Trematon makes a move to buy Club Mykonos Langebaan

ALTHOUGH I'm (unfortunately) not a shareholder in the PSG Group, enormous value can be garnered just by glancing through this adventurous investment company's annual report.

Executive chairperson Jannie Mouton is always refreshingly candid about corporate matters, and you won't find the stuffy executive-speak that usually characterises an annual review.

I've always keenly anticipated PSG's annual report, ever since the company won my undying admiration for quoting my all-time favourite musician - the late, great Frank Zappa - in a previous annual report. But let's not go there right now (and no, the quote did not have anything to do with yellow snow).

What caught me eye this year was Mouton's admission that PSG might have made a mistake in unbundling its major stake in promising mass banking specialist Capitec in 2003.

He said the company believed it was the right decision at the time to unbundle Capitec – adding, rather intriguingly, that PSG was then a potential hostile takeover target. (Hmmm... would that have been Absa, perhaps?)

While most chairpersons would probably prefer not to highlight the painful past, Mouton reminded shareholders that "before then, we owned 58% in this great company as opposed to 34.9% today".

He did add, though, that PSG shareholders remain in a neutral position if they held onto their unbundled Capitec shares.

PSG, on the other hand, had to incur quite a cost – not to mention the dismantling of its original empowerment partner, Arch Equity - to rebuild a strategic stake in Capitec. So far, it's clearly been worth the effort.

Of course, one should perhaps look at another examples of letting go, where the company initiating the unbundling might really regret the decision in later years.

A classic example would be automotive components manufacturer Control Instruments, which split off vehicle tracking firm Mix Telematics about three years ago.

Mix looks a nifty little business (so much so that Imperial recently bought a strategic stake), and I suspect Control must have missed its steady annuity income when the global financial crisis smashed prospects in the automotive sector.

Life after Life?

More recently, there was the proposal by Cape-based empowerment group Brimstone (I'm purposefully ignoring Mvelaphanda, because it is intent dismantling its investment portfolio to realise underlying value) to sell off and unbundle the bulk of its stake in newly-listed private hospitals group Life Health.

Brimstone is set to retain only a small stake in Life, which, in view of Life's underwhelming listing, may seem a reasonable option at the moment. But could there be regrets over the longer term?

Of course, Brimstone (and they're a great bunch of operators) may well clinch such convincing future deal flow that shareholders are satisfied that there is indeed - as one shareholder at the recent annual general meeting (AGM) put it - "life after Life".

Another Cape-based investment group, Trematon, may well have come under question for recently selling off its strategic stake in listed property group Ingenuity - especially since the transaction took place at the bottom of the real estate cycle.

This week Trematon made a move to buy outright control of Club Mykonos Langebaan (which must have enormous long-term development potential), signalling to shareholders that the proceeds from the Ingenuity deal would not lie idle. But back to PSG. I think after the Capitec lesson the company will be playing for keeps.

Consequently, shareholders attending next week's AGMs for the various PSG groupings (Zeder and Paladin specifically) may be wasting their breath in pitching questions around the possibility of unbundling or separately listing promising and valuable investments like KWV Holdings, CapeVin and the much-mooted private schools business, Curro.

Of course, a more pertinent enquiry might be whether PSG - fresh from a R200m preference share issue - intends increasing its exposure to Capitec's fast-growing mass banking business.

- Fin24.com

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Saldanha Bay oil storage, one of the biggest in the world.

South Africa establishes new sources

The visit by South African President Jacob Zuma to Algeria a week ago gave a glimpse of an ongoing shift in the country’s oil relations with other countries. For the past decade or so, the focus has increasingly been to lessen dependency on traditional sources, while engaging new sources in Africa and elsewhere. Other considerations regarding the country’s fuel security have also come into play as oil in South Africa is fast becoming a whole new ball game.

