Custom Search

Tag Archive | "early"

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Living the FATCA life in Africa: New U.S. tax regulations add to burden of compliance on financial institutions across Africa

Posted on 21 May 2013 by Eugene Skrynnyk

Eugene Skrynnyk

Eugene Skrynnyk (CIPM, MILE, BComm) is a senior manager and specialist for the asset management industry in the Africa Sub-Area at Ernst & Young in Cape Town, South Africa.

Eugene Skrynnyk is the Ernst & Young Senior Manager and specialist for the asset management industry in the Africa Sub-Area.

Eugene holds a Certificate in Investment Performance Measurement (CIPM), Master of International Law and Economics (MILE) and Bachelor of Commerce and Finance (B.Comm.).

 

When the U.S. Department of the Treasury (“Treasury”) and Internal Revenue Service (“IRS”) issued final Foreign Account Tax Compliance Act (“FATCA”) regulations in January of this year, there was a sigh of relief that the financial services industry in Africa could begin to digest FATCA’s obligations. However, achieving FATCA compliance remains a challenge for banks operating across Africa.

FATCA is already law in the U.S. but negotiations are under way to enshrine it in national law of countries around the world via intergovernmental agreements (“IGAs”) with the U.S. While a variety of African jurisdictions will each face unique obstacles with FATCA compliance, many in the industry share a general unease with FATCA’s scope, as well as scepticism that FATCA’s rewards (an estimated US$1 billion in additional tax revenue annually) justify its expenses. Generally, FATCA attempts to combat U.S. tax evasion by requiring that non-U.S. financial institutions report the identities of U.S. shareholders or customers, or otherwise face a 30% withholding tax on their U.S. source income. Overwhelmingly, FATCA compliance obligations apply even where there is very little risk of U.S. tax evasion and it impacts all payers, including foreign payers of “withholdable payments” made to any foreign entities affecting deposit accounts, custody and investments.

General issues in Africa

Concerns about privacy abound. FATCA requires financial institutions to report to the IRS certain information about U.S. persons. For this reason, IGAs are being put in place so that institutions could instead report information to their local tax authority rather than the IRS. In some jurisdictions, investment funds and insurance companies are permitted to disclose information with client consent. In other jurisdictions, such disclosure is prohibited without further changes to domestic law. The process to make necessary changes locally involves time and effort.

Cultural differences in Africa need to be considered. In certain situations FATCA requires that financial institutions ask a customer who was born in the United States to submit documents explaining why the customer abandoned U.S. citizenship or did not obtain it at birth. African financial institutions never pose such a delicate and private question to their customers. Even apparently straight-forward requirements may pose challenges; for example, FATCA requires that customers make representations about their identities “under penalty of perjury” in certain situations. Few countries have a custom of making legal oaths, so it would not be surprising if African customers will be reluctant to give them.

FATCA contains partial exemptions (i.e., “deemed compliance”) and also exceptions for certain financial institutions and products that are less likely to be used by U.S. tax evaders. It still has to be seen to what extent these exemptions have utility for financial institutions in Africa. For example, the regulations include an exemption for retirement funds and also partially exempt “restricted funds” — funds that prohibit investment by U.S. persons. Although many non-U.S. funds have long restricted investment by U.S. persons because of the U.S. federal securities laws, this exemption could be less useful than it first appears. It should be pointed out that the exemption also requires that funds be sold exclusively to limited categories of FATCA-compliant or exempt institutions and distributors. These categories are themselves difficult for African institutions to qualify for. For example, a restricted fund may sell to certain distributors who agree not to sell to U.S. persons (“restricted distributors”). But restricted distributors must operate solely in the country of their incorporation, a true obstacle in smaller markets where many distributors must operate regionally to attain scale.

Other permitted distribution channels for restricted funds are “local banks,” which are not allowed to have any operations outside of their jurisdiction of incorporation and may not advertise the availability of U.S. dollar denominated investments.

Challenges and lessons learned – the African perspective

Financial institutions will have to consider what steps to take to prepare for FATCA compliance and take into account other FATCA obligations, such as account due diligence and withholding against non-compliant U.S. accountholders and/or financial institutions.

The core of FATCA is the process of reviewing customer records to search for “U.S. indicia” — that is, evidence that a customer might be a U.S. taxpayer. Under certain circumstances, FATCA requires financial institutions to look through their customers and counterparties’ ownership to find “substantial U.S. owners” (generally, certain U.S. persons holding more than 10% of an entity). In many countries the existing anti-money laundering legislation generally requires that financial institutions look through entities only when there is a 20% or 25% owner, leaving a gap between information that may be needed for FATCA compliance and existing procedures. Even how to deal with non-FATCA compliant financial institutions and whether to completely disengage business ties with them, remains open.

