Author Archive

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.

While Elon Musk becomes the world’s richest man, Ethereum stalks Tesla

Written by Ciaran Ryan. Posted in Journalism

We are entering the Ethereum age, say its advocates. The network already handles more than $31bn in transactions a day, more than twice that of Bitcoin. From Moneyweb.

While Bitcoin is regarded as a digital store of value, Ethereum generates huge earnings daily. Image: AdobeStock
While Bitcoin is regarded as a digital store of value, Ethereum generates huge earnings daily. Image: AdobeStock

Part of the strangeness of cryptos is getting used to voluptuous price gains.

Over the last year, bitcoin (BTC) is up more than 300% and Ethereum (ETH) nearly 700%.

This week ETH broke new all-time highs as it powered through $4 300, or R67 000 on South African crypto exchanges. A year ago, ETH traded at R8 500.

Farzam Ehsani, CEO of crypto exchange VALR, explains why this is an extraordinary success story: “Ethereum is currently worth half a trillion dollars. Some companies alone are 5x this value, and for an ecosystem that has the potential to disrupt much of the traditional world of finance, many think Ethereum, like the valuation of the cryptocurrency space overall, is extremely undervalued.”

Microsoft and Apple are each valued at about $2.5 trillion, with Saudi Aramco coming in third at $2 trillion. Next up is Google parent company Alphabet at $1.9 trillion and Amazon at $1.7 trillion.

Ethereum (ETH) in USD

Source: CoinGecko

In sixth place is Tesla, worth $1.18 trillion by market cap, and just a shade ahead of Bitcoin, worth $1.15 trillion this week.

Read:Tesla is the first junk-rated company to get a $1trn valuation

Ethereum jumps to record high amid crypto’s decentralised boom

Crypto enthusiasts believe it is only a matter of time before Bitcoin surges past Microsoft and Apple to lay claim to the world’s most valuable asset.

Ethereum, the world’s second largest crypto asset, cannot be far behind.

As of September 2021, Tesla Inc co-founder Elon Musk became the world’s wealthiest man with a net worth of $292 billion, knocking Amazon’s Jeff Bezos off the number one spot.

Read:Elon Musk’s fortune soars $36bn in a day on Hertz order

Elon Musk and Jeff Bezos are now worth almost half a trillion dollars
Elon Musk is now three times richer than Warren Buffett

Bitcoin’s ascent through the value rankings is an astonishing story in itself, but perhaps just as riveting is the story of Ethereum’s rise from zero to $507 billion over the last four years.

To put that in perspective, it puts Ethereum ahead of JPMorgan Chase, a banking group with a lineage extending back more than 100 years and the 12th largest group in the world as measured by market cap.

It’s taken Ethereum just four years to dislodge JPMorgan Chase from its perch as the world’s most valued banking group.

Ethereum is barely four years old

Ethereum was conceived by Vitalty ‘Vitalik’ Buterin in 2013 as a network where developers could deploy their applications.

Out of that idea came decentralised finance (DeFi) and smart contracts. These are contracts allowing users to lend, borrow, ‘stake’ (earn interest), transfer and transact using ETH as the currency. These smart contracts occur without human intervention.

You can borrow using your cryptos as collateral, without having to submit realms of documents for credit approval.

And no-one wants to know your name, address or whether you lawfully acquired your crypto.

This is the ‘uncensored’ world of decentralised finance.

Fees and grumbles, yet commitment

Users of the Ethereum network pay ‘gas fees’ in ETH, and these are painfully high, a point that has earned Ethereum plenty grumbles from users, who nevertheless return time and again to use it.

To remedy the problem of network congestion and high gas fees, Ethereum has embarked on a series of upgrades known as Ethereum 2.0 which will only fully come into effect next year.

Richard de Sousa, CEO of crypto exchange AltCoinTrader, explains the recent price moves in ETH: “Even though we’ve recently seen Ethereum reach all-time highs, it is in my opinion still incredibly undervalued. This token embodies smart contracts, decentralisation and the Ethereum virtual machine. It is going to be the blockchain or the infrastructure that many decentralised applications (dApps) are built on.

“A lot of people are complaining that Ethereum is unusable because of the extremely high fees that we’re seeing, but this is contrary to what is actually happening.

“The fact that the fees are so high points to the fact that people are using it so much,” says De Sousa.

“It is the strongest network, it has a lot of competitors, but when Ethereum 2.0 launches hopefully in 2022, we’re going to see this network once again go up dramatically.”

It’s all about the flow

Says Brett Hope Robertson, investment analyst at crypto investment company Revix: “It’s all about the crypto money flows. With the amazing run up in BTC price over the last month, countless investors have made profits on that trade and look to shift them into riskier assets. This normally results in investors moving their BTC profits into ETH. Not only this but ETH just became deflationary for the first time a couple of days ago with net issuance of coins going negative due to the amount on ETH ‘burnt’ [or removed from circulation]. This is a very positive mechanism for price.

“As we know, decreased supply and increased demand only leads one way.”

Many analysts see the recent rally in ETH as a mere waystop to much higher levels for the second largest cryptocurrency, with some calling for $10 000 as achievable before the end of the year.

Market analyst Spencer Noon points out that Ethereum dwarfs every blockchain in terms of fees paid, as the network settles $30.5 billion of value every day, more than bitcoin and the $2.5 billion settled by PayPal daily. While Bitcoin is regarded as a digital store of value, and as a rather slender business case, Ethereum generates huge earnings daily.

Another signal

Another bullish signal for ETH is the number of active daily addresses, which continues to hit new records, signalling that more people are either buying ETH or using it to transact.

The average cost of transacting on the Ethereum network is just shy of $50, aggravated by the network’s inability to process large volumes of transactions (it currently does 1.3 million transactions a day).

This has opened the door for the emergence of so-called ‘Ethereum killers’ like Solana, Polkadot and Cardano – all of which were designed to overcome the cost and congestion issues facing Ethereum.

Anglo American appoints South African Duncan Wanblad as CEO to replace Mark Cutifani

Written by Ciaran Ryan. Posted in Journalism

Wanblad is the first local to be appointed to the position in more than a decade. From Moneyweb.

Duncan Wanblad will take over the helm as CEO of Anglo American in April 2022. Image: Supplied
Duncan Wanblad will take over the helm as CEO of Anglo American in April 2022. Image: Supplied

Anglo American has chosen a 54-year old South African, Duncan Wanblad, as the successor to outgoing CEO Mark Cutifani, who steps down in April next year after nine years at the helm.