Historically, South Africa has imported most of its crude oil from the Middle East, with a number of major multinationals such as BP, Shell, Caltex, and Total maintaining a dominant presence in the country.

Engen is another player that emerged as a domestic company when Mobil disinvested during the apartheid sanctions years. Engen has since been taken over by Malaysia’s national oil company, Petronas, with which the South African government has a close relationship.

Sasol developed into a major South African oil company in the 1960s, and in recent years into a global player. It supplies fuel-from-gas for the domestic market.

By 2001, Mossgas and Soekor were merged into state oil and gas company PetroSA in a rationalisation of the state's commercial interests in this sector. PetroSA is involved worldwide in oil and gas exploration, while both Sasol and PetroSA are involved in importing gas and producing liquid fuels from gas.

PetroSA, alongside the Strategic Fuel Fund Association, the Central Energy Fund, and the Petroleum Agency South Africa, all play various roles relating to oil procurement, storage, exploration, marketing and distribution. This includes managing the Saldanha Bay oil storage facility, one of the largest of its kind in the world, built in the apartheid era to counter sanctions.

Apart from exploration, PetroSA operates two offshore oil fields near Mossel Bay as well as various gas fields along the southern African coast. Multinational oil companies in South Africa also operate a well-developed refining and downstream oil industry. However, their refineries at Cape Town and Durban are ageing and becoming less competitive.

In recent years – because of geopolitical volatility in the Middle East – South Africa has worked toward reducing dependence on oil from Iran by increasing imports from Yemen, Qatar, Iraq, Kuwait, United Arab Emirates, Egypt and Saudi Arabia. At the same time, it has tried to lessen overall Middle Eastern imports and spread its sourcing increasingly to non-Middle Eastern countries.

Imports now come from African countries, South America, Russia and others.

This shift in focus has seen a number of significant oil deals being concluded recently. The first major, and controversial, was in September 2008 when President Hugo Chavez of Venezuela visited South Africa. The two countries agreed to co-operate in oil and gas exploration in Venezuela, refining Venezuelan oil at South Africa’s proposed new refinery at Coega in the Eastern Cape, investment by Venezuela’s state oil company in a local refinery and storage facilities, PetroSA sharing its gas-to-liquids technology with Venezuela, and more.

The announcement heralded another important step toward lessening South African reliance on oil from the Middle East. And there were distinct advantages for South Africa relating to the government’s concerns regarding security of oil supply as outlined in itsEnergy Security Master Plan for Liquid Fuels that had been released shortly before.

The South African government at the time also believed that Venezuelan oil processed by PetroSA for local consumption would help reduce domestic fuel prices.

In August 2009, during bilateral trade talks, South Africa and Angola signed a number of trade agreements, including co-operation in the oil sector. The oil agreement would allow Petro SA and Angola's Sonangol to work together in oil projects, said Angolan President Jose Eduardo dos Santos at the time.

The state-owned oil companies would work together in the areas of exploration, refining and distribution of oil, it was announced.

With Angola already challenging Nigeria as Africa's largest producer of crude oil, and having enormous hydroelectricity potential, energy was said to have been a key area of discussion. And Brazil and China, two countries with which South Africa has recently been enjoying beneficial and vastly increased trade relations, are already involved in the reconstruction of Angola, including its oil interests.

Shortly after the Angola agreement was signed, it was announced by the Industrial Development Corporation (IDC) in an economic report that South Africa’s trade with the world's four largest emerging markets - Brazil, Russia, India and China (BRIC countries) – had increased from $20.3 billion in 2001 to about $162bn in 2008. Among the bulk of these imports, excluding China, were crude oil and non-crude petroleum products.

During President Zuma’s visit to Algeria last week, he signed, among other things, a memorandum of understanding involving increased trade and co-operation between PetroSA and Algeria's Sonatrach.

PetroSA has been involved in oil production in Nigeria since 2004 and it was said some time ago that the company would be pursuing an interest in two oil blocks in the Democratic Republic of Congo (DRC).

