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COMMODITY NEWSBRIEFS: 8 JUNE 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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FAST MOVING CONSUMER GOODS See article “DROUGHT GROWS FOOD PRICE” under heading GRAIN IRON SHRINKING IRON ORE IMPORTS BY CHINA HIGHLIGHT DEMAND CONCERN (Mineweb, 8/6/2015) Iron ore imports by China contracted in May from April and the same month a year earlier, highlighting weakening demand in the largest buyer as policy makers seek to shift the economy away from investment-led growth. Cargoes fell 12% from April to 70.87 million metric tons, and were 8.4% lower than a year earlier, according to customs data on Monday. That’s the lowest monthly total since February. Adjusted for the number of days in the month, the imports in May were at the slowest pace since November. “With China’s crude-steel output declining, that’s going to reduce demand for iron ore,” Wu Zhili, an analyst at Shenhua Futures Co. in Shenzhen, said by phone on Monday. “Imports will continue to grow at a slower pace this year.” While iron ore prices posted the biggest monthly advance in almost two years in May as China’s port stockpiles fell by a record, Goldman Sachs Group Inc. is among banks predicting that the rally won’t last as global supplies are set to expand further. In many commodity markets, recently installed low-cost supply can now be stretched to meet demand, BHP Billiton Ltd. Chief Executive Officer Andrew Mackenzie said last week. Ore with 62% content delivered to Qingdao fell 0.5% to $64.45 a dry ton on Friday, according to Metal Bulletin Ltd. Prices jumped 10% in May following a 9.4% gain in April. After bottoming on April 2 at a decade- low $47.08, prices trimmed this year’s loss to 9.6%. Lower prices are creating a testing environment for commodity producers, while demand is slowing to more routine levels amid the transition in China’s economy, Mackenzie said Wednesday. BHP is the world’s biggest mining company and largest iron ore producer after Rio Tinto Group and Vale SA. CONSTRUCTION, BUILDING MATERIALS & CEMENT AFRICAN LEADERS JOIN FORCES ON INFRASTRUCTURE (Engineering News, 8/6/2015) African leaders are working together on major infrastructure projects on the continent, helped by business and political leaders, including former UK Prime Minister Gordon Brown. The World Economic Forum Global Strategic Infrastructure Initiative (ASII) hopes to draw billions of dollars to boost infrastructure projects in Africa. “Africa has a $100-billion a year infrastructure gap. It needs to spend $1.5-trillion in the next 15 years to provide water, electricity, sanitation, roads, rail and

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economic growth necessary for 80-million young people in Africa to get jobs every year,” Brown told a media briefing. ASII has identified a need to get projects to a stage where they are bankable. Much-needed infrastructure projects often struggle to progress beyond the concept stage as project preparation is costly, lengthy, complex and risky. “Without sufficient funds to pay for high-quality project preparation, projects rarely get off the ground enough to reach tender, let alone implementation,” said the ASII report. The African Union Commission has a Programme for Infrastructure Development in Africa. It comprises a pipeline of 51 mega-programmes within the water, energy, information and communications technology and transport sectors, with an estimated investment value of $75-billion up to 2040. It aims to enhance regional economic integration across the continent. “It’s very important for Africa to successfully address the infrastructure deficit. There needs to be a lot of coordination, trust between the official sector, governments, developers, financial institutions and organs of civil society,” said Standard Bank CEO Sim Shabalala. COAL GLENCORE CALLS ON NUM TO COOPERATE IN OPTIMUM RETRENCHMENT TALKS (Mining Weekly, 8/6/2015) Despite continued challenges caused by the current low coal price and negative economic climate, the Optimum coal mine, in Mpumalanga, was kept running to allow for talks on the proposed retrenchment of employees to continue, diversified miner Glencore said on Friday. In response to a statement by the National Union of Mineworkers (NUM) on Thursday, which declared “war against job losses through retrenchments, voluntary severance package and other ... concocted means of destroying the lives of many families with dependants in labour-sending areas”, Glencore called on the union to “desist from issuing negative statements that do not contribute to the resolution of this matter”. The JSE-listed company noted that the management of the embattled opencast coal mine had, over the past few months, “exhausted every effort” to engage with all key stakeholders including organised labour, the Department of Mineral Resources (DMR), the Commission for Conciliation, Mediation and Arbitration and Productivity South Africa to find a solution to this impasse and to limit the impact of the proposed retrenchments on employees. The union criticised Glencore for going ahead with plans to cut more than 1 000 employees at its coal mines despite an abundance of ore. It also accused the company of having rejected other options such as a trade sale of the operation. “Optimum has provided detailed information regarding its financial position to the NUM, the DMR and Productivity South Africa, the latter of which has unequivocally confirmed that the current situation at Optimum is no longer financially sustainable. SAUDI POWER GROUP POISED TO MAKE COAL IPP BID, AS IT SETS 5 000 MW REGIONAL TARGET (Mining Weekly, 8/6/2015) Power plant developer and owner ACWA Power, of Saudi Arabia, is aiming to develop a 5 000 MW portfolio of renewable-energy and conventional generation assets in Southern Africa by 2025 and reports that it is ready to bid into South Africa’s upcoming Coal Baseload independent power producer (IPP) procurement programme. Chairperson Mohammed Abunayyan, who visited South Africa this week to participate in ceremonies marking the official commissioning of the 50 MW Bokpoort concentrated solar power plant in the Northern Cape, told Engineering News Online that the group had identified South Africa, Mozambique, Namibia and Botswana as key growth markets in the region. It was currently pursuing an active regional pipeline of 1 000 MW, representing a combined investment value of around R60-billion. By 2025, the group’s so-called ‘Southern African cluster’ could comprise up to 20% of its global fleet, which had expanded to over 16 000 MW since the company’s founding as an independent power and water desalination company just over a decade ago in 2004. In North Africa, meanwhile, Morocco had emerged as its major beachhead, from where it intended to expand into West Africa. Abunayyan also confirmed ACWA Power’s intention to list the Southern African entity in the coming “three to five years”, reporting that the unit was being cultivated into a standalone business able to develop, invest in, build and operate its own power-station assets with limited support from either the Riyadh head office, or from the international office in Dubai. GRAIN DROUGHT GROWS FOOD PRICE (Business Report, 8/6/2015) The looming shortage of grain in South Africa due to the ongoing drought would have a severe impact on the poor, and the price of many foodstuffs was likely to increase significantly, said economist Dawie Roodt Maize and wheat crops are significantly smaller than usual this year because last year’s drought conditions have not been alleviated by a return to normal rainfall patterns this year. In KwaZulu-Natal, the sugar industry and others have been hit hard. “I am not concerned by