Tony Trahar was the last South African CEO at Anglo. He retired in 2007, and was succeeded by Cynthia Carroll of the US, and Mark Cutifani from Australia.

Wanblad was appointed group director for strategy and business development at Anglo in 2016, and also served as CEO of its base metals business from 2013 to 2019. He has spent most of his working career within the Anglo family.

He is also a non-executive director of De Beers and Kumba Iron Ore, and chairs the Anglo American Foundation. Between 2009 and 2013, he was group director for the Other Mining and Industrial portfolio at Anglo American, where he was responsible for a global portfolio of mining and industrial businesses for disposal or turnaround as part of a programme to maximise shareholder value.

Read: Anglo American pays out record $4.1bn to shareholders in H1

He was appointed CEO of Anglo American’s Copper operations in 2008, prior to which he served as joint interim CEO of Anglo American Platinum from 2007 (having served on the board since 2004). From 2004 to 2007, Wanblad served as executive director of projects and engineering at Anglo American Platinum.

He started his career at Johannesburg Consolidated Investment (JCI) Company in 1990. He holds a BSc in Mechanical Engineering and a GDE in Industrial Engineering, both from the University of Witwatersrand, South Africa.

Said Cutifani in a statement released on Wednesday: “There has been no greater privilege for me than leading Anglo American and our incredible people. Together, we have transformed our competitive position and led the way towards a very different future for mining – a safer, smarter future that delivers enduring value for all our stakeholders. By delivering our promises, we have established the credibility and capabilities that are the foundation for Anglo American’s next phase of growth. I can think of no better leader than Duncan to pick up the baton and pursue the many opportunities that lie ahead for our business.”

Read: Anglo American through the ages

Though Cutifani steps down as CEO on April 19, 2022, Anglo says he will remain on until June 2022 to support the transition. Mr Cutifani will be expected to maintain a holding of Anglo American shares equivalent to four times his salary on cessation, for a period of two years, says the Anglo statement.

Wandblad was the standout candidate to take over the helm at Anglo American, said Anglo chair Stuart Chambers in a media call on Tuesday: “The board’s appointment of Mark Cutifani was an inspired decision that has served Anglo American and all its stakeholders well over almost a decade. Beyond his unquestionable mining expertise, his personal qualities as a leader to inspire people towards an ambition are second to none. He has led his executive team with distinction through thick and thin to transform Anglo American’s performance and prospects, helping build a culture of self-belief and resilience. Mark’s legacy in the areas of safety, the power of engagement, and his vision for a very different and sustainable future for mining enabled through technology, deserve particular recognition. The board is enormously grateful to Mark for his unerring commitment and all that he has achieved.”

Cutifani was appointed in 2013, and reportedly developed a close working bond with Wanblad during that period.

Says Wanblad: “Having started my career underground as a junior engineer, I have never lost sight of what it takes to produce the metals and minerals that are ever more vital to support our life on this planet. Our responsibility to do so safely and sustainably, including meeting our employees’ and stakeholders’ expectations of us, has never been greater. Through the way we work, the technologies we are deploying to drive us towards our sustainability goals, and the breadth of opportunities I can see, we are determined to live up to that promise.”

Responding to media questions, Wanblad says challenges that face all mining companies are dealing with regulators and communities, managing inflation and the rollout of organic projects that have already been announced.

Anglo says Tony O’Neill, head of technical, and chief finance officer Stephen Pearce, remain committed to working with Wanblad in the next phase of its growth. Pearce and Bruce Cleaver, CEO of De Beers, were likely among the contenders for the Anglo CEO position.

SA secures R131bn commitment to transition to low carbon economy

Written by Ciaran Ryan. Posted in Journalism

UK, US, France, Germany and the EU to assist SA in making the shift. From Moneyweb.

The goal is to achieve 'net zero' emissions by phasing out coal, curtailing deforestation, accelerating the switch to electric vehicles, and encouraging investment in renewables. Image: Getty Images
The goal is to achieve ‘net zero’ emissions by phasing out coal, curtailing deforestation, accelerating the switch to electric vehicles, and encouraging investment in renewables. Image: Getty Images

President Cyril Ramaphosa announced on Tuesday that SA has concluded a historic agreement to secure R131 billion to finance the country’s transition to a low carbon economy.

A statement from the president’s office says partner countries – the US, UK, France, Germany and the EU – will mobilise $8.5 billion (R131 billion) over the next three to five years through a range of financial instruments, including grants and concessional finance, which typically come with softer terms than normal market-related loans.

The announcement comes shortly after the COP26 United Nations Climate Change Conference kicked off in Glasgow, Scotland on Sunday (October 31).

The event is a follow-on from the COP21 conference of 2015 that resulted in the Paris Agreement where signatory countries agreed to limit global warming to below two degrees and to make more money available to deliver on these aims.

COP26, which was delayed for a year due to the Covid outbreak, is where countries are expected to update their plans for reducing carbon emissions.

The goal is to achieve ‘net zero’ emissions by the middle of this century by accelerating the phase-out of coal, curtailing deforestation, accelerating the switch to electric vehicles and encouraging investment in renewable energy.

Read: COP26: What G-20 leaders agreed on coal, methane and net-zero

A big moment for SA

Tracey Davies, executive director at climate activist group Just Share, says this announcement represents a big moment for SA, and a significant shift in political will on climate action.

“For months, the government has been saying that the country needs support from the developed world to help us transition to a low-carbon economy,” says Davies. “It now has that support, and so there are no more excuses.”

She adds: “To maintain credibility and trust, and to ensure that this is only the beginning of just-transition investment and financing, the money must be spent transparently, and with a focus on social and environmental justice for the most vulnerable.

“It must not be used to subsidise business as usual for big polluters, enrich politicians or corporate elites, or for investment in gas.”

Read: COP26 to set important new commitments for the whole world

Alex Lenferna, a campaigner at climate activist organisation 350Africa.org, says if done right, this deal could pave the way to a renewable energy future that works for all.

The ‘biggest obstacle’

“To help make such a reality possible, the Climate Justice Coalition has been calling for a Green New Eskom suited to the demands of the 21st Century,” says Lenferna.