In April, President of the Republic of Congo (Congo-Brazzaville) Denis Sassou-Nguesso announced in Pretoria that the South African company would be given oil production rights in his country.

Equatorial Guinea is another African country with which South Africa has in recent years been stepping up its trade relations, believed to also involve oil.

In addition, PetroSA and Sasol are already importing gas, mainly with a view to boosting the local gas-to-liquid fuel production. These imports will assist to extend the life of PetroSA’s gas-to-liquid refinery at Mossel Bay.

Apart from that, PetroSA has focused its natural gas exploration activities in southern Africa, and exploring for oil in Egypt, Sudan and Equatorial Guinea.

Sasol Synfuels and Qatar Petroleum (QP) signed an agreement to jointly construct an $800-million gas-to-liquids plant.

A development that is symptomatic of the changes taking place in South Africa’s oil supplies is the fact that, after years of secrecy, overriding political and security considerations and protected monopolist practices, the fuel industry in South Africa is heading for a new showdown as competing players variously promote and resist new options in a changed global and local environment.

While state-owned PetroSA wants the government to invest billions of taxpayers’ rands in a new 400 000 barrels-per-day refinery at Coega, known as the Mthombo Project, one of the largest petroleum groups active in South Africa, BP Africa, is cautioning the government against approving the refinery project of more than R77bn.

In fact, BP chief economist Christof Rëhl recently visited South Africa to promote BP’s argument that the proposed refinery would cost a great deal of money for relatively little employment and would not improve anything.

BP also argues that the costs are likely to be much more than envisaged, and that there is a surplus refinery capacity worldwide at present which is likely to be the case beyond 2020.

A new refinery now would be an unfair burden for taxpayers, the company argues, and calls for a comprehensive review of all supply-side options that could have far-reaching implications for the industry. It maintains that the surplus capacity is such that a new refinery would hardly improve South African fuel security.

But the government has so far rejected objections from oil companies such as BP. Last month, Energy Minister Dipuo Peters said the project was key to providing a solution to domestic liquid fuel challenges. According to her, it would address the gap between demand and supply, further reduce the dependence on imported finished product, and promote new standards for clean fuels.

PetroSA has also maintained that building the Coega refinery is the most sustainable solution for meeting the country's need for supply-side security and improved fuel quality. Of course, PetroSA is also concerned about the fact that it has already spent more than R250m on the project, with a further pending investment of R2.4bn to complete the front-end engineering design of the project.

On the other hand, it is widely suspected in industry circles that BP and the other large oil companies operating in South Africa have every reason to resist the competition from a new player which could cut heavily into their super profits, particularly as their conventional refineries are ageing, uncompetitive and not living up to the latest emissions standards.

Mthombo, some say, could threaten the very existence of the oil multinationals in South Africa.

On the local oil exploration front, after years of showing no interest it, it seems Petro SA’s activities, along with new foreign partners, may have prompted the oil giants into action. It has just been announced that Shell hopes to explore for oil and natural gas over an extensive area of South Africa's West Coast. With seawater depth in the proposed region ranging from 150m to about 4 000m, this is likely to be the deepest that Shell has ever prospected for oil.

Indeed, when it comes to South Africa’s oil interests, the times they are a changing.

Source leadershiponline.co.za

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Saldanha Bay. Shell start gas Exploration on the West Coast

Shell Upstream International has joined the hunt for deep-water oil and gas off South Africa's West Coast, but one of its priorities is to quell any hopes of quick riches.

The Dutch group sent executives this week to hold public consultation meetings in Cape Town and smaller centres like Lamberts Bay, Springbok and Port Nolloth.

"We are trying to keep expectations to a minimum," said Kim Bye Bruun, the Upstream unit's communication manager. "Nothing will be done on the ground for the next few years. This is a desktop study."

Shell won rights last November to explore a deep-water block the size of the Netherlands about 150km offshore, from Saldanha Bay to Port Nolloth.