The following is an outline of some of the lessons learned in approaching FATCA compliance and the considerations financial institutions should make:

Focus on reducing the problem

Reducing the problem through the analysis and filtering of legal entities, products, customer types, distribution channels and account values, which may be prudently de-scoped, can enable financial institutions to address their distinct challenges and to identify areas of significant impact across their businesses. This quickly scopes the problem areas and focuses the resource and budget effort to where it is most necessary.

Select the most optimal design solution

FATCA legislation is complex and comprehensive as it attempts to counter various potential approaches to evade taxes. Therefore, understanding the complexities of FATCA and distilling its key implications is crucial in formulating a well rounded, easily executable FATCA compliance programme in the limited time left.

Selecting an option for compliance is dependent on the nature of the business and the impact of FATCA on the financial institution. However, due to compliance time constraints and the number of changes required by financial institutions, the solution design may well require tactical solutions with minimal business impact and investment. This will allow financial institutions to achieve compliance by applying low cost ‘work arounds’ and process changes. Strategic and long-term solutions can be better planned and phased-in with less disruption to the financial institution thereafter.

Concentrate on critical activities for 2014

FATCA has phased timelines, which run from 2014 to 2017 and beyond. By focusing on the “must-do” activities, which require compliance as of 1 January 2014 – such as appointing a Responsible Officer, registering with the IRS, and addressing new client on-boarding processes and systems – financial institutions can dedicate the necessary resources more efficiently and effectively to meet immediate deadlines.

Clear ownership – both centrally and within local subsidiaries

FATCA is a strategic issue for the business, requiring significant and widespread change. Typically it starts as a ‘tax issue’ but execution has impacts across IT, AML/KYC, operations, sales, distribution and client relationship management. It is imperative to get the right stakeholders and support onboard to ensure that the operational changes are being coordinated, managed and implemented by the necessary multidisciplinary teams across the organization. These include business operations, IT, marketing, and legal and compliance, to name but a few. Early involvement and clear ownership is key from the start.

Understand your footprint in Africa

Many African financial institutions have operations in various African countries and even overseas, and have strategically chosen to make further investments throughout Africa. The degree to which these African countries have exposure to the FATCA regulations needs to be understood. It is best to quickly engage with appropriate stakeholders, understand how FATCA impacts these African countries and the financial institutions’ foreign subsidiaries, and find solutions that enable pragmatic compliance.

What next for financial institutions in Africa?

Negotiations with the U.S. are under way with over 60 countries to enshrine FATCA in national law of countries around the world via IGAs. Implementation of FATCA is approaching on 1 January 2014 and many local financial institutions have either not started or are just at the early stages of addressing the potential impact of FATCA. In South Africa, only few of the leading banks are completing impact assessments and already optimizing solutions. Other financial services groups and asset management institutions are in the process of tackling the impact assessment. Industry representative in Ghana, Kenya, Mauritius, Namibia, Nigeria and Zimbabwe have started engaging relevant government and industry stakeholders, but the awareness is seemingly oblivious to date. In the rest of Africa, FATCA is mainly unheard of.

Financial institutions choosing to comply with FATCA will first need to appoint a responsible officer for FATCA and register with the IRS, ensure proper new client on-boarding procedures are in place, then identify and categorize all customers, and eventually report U.S. persons to the IRS (or local tax authorities in IGA jurisdictions). Institutions will also need to consider implementing a host of other time-consuming operational tasks, including revamping certain electronic systems to capture applicable accountholder information and/or to accommodate the new reporting and withholding requirements, enhancing customer on-boarding processes, and educating both customers and staff on the new regulations. Where possible, institutions should seek to achieve these tasks through enhancing existing initiations so as to minimise the cost and disruption to the business.

Conclusion

Financial institutions in Africa face tight FATCA compliance timelines with limited budgets, resources, time, and expertise available. This is coupled with having to fulfil multiple other regulatory requirements. To add to the burden, FATCA has given stimulus to several countries in the European Union to start discussing a multilateral effort against tax evasion. The support of other countries in the IGA process indicates that some of these countries will follow with their own FATCA-equivalent legislation in an attempt to increase local tax revenues at a time when economies around the world are under unprecedented pressure. The best approach for African financial services industry groups is to engage their local governments in dialogue with the IRS and Treasury, while for African financial institutions to pro-actively assess their FATCA strategic and operational burdens as they inevitably prepare for compliance.