“We have also been protesting the biggest obstacle to change, namely Minister [Gwede] Mantashe and his Department of Mineral Resources and Energy.

“They want to keep us locked into outdated, expensive and polluting coal and gas, rather than embracing the cleaner, more affordable and job-creating energy future that could be unlocked.”

Renewable energy might not be enough

However, not everyone is convinced that renewable energy will deliver anything like what the country needs to sustain itself as it transitions to a low-carbon future.

Says Des Muller, spokesperson for the SA Nuclear Build Platform: “It’s great to see the earlier discussions [on climate change] materialise into a complementary partnership. I am however surprised that developed countries are trying to convince developing countries to repurpose their retired coal power plants with renewables. These sites were not selected for their excellent solar or wind resources, but for their abundant coal supplies.

“You would be lucky if renewables would replace even 10% of the capacity of the coal power plant,” says Muller.

“The skills developed in running coal power plants will be wasted on maintaining a solar power plant,” he adds.

“Small modular reactors would be better suited to repurposing a coal power plant. You enhance your energy security, drastically reduce your emissions and up-skill the existing workforce, which also aligns well with the intended objectives of this partnership.”

The announcement from the president’s office says the agreement just concluded was motivated by the need for international communities to collectively halve their greenhouse gas emissions by 2030, and achieve net zero emissions by 2050.

Care must be taken not to harm vulnerable communities

This must be a “just, equitable and inclusive transition for workers and affected communities so that all are protected against the risks and benefit from the opportunities presented by this transition, and no one is left behind”, reads the statement.

It recognises that the transition has the potential to negatively impact certain sectors of the economy, such as mining, energy, manufacturing and transport.

The plan envisages developing new economic opportunities such as green hydrogen energy and electric vehicles to soften the shift to a low-carbon future.

Read: Deliver on promises, developing world tells rich at climate talks

Efforts will be made to protect vulnerable workers and communities, especially coal miners, women and youth, while at the same time stimulating jobs and business creation through decarbonisation and the shift to alternative energy sources.

A task force is to be created and will have six months to plot the way forward, set the terms of finance, and identify initial sources of finance.

Within a year, a more comprehensive financial plan for reducing Eskom’s financial sustainability will be proposed, while means of addressing the country’s longer-term funding needs to lower emissions will be devised.

Read: Eskom say meeting pollution limits would cost R300bn

Death threats against advocate representing Zimbabweans in high court

Written by Ciaran Ryan. Posted in Journalism

Advocate Simba Chitando has received death threats after it was publicised that he had applied to the high court for Zimbabweans to receive permanent residence in SA. From Moneyweb.

SA has been reported to the International Criminal Court over xenophobic attacks against foreign truck drivers, more than 200 of whom have been murdered in recent years. Image: Siyabonga Sishi/Reuters
SA has been reported to the International Criminal Court over xenophobic attacks against foreign truck drivers, more than 200 of whom have been murdered in recent years. Image: Siyabonga Sishi/Reuters

Advocate Simba Chitando, who is representing some 250 000 Zimbabweans in the Gauteng High Court in their quest to become permanent residents of SA, has received multiple death threats since Moneyweb first broke the story.

Read: Zimbabweans ask Gauteng High Court to declare them permanent residents

Chitando told Moneyweb his Twitter account has been lit up with hateful comments about Zimbabweans, but some of the more disturbing threats came from anonymous callers.

“I’ve had several death threats, and one person said he wanted to strangle me. It’s disconcerting and is not a good look for SA, particularly given its history of xenophobic attacks in the not so distant past.”

Chitando says he has had to confront taking on private security to ensure his safety, something he never imagined would happen. “It’s the nature of the business we are in as legal counsel and advocates. We’re often representing people or groups who may pose a threat to some perceived interest.

“It’s not the first time I have received threats as an advocate, but this is certainly the most alarming.”

SA has been reported to the International Criminal Court (ICC) at The Hague in the Netherlands over xenophobic attacks against foreign truck drivers, more than 200 of whom have been murdered in recent years. The ICC says it is monitoring the situation of foreign drivers in SA, though so far has declined to open an investigation.

Read:Attacks on trucks are an attack on the economy

Protesters, thieves target South African truck operators

Foreign truck drivers attacked under cover of looting, demand compensation from SA

The Legal Practice Council (LPC) issued a statement on Tuesday noting “with concern the xenophobic attacks on Advocate Simba Chitando who is involved in a court case regarding the issue of Zimbabwean Special Dispensation permits issued by the Department of Home Affairs. The LPC does not condone any xenophobic statements against any of our members.

“Legal practitioners should be allowed to fulfil their mandate of providing professional, principled inter-alia impartial, legal representation to the public without fear or favour.”

The LPC says the country is still reeling from the effect of xenophobic attacks on foreign nationals that took place in the recent past. These attacks have resulted in the loss of lives, displacement, destruction of property, loss of the source of livelihoods, and insecurity.

Legal process ‘must be allowed’

While acknowledging the sensitive nature of the issue, the LPC says the court process must be allowed to run its course in a transparent and impartial way. It also urges members of the public to report any instances of xenophobic attacks to the South African Police Service (SAPS).

The Zimbabwean Exemption Permit Holders Association has asked the high court to direct the Minister of Home Affairs to issue its members with SA ID documents on the grounds that they are permanent residents of SA in terms of the Immigration Act read together with the Identification Act.

Black Pharoah responded on Twitter: “We are not saying every Zimbabwean should leave but at least 10 at a time not 5 million that’s practically moving in and taking away from locals. I’d understand if most weren’t criminals but unfortunately they are.”

“All illegal immigrants must go home,” reads another.

Repercussions

Human rights advocates have warned that xenophobic attacks against foreign truck drivers and others in SA could incite tit-for-tat responses in other countries against South Africans.

Upwards of three million Zimbabweans are reckoned to reside in SA.

The SA Department of Home Affairs introduced various permit schemes to regularise the residence of status of Zimbabweans illegally in SA as a result of economic or political turmoil at home.

The court case brought by the Zimbabwean Exemption Permit Holders Association says the latest permit scheme, the Zimbabwean Exemption Permits, or ZEPs, expires in December 2021 and has not been renewed by Home Affairs.

The court papers argue that the affected Zimbabweans have been in SA for 10 years or more and know no other home.

The law provides for the issue of SA permanent residence to those affected.