If the desktop study, which could take three years, indicates areas of interest, seismic studies will be done. If those prove positive, test holes will be drilled.

It is a long process with no guarantee of results as shown by the Ibhubesi gas field closer inshore. Forest Exploration International found significant reserves there 10 years ago, but no gas has been piped ashore. In fact, no pipes have been laid to carry it.

Forest Exploration's commercial director, John Langhus, said it was impossible to say when the first gas would be delivered. "We can't predict that until we know what the demand for the gas is," he said.

"We're negotiating with parties about offtake of the gas. Once we get the critical level of commitments for the gas, then we can decide to move that forward."

Langhus said Forest saw the South African market as a big one, from electricity generation to industrial and residential use. "We're very optimistic about the growth of the market once it kicks off."

The problem is getting the market to kick off. Doug Kuni, managing director of the Independent Power Producers Association, said energy companies had yet to strike a deal with a South African buyer that would make it economical to start producing.

"All the exploration companies are spending dollars; they will require a dollar price for the gas. They will put it into a power station and produce electricity that will be paid for in rand. They don't want to take the currency risk."

Kuni said the energy companies wanted a Brent index in the pricing, but South African buyers were reluctant to commit. "Who knows where the price of oil will go?"

There had been more than 10 years of talks without a solution.

The minister of energy, Elizabeth Dipuo Peters, said in parliament this week that her department was in talks with a company to supply about 1500MW of electricity from a gas-fired power station on the West Coast, but she gave no details. "A memorandum of understanding will be signed once all the negotiations are finalised," she said.

Source timeslive.co.za

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Expansion plans for Saldanha Bay port on the West Coast

A remarkable transport/engineering feat happened during last year’s Christmas season – on 27 December – at the Sishen railway station. It literally set the wheels in motion for far-reaching results, especially so for Saldanha’s iron ore export effort.

On that day the last of ten trains left the Northern Cape’s iron export station for Saldanha, almost 1 000 km to the south. Its successful departure would determine whether the iron ore team could claim victory by reaching the one million ton per week throughput mark. And so it did, to much jubilation amongst the teams involved.

There was purpose to this exercise – to push iron ore exports, through the Port of Saldanha, at a rate of 60 million tons a year on a continuous basis by the end of this year. SA Port Operations is under continual pressure from the Northern Cape mining operations, especially Kumba and Assmang, to increase export capacity.

During a visit to the bulk terminal in Saldanha, chief executive Karl Socikwa last month told CBN the third phase (1C) of the terminal expansion plan is now in full swing, with the aim to lift export capacity to 60 million tons per annum. This comes in at a cost of R630 million, all earmarked to improve the infrastructure at the port.

During the past financial year, ending March 2010, the port loaded a record of 44 million tons of iron ore, almost 70% of it for Far East markets, more notably China.

During 2004 Terminal Expansion Phase 1A was completed, at a cost of R950 million, lifting capacity from 28 mtpa to 36 million tons per annum. Last year Terminal Expansion Phase 1B was completed, expanding capacity to 47 mtpa.

The current ramp-up of the corridor to 60 mtpa is reliant on the channel achieving certain milestones within certain pre-defined time frames.

One of these critical milestones was for the channel to move from an average of 920 000 tons per week to around a million tons per week in the first quarter of 2010. Breaking through this psychological barrier early was necessary to set the tone for this year. Now it’s all about sustainability at these levels.

The bulk terminal at the Port of Saldanha, which is the last link in the iron ore corridor supply chain is where all the action happens in terms of offloading, stacking and stockpiling, reclaiming and loading the ore onto bulk carrier ships.

It is estimated that well in excess of R5 billion has so far been spent to increase iron ore exports from the deep-water port to meet the growing demand for South Africa’s high-quality iron ore. Although volumes have been down of recent months, all seems set to sustain the one million ton target to create capacity ahead of demand.

