News in South Africa 2nd October:
1. Sasol to sell 50% of US project:
Sasol has agreed to sell a 50% stake in its US base chemicals business to LyondellBasell Industries for $2 billion to help pay down debt.
The unit will become a joint venture between the South African company and the US chemicals giant, Sasol said in a statement Friday. The deal is expected to be completed this year.
Sasol has been looking to reduce borrowings after a series of cost overruns and delays at its Lake Charles chemicals project in Louisiana put its covenants under pressure. The US chemicals sale will cut debt to about $8 billion from $10 billion, the company said, improving its financial position.
2. ANC cracks down on corruption:
Corruption-accused eThekwini municipal manager Sipho Nzuza made a dramatic return to work this week, but the councillors charged with him were barred from attending a full council meeting as the governing party continued to move against leaders facing criminal charges.
On Wednesday, ANC councillor Zoe Shabalala was prevented from attending the council meeting by the party’s eThekwini caucus leadership, together with two other councillors who are facing corruption charges.
ANC KwaZulu-Natal spokesperson Nhlakanipho Ntombela confirmed that the decision was being implemented across the province’s 11 ANC regions, with 12 councillors affected by the ruling.
“There is a decision that has been taken that none of them will attend any council meetings pending the outcome of their appearance before the integrity commission,” he said.
In KwaZulu Natal, 11 councillors have been asked to step aside, pending the outcome of an integrity committee hearing.
3. Donald Trump sick:
Global equity markets and oil plunged on Friday, while gold spiked after US president Donald Trump said he and his wife had tested positive for coronavirus.
Asia-Pacific benchmark indices dropped as investors piled out of risk-linked assets, including even the US dollar.
Trump, who faced off against Democratic rival Joe Biden in a televised debate on Tuesday, got tested for the disease along with his wife, Melania, after his close confidant and White House counselor, Hope Hicks, tested positive earlier this week.
Oil, one of the most sensitive commodities to geopolitics and the economy, plunged by nearly 4%. Brent crude futures were last down 3.3% at $$39.59 a barrel, while WTI futures fell 3.5% to $37.41 a barrel.
“A short while ago it was announced that Donald Trump tested positive for COVID-19, so no doubt he will quarantine. This put pressure on US index futures and European indices are called lower,” CMC Markets analyst David Madden said.
4. Farmers acquire land:
President Cyril Ramaphosa announced in February that government-owned land would be released to the public for farming purposes.
Since then, close to 20% (135,117 hectares) of the around 700,000 hectares allocated has been released to 275 farmers.
On Thursday, Minister Thoko Didiza (Agriculture, Land Reform and Rural Development) announced that the remaining land, equating to about 896 farms, will become available in the next two weeks.
Analysts say the move by government to lease 500,000 hectares of state-owned land out to farmers is a positive step to address ‘land hunger’ in South Africa, and is certainly considered land redistribution, even though people will be paying.
The land will be distributed on 30 year leases with the option to buy – but some experts believe this could be improved even more where the option to buy kicks in sooner, and rental contributes to the purchase.
The warning is that getting land doesn’t automatically give access to finances.
5. New vehicle sales data:
The National Association of Automobile Manufacturers of South Africa wants government to cut taxes on new vehicle purchases to stimulate more sales.
The industry body commonly known as Naamsa, which represents original equipment manufacturers Toyota, BMW, Volkswagen and others, on Thursday released new vehicle sales data for September.
It showed that new vehicle sales improved from prior months, coinciding with the easing of lockdown restrictions and an uptick in business activity, but it is still lower than levels recorded last year.
Compared to September 2019, new vehicle sale declined by 23.9%. For the year to date, the new vehicle market contracted by a third, compared to the same period last year.
Export sales also declined by a fifth, compared to the previous year. For the year to date, export sales have fallen by 37.5%, compared to the same period last year.
Naamsa called on government to reduce taxes on new vehicle purchases to stimulate new vehicle sales. “Combined with record low interest rates and low inflation, the automotive industry and the economy in general could hugely benefit should the tax burden on vehicles be reduced during this time,” Naamsa said.