Can EOH become the poster child for crisis turnaround?

Written by Ciaran Ryan. Posted in Journalism

The latest results bear the fruits of years of hard work and building a new culture under CEO Stephen van Coller. From Moneyweb.

Business students in the years to come may look on EOH as a case study in business turnaround. It’s not there yet, but the signs are positive. Image: Moneyweb
Business students in the years to come may look on EOH as a case study in business turnaround. It’s not there yet, but the signs are positive. Image: Moneyweb

The EOH share price over 10 years look like a classic Bell curve. It currently trades at one-twentieth of its 2017 peak, at which point the salacious stories of corrupt public sector dealings sent it into freefall. Has it at last hit true bottom?

EOH share price

Source: ShareMagic

The results for the financial year to July 2021 released on Thursday may give the optimists something to cling to – a swing from R1.3 billion operating loss to R147 million operating profit.

The main engine of revenue was systems integrator business iOCO, which delivered R4.9 billion out of total group revenue of R7.9 billion, at a 10.7% margin. iOCO accounted for the bulk of Ebitda (earnings before interest, tax, depreciation and amortisation) of R524 million out of a group total of R667 million.

The next largest contributor to revenue was Nextec, with revenue of R1.9 billion, though it made an Ebitda loss of R35 million due to the wind-down of loss-making legacy projects.

Road to redemption

In May 2019 the company was faced with a wave of distrust and anger.

Announcing the results on Thursday, CEO Stephen van Coller presented a chart showing the efforts undertaken by the group to restore governance, or what he called “the road to green”.

In 2019, most of the required governance functions were below par, or worse, but by 2021 virtually all had been restored to health.

Business students in the years to come may look on EOH as a case study in business turnaround. It’s not there yet, but the signs are more positive. Three years ago, EOH was a toxic brand associated with corrupt public sector tenders. Van Coller and his team have worked hard to expunge that association, and the fruits of that effort are starting to come through.

For example, the group has more than 50 partnerships with original equipment manufacturers (OEMs), who in prior years were loath to offer it anything more than one-year business renewals. This year, many of these OEMs have signed longer-term contracts, allowing EOH to budget with better certainty. In 2020, EOH’s forward load (the budgeting carry-over from one year to the next) was 45%, now it is more than 55% and rising.

New deals

It also won 441 deals worth over R3.1 billion from the public sector, and managed to avoid being blacklisted for past corrupt activities.

A bid review committee scrutinises these deals for pricing and governance, and makes sure they meet all the legal and regulatory requirements. All problematic legacy contracts have been closed, allowing EOH to focus on the next phase of its evolution.

EOH is stacking up some interesting growth projects built around intellectual property, such as software using artificial intelligence to pick up fraudulent and duplicate claims in the funeral and motor sectors, with possibilities to expand into the medical claims insurance business, and a new payroll management system that checks for duplication and over-claiming.

Earlier in the Covid-19 pandemic EOH developed an automated grant application service to assist millions of South Africans to apply for grants online, and it did this in 48 hours.

Just this week Moneyweb reported on the tragic death of former CFO John King (61), who reportedly passed away from pneumonia, while he and former CEO Asher Bohbot were being sued by EOH for billions of rands in damages for governance lapses when they led the company. The charges against King and Bohbot include delinquency, breach of fiduciary duties and breach of contract.

Read:ANC heavyweights fingered in EOH corruption storm

Former EOH finance chief John King dies amid R1.7bn damages claim

Other former directors also face charges following a 2019 ENSafrica investigation uncovered evidence of widespread wrongdoing at EOH. This came after Microsoft terminated its relationship the IT group over a suspect Department of Defence contract.

Results

On the financial front, debt is down from R2.5 billion to R2 billion over the 2021 financial year (and down from R4 billion in 2018).

CFO Megan Pydigadu said R433 million had been paid over the last year to lenders, thereby reducing interest charges, while fresh agreements have been reached with lenders to reduce risks to EOH by modifying the lending profile.

The focus on exiting non-core and underperforming businesses has reduced revenue from R11.3 billion in 2020 to R7.9 billion in 2021, but the real benefit is visible in Ebitda margins – up from 3% in 2019 to 9% in 2021.

“Nextec is where our turnaround efforts are focused, and the results show the division is neutral in terms of profitability, but is significantly derisked,” says Pydigadu.

Cleaning out corruption

In a previous video presentation, Van Coller spoke about the lessons learned in cleaning out corruption in the organisation and highlighted some of the red flags.

One of these flags is a complex corporate structure, suggestive of an organisation at risk of corrupt practices.

“Culture beats strategy any day, and it has to come from the top,” says Van Coller.

Limited governance and compliance (such as one or two people signing off everything) are early indicators of possible corruption. To this end, board independence is crucial.

Another vital step in any corporate clean-up operation: make it easier for whistleblowers. “These will be your best policemen, but you have to make it easy for them.”

Two other lessons learned: Don’t use go-betweens – you don’t have much control over them, you don’t employ them, and even though you can sign contracts with anti-graft clauses in them, they still carry your brand.

Read: Blacklisting EOH now will punish the wrong people

“If you’re compromised even slightly, you cannot come back from that,” says Van Coller.

“What has kept us going at EOH is the realisation that 99% of people truly want to do the right thing. People want to subscribe to a moral code that makes them feel good and worthy.”


The ‘velvet gloves are off’ in the battle for Barbrook and Lily mines

Written by Ciaran Ryan. Posted in Journalism

Arqomanzi must be recognised as a creditor, and business rescue practitioners cannot amend rescue plans unilaterally, says high court. From Moneyweb.

Workers who have been waiting six years to get their jobs back will have to wait a few more months at least. Image: Shutterstock
Workers who have been waiting six years to get their jobs back will have to wait a few more months at least. Image: Shutterstock

The “velvet gloves are off between the fighting parties” in the battle for control of the Barbrook and Lily mines, according to Judge President Francis Legodi of the Mpumalanga High Court.

It’s now six years that the mines have been under business rescue. Earlier this year, it seemed that the rescue of Vantage Goldfields by Australia’s Macquarie Metals was a done deal, and all that remained was to dispense with a few legalities.

Now it doesn’t seem so cut and dried. Arqomanzi, which acquired from Standard Bank loan claims of R391 million and R189 million in two of the companies that control Barbrook and Lily, was this week declared to be a valid creditor.