Currently the infrastructure at the port comprises two rotary tipplers, four stacker reclaimers, two shiploaders and 25 conveying systems, providing the terminal with a capacity to off-load 10 000 tons per hour onto a ship.

But much money will still be spent on to expand infrastructure as the port is gearing up to increase capacity to more than 80 million tons per annum in the not too distant future.

Environmental impact studies are needed for the establishment of new infrastructure on some 141 hectares of land. This part of the proposed project could have the biggest impact on the sensitive environment of the bay and lagoon.

The plan is to reclaim an additional 50 hectares of land within Saldanha Bay. This will be done by dredger. The shipping channel will be deepened and the material recovered will be used for the construction of new shipping berths.

Another footprint area which could be impacted, is 35 hectares of land in the undisturbed dune area on the coast between the iron ore quay and the Saldanha Mittal Steel Plant. The intention is also to fill in the so called ‘Oyster Dam’ to create more space for stockpiling iron ore within the confines of Saldanha Bay.

The size of trains and the number of ships calling at Saldanha’s port will also increase when the facilities are enlarged to handle more iron ore. Ships calling at the port of Saldanha will also increase in size and number. Two ships a week, being about a hundred a year, called at Saldanha in 2007 to load iron ore. Even though bigger ships will be loading, it’s anticipated that shipping volume will now increase to more than 200 vessels a year.

Source cbn.co.za

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Langebaan Lagoon could suffer massive environmental disaster

A "shocked and embarrassed" Public Works Minister, Geoff Doidge, says he was unaware his department was constructing a R100-million boat yard for the SANDF's Special Forces in Langebaan Lagoon without the necessary environmental approvals.

He has now asked his Water and Environmental Affairs counterpart, Buyelwa Sonjica, to set up a joint task team from their departments to undertake a "thorough" investigation.

Sonjica's officials are furious that Doidge's department reneged on its promise last year to stop work on the project, other than to stabilise the roof of the boat yard, until the required environmental authorisations were approved.

And the breaking of this commitment also caused Sonjica unwittingly to give an untrue answer to a parliamentary question by the DA in March.

Doidge's department has already paid a R93 000 fine for starting the project without doing the necessary environmental impact assessment and without authority to work in a protected area: the West Coast National Park.

Langebaan Lagoon is also proclaimed as a internationally important bird conservation site under the Ramsar Convention, which South Africa has signed.

"Green Scorpions" - environmental management inspectors - were told during a site visit last August that the project had been started without applying for environmental approval "as a result of time constraints". However, it has been on the cards since at least 2006.

After the inspectors' visit, Water and Environmental Affairs deputy director-general Joanne Yawitch sent Doidge's department a formal letter, notifying it of her intention to issue a compliance notice under the National Environmental Management Act because of the "unlawful" construction and contravention of "numerous provisions of the protected areas legislation".

The notice would have forced all work on the project to stop until environmental approvals were given.

But spokesman for Sonjica's department Albi Modise said it had decided not to issue a compliance notice because the public works department (DPW) had responded promptly with an appeal.

"The decision not to issue the compliance notice was also based on the fact that DPW has a firm undertaking that work would only continue on the roof stabilisation and that other activities would cease pending the outcome of the appeal.

"The department recently became aware that DPW has reneged on their commitment... it appears as if the DPW has proceeded in direct contravention of its undertaking and failed to inform this department until recently.

"This is viewed in an extremely serious light and will be taken into account in determining enforcement action moving forward."

By John Yeld
Environment & Science Writer

Source http://www.iol.co.za

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Table Mountain view will never be the same again.