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the shortage of grains in South Africa as such, because there is a global surplus and the US is a very good producer of grain for export,” said Roodt. “What is of concern is that we will have to import grain with a weak rand, which will drive the price of food up considerably. This is true of grain because so many foodstuffs include it, and chicken and meat are no exception. Roodt said that crop failures in neighbouring countries like Zimbabwe, which is also suffering a drought, “may have the effect of driving more people to seek employment in South Africa than before”. The economist said South Africa was of enormous importance to the southern African region as far as grain was concerned. “Traditionally, we have supplied a significant maize surplus, and maize is the staple foodstuff of most southern African people. Mike Black, president of the KwaZulu-Natal agricultural union, Kwanalu, said that estimates for the national maize and wheat crops “are being revised downwards each time they are reviewed, so concerns that we may be headed for food shortages are well founded. If we have to import maize then this would increase costs to the consumer. NON-FERROUS METALS ZINC LIKELY TO STRUGGLE IN THE SHORT TERM (Mineweb, 8/6/2015) Zinc prices are likely to struggle in the short term, weighed down by a more plentiful supply situation than forecast. More inventories are due to move into LME warehouses while two mine operations will produce more than expected despite well-flagged closures, analysts and industry sources said. Zinc is one of the best performing metals on the London Metal Exchange (LME) and has been a favourite of investors in recent years due to the prospect of shortages developing because of the shutdowns of major mines. Benchmark LME zinc surged by a fifth during the six weeks to May 5, when it hit an eight-month peak of $2,404.50 a tonne, but has since given up about half of those gains. Some analysts are concerned about more flows of inventories into LME warehouses after 36,400 tonnes arrived in Malaysian depots on May 19, the biggest one-day inflow in over a year. Bullish investors expect a supply-demand deficit this year due to the closure of big mines such as Century in Australia and Lisheen in Ireland. But recent announcements indicate that some of the lost production will be made up. Vedanta Resources, which is closing the Lisheen mine in Ireland, said last month it would extend the life of its Skorpion mine in Namibia by two years. “The market balance looks more comfortable right now than we anticipated late last year,” said a source at a trading company. The global zinc market was in a surplus of 34,500 tonnes in March, down from 53,100 tonnes the month before, data from the International Lead and Zinc Study Group showed last month. TRANSNET UPSWING IN VOLUMES MOVED BY RAIL (Cargo Info Africa, 8/6/2015) There is definite upswing in the share of rail transport, with Transnet Freight Rail (TFR) set to move a projected 225 million tonnes of freight this year, compared to 220 million tonnes last year. So said Elvin Harris, executive manager for strategic knowledge at TFR, speaking at the monthly Special Interest Group (SIG) Transport Forum in Johannesburg last week. “This upswing is occurring more rapidly than we anticipated,” he said. Harris acknowledged the fact that upgrades and acquisitions within TFR – as part of Transnet’s ambitious R300 billion Market Demand Strategy (MDS) – might not be happening as fast as industry would like but commented that there was a huge backlog that the parastatal needed to redress. “This is a massive ship to turn around and we are focusing on doing it properly rather than as a quick-fix solution but I can assure you we are moving and we are moving in the right direction,” he said. According to Harris, R14.6 billion has already been spent on railway expansion and R19 billion on replacement of rolling stock, since the MDS was launched in 2012. Transnet has also now secured 92% of the required funding for its ambitious 1064 locomotives, he said. GENERAL FITCH BLAMES LOW RATING ON ESKOM (iAfrica, 8/6/2015) The National Treasury has emphasised that the government is addressing power supply problems at the highest level after a clear warning by ratings agency Fitch. The agency affirmed its BBB rating, but says an unstable power supply has led it to cut growth forecasts. It's warned that the onus is now on Eskom to meet demand soon. Fitch has warned that the negative outlook for Africa’s most advanced economy reflects risk factors including a weaker Gross Domestic Product growth. This is also a failure to reduce the budget deficit and stabilise government debt. With these combined factors the agency says this may individually or collectively result in a downgrade. It warned in March that a downgrade of its BBB rating for South Africa, two notches above junk status, was likely.