Read: 6 years in business rescue, Barbrook and Lily gold mines cannot escape the court system

This makes it the largest creditor – something the business rescue practitioners (BRPs) refuted – and means it must be given a chance to vote on the proposed business rescue plan.

Battle for control

The mines went into business rescue after a support pillar at Lily Mine in Mpumalanga collapsed and claimed the lives of three workers.

The fate of the mines has been the subject of a hostile battle for control, pitting Macquarie Metals against Arqomanzi, whose financial backer is Hong Kong-registered Alpha Capital Group.

Legodi this week ruled that any transfer of the mining rights owned by Barbrook Mines and Makonjwaan Imperial Mining (which owns Lily) require ministerial approval in terms of Section 11 of the Mineral and Petroleum Resources Development Act (MPRDA).

The business rescue practitioners were further interdicted and restrained from misrepresenting the need to seek ministerial approval for any transfer of the mining rights.

The ruling also states that Arqomanzi lawfully acquired R189.7 million in Barbrook loans claims from Standard Bank, and the BRPs were ordered to recognise it as a creditor in the rescue proceedings.

Read:Dog fight over the carcass of Vantage Goldfields

Moves to reopen Lily and Barbrook gold minesSurreal happenings around Lily and Barbrook sale

The court ruled that Arqomanzi could now, in effect, vote R377 million in Vantage Goldfields, and R172 million in Barbrook Mines, which is sufficient to swing the vote for or against the business rescue plan in these companies.

This latest judgment throws open the battle for control of the Barbrook and Lily mines.

Mike McChesney, CEO of Vantage Goldfields, says Vantage had been granted leave to appeal an earlier judgment by Legodi in which the BRPs were instructed not to unilaterally amend the business rescue plans.

This latest judgment may also be appealed “should it be necessary,” says McChesney.

Macquarie ‘sidestepped ministerial scrutiny’

Arqomanzi argued in court that Macquarie Metals had managed to sidestep ministerial scrutiny as required under Section 11 of the MPRDA when it acquired a controlling interest in Vantage, which in turn owns the mining rights in Barbrook and Lily.

The latest court ruling supports that view, and obligates the BRPs to secure ministerial approval.

Arqomanzi CEO Neil Herrick says the Hong Kong investors have paid out R15 000 to each of 550 workers as a measure of goodwill and says these workers will be paid the entirety of their claims against the company once operations recommence.

Arqomanzi proposes injecting R390 million into mine infrastructure, such as the sinking of a decline shaft at Lily to recover the bodies of the deceased workers and to reopen the mine, refurbishing the metallurgy plant, and processing of tailings on the site.

The relaunch and optimisation of Barbrook – which has a more complex metallurgy than Lily – will be delayed until Lily is up and running.

Herrick says Arqomanzi has R550 million committed from Alpha Capital and the Industrial Development Corporation, but the Hong Kong investors are willing to stump up more cash, if needed.

Meanwhile, the fate of Barbrook and Lily mines and the workers, who have been waiting six years to get their jobs back, will likely have to wait a few months more for the courts to light the way forward.

Herrick says Arqomanzi is still awaiting a response from the BRPs over his claims that a fraudulent a letter of funding was used by Macquarie Metals shareholder Africa Pacific Capital.

The BRPs have denied these claims, and Vantage Goldfields put out a statement saying no bank would provide details about its customers in the way suggested by Arqomanzi.

There’s a revolution happening at local government level as elections loom

Written by Ciaran Ryan. Posted in Journalism

Dozens of community-led groups threaten to unseat incumbents who sat on their hands – or worse – as local government was pushed off a cliff. From Moneyweb.

Running water remains a dream for many, including residents in Marakong Village in QwaQwa in the Free State. Image: Siphiwe Sibeko/ Reuters
Running water remains a dream for many, including residents in Marakong Village in QwaQwa in the Free State. Image: Siphiwe Sibeko/ Reuters

The upcoming local government elections will be the most vigorously contested in decades, as local community-led groups have sprung up around the country to challenge incumbent councillors seen as enablers of the breakdown of governance across the country.

One of these is the Setsoto Service Delivery Forum (SSDF) which is fielding 17 candidates in the Eastern Free State, in an area that encompasses the rural towns of Ficksburg, Clocolan, Senekal and Marquard.

These towns are ANC strongholds that may be in danger of falling to new political forces now gusting through the province, led by highly energised opposition candidates with plenty of ammunition with which to club the incumbents.

Other groups have sprouted in Qwaqwa, in Maluti a Phofung Municipality in the Free State, and in Parys, also in the Free State.

‘Enough’

Selloane Lephoi, SSDF spokesperson, says the reason for the emergence of these localised rebellions is citizen fatigue at watching their municipalities being drained of funds and skills as politically-connected individuals made fortunes from corrupt deals at ratepayer expense.

“We are going to win this election,” she says without hesitation.

“We know this because we’ve been to 90% of the households in our areas, and we have been listening to what people are saying. They are fed up with corruption, at having no water, broken sewage pipes and potholes. They want basic services, and they want economic opportunities.”

The SSDF cuts across race, class and profession.

Whites and blacks have found common cause in the campaign to bring back good governance to the local municipality. The SSDF public meetings have drawn an enthusiastic crowd eager for real change. Lephoi says there’s no question the ANC is about to be routed. “What we have to watch is that the election is not stolen, and we have put plans in place to make sure this does not happen.”

She adds: “Many people in this area are fed up with politics and are not interested in voting. These are the people we are busy campaigning to get to the voting booths on the day of election.

“Voter apathy is what got us into this mess, and this has got to be stopped now.”

From disillusioned to confident

The Azanian Independent Community Movement (AICM) is contesting 12 municipalities in North West Province, and is confident of winning at least half of these, according to local government co-ordinator, Mandla Mpempe, a former ANC activist who left the party to crusade against corruption and graft at the local level.

Read:‘Thugs’ infiltrate ANC before vote – report

ANC unlikely to win Johannesburg majority

Mpempe formed the non-profit Centre for Good Governance and Social Justice to highlight instances of corruption at local government level and has been a thorn in the side of municipal administrators in North West.

Mpempe’s activism appears to have earned him the enmity of local administrators, who denied the AICM the use of a local multi-purpose hall in Mamusa in North West, while allowing other parties free access to the same facility. The AICM was formed to fill a void left by all of the existing political parties.