Breaking news on the SELI 1 Seli 1 is here to stay and as predicted will become a permanent feature on our shore line. The big swell of the first winter storm has been battering her for several days and has put the final nail in her rusty coffin. The area was named Table View for the great views of Table Mountain, which is one of the seven wonders of the world and. Tourists from all over the world flock daily to our beaches to take photos of the spectacular views, and to spend some time on our beautiful beaches, but now they will have to photo shop their photo’s or buy post cards to get photo’s of the mountain without a shipwreck. They will also have to content with the sticky oil on the beaches. Our government is so keen on changing names of towns and cities I wonder if they will be changing the name from Table View to Seli 1 view? I am sure they would rather spend the money on changing the name of maritime maps, have a huge renaming party and fly Jacob Malema down to do the offici al opening of Seli 1 Boulevard than on trying to remove the wreck. Just as Table Mountain one of the seven wonders of the world is, so is the Seli 1 one of the seven stuff ups of our government and maritime authorities. 1st. Allowing the crew of the ship to get on a aeroplane and to leave the country. (They should be cleaning dishes to help paying for the mess they left us). 2nd. Allowing uninsured ships in our waters. 3rd. Not putting pressure on the Turkish government to put pressure on the ships company to take responsibility for the disaster. 4th. Taking 3 months to chat over tea, cake and picnics in meetings while the weather was absolutely perfect, with small waves and hardly any wind before deciding that they would slowly start the removal of the oil and then the coal. NO RUSH 5th. The skill full way all the government departments past the hot potato. (They would make any rugby team proud with their slick handling). 6th. The skill full way they past the buck. Now other governments departments will have to get involved to help pay for the mess and clean up. 7th. The fact that they would rather wait for the ship to break up and cause a lot of damage to the ecology than to try to remove it. I am sure if FIFA asked them to move it, it would have been removed within one week. Yes, the Seli 1 did improve the banks for surfing, but at what cost? It will be spewing oil and debris on to our beaches, polluting the water and beaches killing birds and sea life and we will be getting oil spots on our wetsuits, feet and equipment for months and years to come. Read the official press release of SAMSA Source atlanticsurfco.co.za News sponsored by West Coast Office National for all your printing needs.

ArcelorMittal SA seeks quick end to row with kumba

The South African unit of ArcelorMittal, the world's largest steel maker, on Tuesday said it was cooperating with Kumba Iron Ore to expedite a prolonged dispute over iron-ore supply amicably.

ArcelorMittal South Africa also said steel prices were set to rise on recovery of global demand, restocking and a boom in South Africa's economy, particularly in the construction industry.

"We are co-operating (with Kumba) to take the matter to arbitration," Nonkululeko Nyembezi-Heita, CEO of ArcelorMittal South Africa, said at a meeting for shareholders.

She later declined to provide further details to Reuters.

Kumba, a unit of global miner Anglo American, terminated the preferential pricing deal with the steelmaker, claiming that the company had failed to renew its mining rights in Sishen mine as per South African mining laws.

Kumba supplies ArcelorMittal from the Sishen mine.

"We remain firmly optimistic that the supply agreement (with Kumba) is valid and we are taking necessary steps to protect our rights," Johnson Njeke, the unit's chairman said at the same meeting.

Nyembezi-Heita later told Reuters that the refusal by Zimbabwe President Robert Mugabe to allow ArcelorMittal to take over the country's Zisco Steel, was a lost opportunity to show foreign investors Harare was changing its policies.

"What Zisco would have offered us was a presence in a part of the world where we could service landlocked neighbouring states, plus participating in the rebuild of Zimbabwe as a country, obviously now we have lost that," she said.

"But we haven't lost the strategy and ambition for our Sub-Saharan footprint," Nyembezi-Heita said.

Nyembezi-Heita said ArcelorMittal South Africa planned to grow its market within Sub-Saharan Africa in countries like Zambia, Namibia, Botswana and also Ghana.

Nyembezi-Heita said the global economic climate had improved and that she saw this supporting prices.

"We are seeing prices being traded up and up. There is also restocking and a rebound in steel demand," Nyembezi-Heita said.

Edited by: Reuters

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