011.00 1861.00 2015.00 2100.00 2117.00 2217.00 2273.00 2184.00

YR2014

01-Jan-

14

05-Feb-

14

05-Mar-

14

02-Apr-

14

07-May-

14

04-Jun-

14

02-Jul-

14

06-Aug-

14

03-Sep-

14

01-Oct-

14

05-Nov-

14

03-Dec-

14

COASTAL

95 LRP (c/l) 1320.00 1359.00 1395.00 1398.00 1383.00 1361.00 1392.00 1392.00 1325.00 1320.00 1275.00 1206.00

95 ULP (c/l) 1320.00 1359.00 1395.00 1398.00 1383.00 1361.00 1392.00 1392.00 1325.00 1320.00 1275.00 1206.00

Diesel 0.05% (c/l) 1260.55 1284.75 1311.95 1299.15 1269.37 1245.79 1259.79 1254.17 1228.79 1215.79 1154.79 1101.49

Diesel 0.005% (c/l) 1263.95 1288.15 1316.35 1304.55 1274.77 1249.19 1263.19 1258.57 1234.19 1221.19 1161.19 1106.89

Illuminating Paraffin (c/l) 963.828 975.828 991.828 953.028 934.028 924.028 947.028 940.028 921.028 907.028 855.028 805.728

Liquefied Petroleum Gas

(c/kg) 2260.00 2314.00 2372.00 2350.00 2346.00 2319.00 2377.00 2365.00 2257.00 2269.00 2164.00 2039.00

GAUTENG

93 LRP (c/l) 1336.00 1375.00 1411.00 1416.00 1401.00 1379.00 1408.00 1408.00 1341.00 1343.00 1298.00 1229.00

93 ULP (c/l) 1336.00 1375.00 1411.00 1416.00 1401.00 1379.00 1408.00 1408.00 1341.00 1343.00 1298.00 1229.00

95 ULP (c/l) 1357.00 1396.00 1432.00 1439.00 1424.00 1402.00 1433.00 1433.00 1366.00 1361.00 1316.00 1247.00

Diesel 0.05% (c/l) 1287.15 1311.35 1338.55 1329.75 1299.97 1276.39 1290.39 1284.77 1259.39 1246.39 1185.39 1132.09

Diesel 0.005% (c/l) 1290.55 1314.75 1342.95 1335.15 1305.37 1279.79 1293.79 1289.17 1264.79 1251.79 1191.79 1137.49

Illuminating Paraffin (c/l) 1009.728 1021.728 1037.728 1003.228 984.228 974.228 997.228 990.228 971.228 957.228 905.228 855.928

Liquefied Petroleum Gas

(c/kg) 2442.00 2496.00 2554.00 2532.00 2528.00 2501.00 2559.00 2547.00 2439.00 2451.00 2346.00 2221.00

(SAPIA online)

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