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CURRENCIES AND PRICES

ALSI: 3 mnth to 5 Jun 15

(Mail & Guardian, 8/6/2015)

JSE AS AT 17:00PM 5 JUNE 2015

All Share Index 5/06 51,694

+ 370.57 + 0.72%

Industrials Index 5/06 44,197

+ 255.00 + 0.58%

Financials Index 5/06 43,079

+ 37.85 + 0.09%

Top 40 Index 5/06 45,993

+ 407.85 + 0.89%

Industrial 25 Index 5/06 65,679

+ 505.92 + 0.78%

Financial 15 Index 5/06 16,356

+ 43.20 + 0.26%

Resources 10 Index 5/06 41,826

+ 757.42 + 1.84%

Alt-X Index 5/06 1,352

+ 15.74 + 1.18%

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WORLD INDICATORS

FOREX

Rand/Dollar 06:48 12.6124

+ 0.24 + 1.96%

Rand/Pound

06:50 19.1985

+ 0.22 + 1.17%

Rand/Euro 06:50 13.9904

+ 0.10 + 0.74%

COMMODITIES

Gold (usd/oz) 06:48 1,172.60

- 4.80 - 0.41%

Platinum (usd/oz)

06:48 1,098.29

+ 6.29 + 0.58%

Brent (usd/barrel) 06:39 62.77

+ 0.74 + 1.19%

WORLD MARKETS

Wall St (DJIA) 5/06 17,849

- 56.12 - 0.31%

Germany (DAX)

5/06 11,197

- 222.47 - 1.95%

Japan (Nikkei) 06:48 20,426

- 34.94 - 0.17%

(Business Report, 8/6/2015)

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(TFR Commercial Management: Business Performance Dept)

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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

95 ULP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00

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

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

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

Liquefied Petroleum Gas

(c/kg) 1829.00 1679.00 1833.00 1918.00 1935.00

GAUTENG

93 LRP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00

93 ULP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00

95 ULP (c/l) 1124.00 1031.00 1127.00 1289.00 1289.00

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

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

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

Liquefied Petroleum Gas

(c/kg) 2011.00 1861.00 2015.00 2100.00 2117.00

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

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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)

Daily prices for 5 June 2015

LME Official Prices, US$ per tonne

Contract Aluminium Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Cash Buyer 1730.00 1693.00 5924.00 1902.00 12860.00 15245.00 2131.50 1740.00

Cash Seller & Settlement 1740.00 1693.50 5924.50 1902.50 12865.00 15250.00 2132.00 1750.00

3-months Buyer 1745.00 1731.00 5937.00 1913.00 12880.00 15245.00 2141.00 1765.00

3-months Seller 1755.00 1731.50 5938.00 1915.00 12890.00 15255.00 2142.00 1775.00

15-months Buyer 15300.00

15-months Seller 15350.00

Dec 1 Buyer 1745.00 1813.00 5965.00 1938.00 12985.00 2157.00 1835.00

Dec 1 Seller 1755.00 1818.00 5975.00 1943.00 13085.00 2162.00 1845.00

Dec 2 Buyer 1875.00 5980.00 1957.00 13055.00 2147.00

Dec 2 Seller 1880.00 5990.00 1962.00 13155.00 2152.00

Dec 3 Buyer 1925.00 5985.00 1963.00 13055.00 2137.00

Dec 3 Seller 1930.00 5995.00 1968.00 13155.00 2142.00

(London Metal Exchange, 8/6/2015)

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