“We are not prepared to stand by and let the same councillors lie and make false promises so they can get re-elected and draw a nice salary,” says Mpempe.

“People here are tired of the corruption, the arrogance of the ANC councillors who they never hear from once they are elected, and the general disregard for the rule of law and requirements of public office. So we will be fielding 120 candidates across 12 municipal areas, and we are already a force to be reckoned with in this area.”

Like the SSDF, the AICM is less interested in waging ideological battles forged in Moscow or Washington than in delivering practical improvements to the lives of local residents.

To this end it too cuts across race and class divides. Yet its manifesto is progressive, pro-poor, anti-corruption and promises sweeping improvements in service delivery.

‘A manifesto like no other’

Last week the Makana Citizens Front (MCF) in the Eastern Cape launched its manifesto at Soccer City in Nelson Mandela Bay to an enthusiastic crowd.

“This is a manifesto like no other: it is the people’s voice, not a document written by a committee or an advertising agency. The opening line of the Freedom Charter is ‘The people shall govern!’ MCF’s manifesto brings that to life,” says Lungile Mxube, MCF’s coordinator.

History was made last year when the Eastern Cape’s Provincial Executive was ordered to dissolve Makana Municipality and appoint an administrator until a new council is elected.

The ANC decided to appeal the damning judgment, which ruled that it had failed to provide services to the community in a sustainable manner, nor did it offer a safe and healthy environment, among other findings.

Read: Municipal election candidates must honour their promises: Ramaphosa

The MCF was formed to restore ethical leadership to Makana, and like the other groups fighting the ANC across the country, is committed to genuine non-racialism, while deploring xenophobia and racial polarisation. Mxube tells Moneyweb that while his group has been packing out halls and venues where it is holding rallies, the ANC has struggled to raise a crowd of 20.

“We’re a non-political organisation that does not have its headquarters in Johannesburg, nor does it have a provincial headquarters.

“Our mission is simple: we want a return of basic services, we want to work with law enforcement to lock up corrupt officials and to combat violence of all kinds, we want to get rid of ghost workers who draw salaries every month, and we will investigate corrupt tenders that have been awarded over the years,” says Mxube.

“We will be contesting 13 of the 14 wards in this area, and we are absolutely confident of winning and getting rid of the incumbents who allowed this terrible situation to develop.”

The need for change

The state of local governance in SA is appalling, as the Auditor-General constantly reminds us.

Earlier this year we learned that just 27 municipalities out of 257 countrywide received clean audits. The same AG report indicates that 163 of the 257 municipalities – nearly two out of every three – are currently in financial distress.

Read: The extent of SA’s municipal problem? R51bn, says Ratings Afrika

A new report by PwC – ‘South Africa Economic Outlook, Elections 2021: Improving municipal finances to support the socio-economic recovery’ – suggests that municipalities are in real financial trouble as transfers from national to local government are falling rather than rising.

Total transfers actually reduced from R138.5 billion to R138.4 billion in 2021/2. While ‘conditional grants’ from national to local government are being increased from R40 billion to R45.5 billion, the ‘equitable share’ is being reduced from R84.5 billion to R78 billion.

Says PwC: “With municipal elections happening on November 1, political parties are campaigning with promises of improving municipal service delivery outcomes.

“However, the financial health of municipalities is a particular concern for service delivery and the country’s socioeconomic recovery over the short to medium term. Municipalities require adequate funds to provide the essential services needed to create an environment conducive for doing business and growing the economy following last year’s recession. To fund those services, they rely on a mix of transfers from the national government and their own revenue sources.”

Municipal revenue from national government (Rbn)

Source: National Treasury

This small town rebellion sometimes ends up in court, as when residents of Kgetlengrivier in North West Province were ordered by the North West High Court to take control of the area’s sewage and water works after the local municipality had run the plants into the ground and abandoned post.

In the farming town of Bethal in Mpumalanga, a local residents association recently dragged the local Govan Mbeki Municipality and Eskom to court, claiming that power cuts of up to 20 hours a day are threatening the livelihoods and health of residents.

Read:North West residents take matters into their own hands, and get court’s blessing

Mpumalanga residents head to court to halt 20-hours-a-day power cuts

Neil Gopal, CEO of the SA Property Owners Association (Sapoa) says we should not rejoice in instances where citizens are effectively running municipalities.

“These are signs of dismal failure on the part of government which will come with its own consequences. We are of course concerned about these court judgements [such as the one involving Kgetlengrivier].

“We are in uncharted territory here,” says Gopal. “What can we expect next? For the Constitutional Court to hand over the running of the country to its citizens?”

The civic forums sprouting across the country are no longer waiting for their local governments to reform themselves, nor do they believe promises of “give us another chance and we’ll do better next time”.

They’re taking the revolution right to the door of broken municipalities, and are planning, not just to win a few seats, but to take over.

Cabinet approves replacement for 56-year-old nuclear reactor at Pelindaba

Written by Ciaran Ryan. Posted in Journalism

It comes at a cost of about R12bn and should be operational by 2032. From Moneyweb.

The Pelindaba nuclear research centre near Hartbeespoort Dam in North West Province. Image: Necsa website
The Pelindaba nuclear research centre near Hartbeespoort Dam in North West Province. Image: Necsa website

Cabinet has approved a replacement for the 56-year-old Safari-1 nuclear reactor at Pelindaba, which catapulted South Africa to world leadership in the production of medical isotopes used in the treatment of cancer.

The Safari-1 reactor is operated by the South African Nuclear Energy Corporation (Necsa) at Pelindaba, west of Pretoria. It will be replaced by a multipurpose reactor (MPR) which is expected to cost about R12 billion, with construction expected to start in 2026 and be completed in 2032.

“There will be some 5 000 direct and 26 000 indirect jobs created during construction,” says Necsa chair David Nicholls.

“The nuclear reactor will provide employment to about 750 full-time employees and an additional 3 800 indirect jobs for its operation and fulfilment of its research mandate at the NBLC [Neutron Beam Line Centre] during its operational lifetime.”

The MPR project moved into the feasibility phase in April 2021, a process that will last until about March 2023. Part of this process includes a request for information (RFI) from potential vendors, which will also indicate potential cost. The RFI is expected to go out to the market next month.

Flexibility and efficiency

The new reactor will have a life of about 60 years and will have far greater flexibility and efficiencies than the current reactor.

Necsa CEO Loyiso Tyabashe says the new reactor will ensure SA remains among the top four producers of radioisotopes in the world and is able to continue its cutting edge research and development in this field.

The MPR provides a wider range of manufacturing possibilities and potential markets that can be harnessed, and will allow Necsa to produce new radioisotopes that are seen as the future in therapeutic nuclear medicine.

This includes the production of short-range radioisotopes that will be delivered by smart delivery systems to tumour cells, radiating cell by cell and thereby eliminating the cancer while preserving surrounding healthy tissue.

Relationship with regulator has ‘stabilised’

As Moneyweb previously reported, the National Nuclear Regulator (NNR) shut down the Safari-1 reactor on several occasions over violations of safety protocols, which were administrative rather than physical breaches of safety.

Read:SA’s nuclear medical plant shut down – again

Suspended nuclear company execs smell rat over adverse audit

Axed Necsa board blames resistance of ‘privatisation by stealth’ for dismissal

These shutdowns resulted in Necsa losing market share to competitors. Nicholls says the situation with the regulator has stabilised over the last year, allowing Necsa to regain lost market share.

Necsa currently has about 20% of the world market for medical isotopes.

Due to the short half-life of these medicines, products have to be shipped to patients within a day of manufacture to have the desired therapeutic effect. The reactor shutdown by the regulator forced customers to approach competitors capable of meeting the strict supply timelines for therapeutic treatment.

Leading role in world market

The reactor is widely used by researchers and academia in SA and across the continent, giving SA a seat at the nuclear table internationally. In a statement, Necsa says the MPR will expand these research capabilities and outputs substantially in that it will be equipped with a cold neutron source that extends the delivered range of neutrons to long wavelengths (very low energies).

“The inclusion of a cold neutron source in the MPR will also make it the only cold-neutron source available in Africa, and thus may attract interest from the region and continent,” says Necsa.

“This capability will be located at the Neutron Beam Line Centre (NBLC) that will be associated with the MPR and will act as a new large-scale research hub, equipped with an extensive suite of neutron-scattering applications.”

The new reactor will benefit the domestic and international healthcare sector, particularly in the treatment of cancer, through Necsa’s leadership in the research and production of therapeutic radiopharmaceuticals.

Other sectors that will benefit from the MPR are mining and industry, power generation, agriculture, geosciences, forensics and education.

“The MPR project is expected to have significant social, economic and environmental benefits for the country. A substantial portion of products will be sourced locally during the MPR construction, [and] thus boost the local and national economy,” says Nicholls.

Read: SA’s nuclear energy housekeeping costs – who will foot the bill?

Two LSE-listed Umuthi Healthcare execs arrested on charges of fraud

Written by Ciaran Ryan. Posted in Journalism

Amid allegations funds from share, sales were deposited into personal bank accounts. From Moneyweb.

Image: REUTERS/Toby Melville/File Photo
Image: REUTERS/Toby Melville/File Photo

London Stock Exchange-listed Umuthi Healthcare Solutions CEO Gert Viljoen (42) and Connie van Nieuwkerk (52) were arrested last week and appeared in the Palm Ridge Magistrate Court, south of Johannesburg, on charges of fraud.

It is alleged shareholders were defrauded of millions of rands between March 2019 and May 2021 after being enticed to purchase shares that in many cases did not exist. Shareholders claim 28 million shares are missing.

Though the company was listed on the LSE, the two arrested executives are South African, as are the majority of shareholders who say they have been defrauded.

Viljoen was released on R20 000 bail, and his hearing was postponed to December 1, 2021.

Moneyweb understands that Van Nieuwkerk, who also goes under the name Connie van Vliet, remains in custody, and her bail hearing has been postponed to November. She was previously arrested on a R5.5 million fraud charge that pre-dated the alleged sale of these shares in Umuthi. She was formerly a director and CFO of African Dawn and Alliance Mining. In March 2020, she was fined a total of R46 million by the Financial Sector Conduct Authority (FSCA) for misrepresenting the African Dawn’s financial statements by R274 million, and for similar financial deceptions at Alliance Mining. Van Nieuwkerk then moved on to Umuthi Healthcare Solutions and was in charge of the London listing process.

Shareholders were given bank accounts where the monies were to be deposited, which turned out to be the suspects’ personal bank accounts.

Thirty shareholders lost R50 million due to misrepresentation, says the SAPS.

The matter was reported to the Hawks’ Serious Commercial Crime Investigation team in Johannesburg for investigation.

The SAPS says its investigations are continuing and more arrests are imminent.

Umuthi was listed on the Standard Board of the London Stock Exchange (LSE) in March, but trading in the shares was suspended six days later, after questions were raised about alleged misrepresentations in the listing prospectus.

Potential investors were apparently enticed by promises of a £4 listing price, but the shares ended up trading at less than a tenth of this.

The listing was bedevilled by mishaps and resignations. The company has cycled through two CFOs in the last six months, Pieter Grimes and Phillip van Huyssteen. It currently sits without a CFO, according to a Regulatory News Announcement (RNS – the London equivalent of Sens) issued this week, though the hunt is on for a suitably experienced UK-based replacement “to take the restructured business forward upon restoration of the listing.”

UK-based director Colin Bloom recently resigned, and Memery Crystal, listed in the prospectus as solicitors to Umuthi, issued a statement saying that it had terminated its engagement with Umuthi in December 2020. There was also a change in auditor soon after the March 2021 listing, when PKF Littlejohn raised concerns about certain statements in the prospectus. Jeffreys Henry then took over as auditor.

Moneyweb is in possession of emails purportedly written by Umuthi CEO Viljoen to Van Nieuwkerk where he accuses her fraud, and of threatening him and his family. Viljoen also accuses her of selling shares she does not have and forcing the company to a standstill.

The RNS issued this week informs shareholders of Viljoen’s arrest, but says charges have not formally been put to him, “though the allegations appear to relate to over-the-counter sale of Umuthi shares, transactions over which the Company and Mr. Viljoen had no control or involvement.”

Anthony Morris, the mandated representative of the largest shareholder group which collectively owns 40 million shares out of 92 million in issue, says the Umuthi listing on the LSE was a catastrophic failure at multiple levels: from the banks that allowed millions of rands in share sale revenue to be deposited in the personal bank accounts of Viljoen and Van Nieuwkerk, to the alleged misrepresentations that managed to slip past the LSE.

The principal asset in Umuthi is pharmaceutical supplier Lems, which the prospectus says generated revenue of £447 831 and a gross profit of £13 971 for the period ended February 29, 2020.

Doubts have been cast by some investors as to the authenticity of the financial figures presented in the prospectus, particularly the revenue figure (which is covered by the international accounting standard known as IFRS 15).

Lems, the key source of this revenue, supposedly operates out of a warehouse in Johannesburg, but when Umuthi shareholders went to verify this, they found a deserted building that had apparently been unoccupied for months. In the RNS issued this week, Umuthi says “the warehouse was temporarily closed from early 2020 due Covid 19 Lockdown regulations and cost efficiencies.”

Umuthi’s online prospectus also claims that Lems holds a licence with the Medicines Control Council (MCC), yet Morris says there is no evidence of this when the licence number is entered on the MCC website.

The Umuthi RNS issued this week advises shareholders that the company is undergoing management restructuring and working on a business plan for the future.

It also advises that management is working on securing financing from shareholders and remains confident of the viability of the company “with their continued support.”

As for the going concern status of the company, Umuthi chairperson Shaun Gresse, says: “The board of directors would like to highlight that as a result uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern without shareholders continued support.”

Morris says this wording is setting up shareholders for blame for the collapse of the listing.

In response to questions sent by Moneyweb surrounding the arrests and the background to Umuthi’s suspended listing, Viljoen replied that he could not comment as the matter is sub judice.

According to Daily Maverick, Viljoen denied the charges of fraud as claimed by SharePropets.com, a market-related website, and others. He claims the listing went through a rigorous verification process and was scrutinised by the UK regulator, the Financial Conduct Authority (FCA).

Morris claims that various members of their group have irrefutable evidence that the FCA’s systems and processes were completely compromised throughout the Umuthi engagement. A shareholder group’s Facebook page will go live in the coming week where evidence of alleged wrongdoing at Umuthi will reportedly be displayed.

To be continued.

The R1m bitcoin is now in sight. Where to now?

Written by Ciaran Ryan. Posted in Journalism

It was inevitable, say crypto watchers. The bull market is far from over, but it will be a bumpy ride. From Moneyweb.

Image: Chris Ratcliffe/Bloomberg
Image: Chris Ratcliffe/Bloomberg

For the second time this year, crypto came within sniffing distance of R1 million this week. On international exchanges, it set new all-time highs on Wednesday, trading at $66 000.

By way of comparison, bitcoin traded at around R14 000 at the start of 2017, and ended that year at R310 000, before commencing a brutal 84% drawdown that took it all the way back to R50 000. It then started a long climb to R974 000, which is where it traded on Wednesday.

It came within a whisker of R1 million in April, but failed to cross that key hurdle, and instead lost roughly half it value over the subsequent months before bottoming out at around R445 000 in July.

Bitcoin’s ability to surprise to the upside remains undiminished. It has increased 70-fold since the start of 2017, with some analysts now pegging $80 000 and even $100 000 as the next price targets, with much of the momentum coming from news that bitcoin ETFs (exchange-traded funds) have been green-lighted by US regulators.

“(Reaching R1 million) was inevitable and we’re just beginning,” says Farzam Ehsani, CEO of crypto exchange VALR.

“Bitcoin and crypto are still a dot on the financial horizon of the world. It will continue to become more and more prominent with the passage of time.”

Says Marius Reitz, Africa GM for crypto exchange Luno: “The bitcoin price started trending at the beginning of the month when speculation began on the coin’s ETF approval. The first bitcoin ETF $BITO started trading this week and this news is being priced in. We’re seeing a lot of positive sentiment in the market, not only on the ETF side, but also bitcoin being recognised as legal tender in El Salvador and progress on the regulatory front. The cryptocurrency market remains volatile and the price isn’t guaranteed to only go up. We’ve seen many similar rallies and pullbacks over the years.”

Luno, like most exchanges in SA, has seen accelerating customer sign-ups as the crypto bull market builds a head of steam. It added more than one million new customers in just over four months, says Reitz, with some 30% of these coming from SA.

Adds Richard da Sousa, CEO of crypto exchange AltcoinTrader: “R1 million is not an international milestone, but it is for us South Africans. We’ve been predicting R1 million for bitcoin for many years, even though others were scoffing at the suggestion – but we’re just about there.”

Josh Miltz, co-founder of crypto investment company BitFund, says the R1 million bitcoin is something he expected would arrive sooner or later, and this makes it the sixth most valuable asset in the world.

A decade of records

“As the fastest growing asset class of the decade, returning 10 times more than the Nasdaq 100 on an annualised basis, bitcoin’s continued growth is not a surprise, except perhaps to regulators, who continue to frown upon one of the best assets in the market.

“Since 2011, bitcoin’s cumulative gains equate to a whopping 20 000 000%; 2013 was bitcoin’s best-performing year, during which it gained 5 507%.

“Bitcoin is the fastest asset to reach a $1 billion market capitalisation, which it did in 12 years,” says Miltz.

Bitcoin posted annualised losses for just two out of 12 years since it was launched, falling by 58% and 73% in 2014 and 2018 respectively. History suggests it is likely to continue growing, albeit with returns lower than previous years.

Adds Miltz: “In our view, as the cryptocurrency market continues to mature, and as innovation continues, bitcoin’s growth will drastically increase. It should come as no surprise that assets may, in the future, be priced in bitcoin, similar to how numerous other cryptocurrencies are now priced in bitcoin. As global citizens start pricing their financial systems in bitcoin as opposed to a fiat currency denomination, such as rands, we have no doubt that this will cause the price of bitcoin to increase and it will arguably become one of the most valuable assets on the planet. In fact, we believe that countries will either adopt bitcoin as a currency, like El Salvador has done, or invest their treasury reserves into bitcoin.”

While the R1 million-mark may be a way-stop to much higher prices, investors should expect bumps along the way. Trends can change and the volatility should be monitored by investors, says Miltz.

“It is easy to get caught up and fear missing out in a bull market, so all allocations to cryptocurrencies should be made with risk capital, and follow the principles of diversification to minimise risk.

“For this reason, we always recommend investing in cryptocurrency portfolios, to ensure a wide variety of exposure to various cryptocurrencies.”