 

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

The Ernst & Young Africa Sub-Area consists of practices in 28 countries across the African continent. We pride ourselves in our integrated operating model which enables us to serve our clients on a seamless basis across the continent, as well as across the world.

Ernst & Young South Africa has a Level two, AAA B-BBEE rating. As a recognised value adding enterprise, our clients are able to claim B-BBEE recognition of 156.25%.

Ernst & Young refers to the global organisation of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. All Ernst & Young practices in the Africa Sub Area are members of Ernst & Young Africa Limited (NPC). Ernst & Young Africa Limited (NPC) in turn is a member firm of Ernst & Young Global Limited, a UK company limited by guarantee. Neither Ernst & Young Global Limited nor Ernst & Young Limited (NPC) provides services to clients.

For more information about our organisation, please visit www.ey.com/za

Comments (0)

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Developing World’s Share of Global Investment to Triple by 2030, Says New World Bank Report

Posted on 18 May 2013 by Africa Business

Seventeen years from now, half the global stock of capital, totaling $158 trillion (in 2010 dollars), will reside in the developing world, compared to less than one-third today, with countries in East Asia and Latin America accounting for the largest shares of this stock, says the latest edition of the World Bank’s Global Development Horizons (GDH) report, which explores patterns of investment, saving and capital flows as they are likely to evolve over the next two decades.

Developing countries’ share in global investment is projected to triple by 2030 to three-fifths, from one-fifth in 2000, says the report, titled ‘Capital for the Future: Saving and Investment in an Interdependent World’. With world population set to rise from 7 billion in 2010 to 8.5 billion 2030 and rapid aging in the advanced countries, demographic changes will profoundly influence these structural shifts.

“GDH is one of the finest efforts at peering into the distant future. It does this by marshaling an amazing amount of statistical information,” said Kaushik Basu, the World Bank’s Senior Vice President and Chief Economist. “We know from the experience of countries as diverse as South Korea, Indonesia, Brazil, Turkey and South Africa the pivotal role investment plays in driving long-term growth. In less than a generation, global investment will be dominated by the developing countries. And among the developing countries, China and India are expected to be the largest investors, with the two countries together accounting for 38 percent of the global gross investment in 2030. All this will change the landscape of the global economy, and GDH analyzes how.”

Productivity catch-up, increasing integration into global markets, sound macroeconomic policies, and improved education and health are helping speed growth and create massive investment opportunities, which, in turn, are spurring a shift in global economic weight to developing countries. A further boost is being provided by the youth bulge. With developing countries on course to add more than 1.4 billion people to their combined population between now and 2030, the full benefit of the demographic dividend has yet to be reaped, particularly in the relatively younger regions of Sub-Saharan Africa and South Asia.

The good news is that, unlike in the past, developing countries will likely have the resources needed to finance these massive future investments for infrastructure and services, including in education and health care. Strong saving rates in developing countries are expected to peak at 34 percent of national income in 2014 and will average 32 percent annually until 2030. In aggregate terms, the developing world will account for 62-64 percent of global saving of $25-27 trillion by 2030, up from 45 percent in 2010.

“Despite strong saving levels to finance their massive investment needs in the future, developing countries will need to significantly improve their currently limited participation in international financial markets if they are to reap the benefits of the tectonic shifts taking place,” said Hans Timmer, Director of the Bank’s Development Prospects Group.

GDH paints two scenarios, based on the speed of convergence between the developed and developing worlds in per capita income levels, and the pace of structural transformations (such as financial development and improvements in institutional quality) in the two groups. Scenario one entails a gradual convergence between the developed and developing world while a much more rapid scenario is envisioned in the second.

The gradual and rapid scenarios predict average world economic growth of 2.6 percent and 3 percent per year, respectively, during the next two decades; the developing world’s growth will average an annual rate of 4.8 percent in the gradual convergence scenario and 5.5 percent in the rapid one.

In both scenarios, developing countries’ employment in services will account for more than 60 percent of their total employment by 2030 and they will account for more than 50 percent of global trade. This shift will occur alongside demographic changes that will increase demand for infrastructural services. Indeed, the report estimates the developing world’s infrastructure financing needs at $14.6 trillion between now and 2030.

The report also points to aging populations in East Asia, Eastern Europe and Central Asia, which will see the largest reductions in saving rates. Demographic change will test the sustainability of public finances and complex policy challenges will arise from efforts to reduce the burden of health care and pensions without imposing severe hardships on the old. In contrast, Sub-Saharan Africa, with its relatively young and rapidly growing population as well as robust economic growth, will be the only region not experiencing a decline in its saving rate.

In absolute terms, however, saving will continue to be dominated by Asia and the Middle East. In the gradual convergence scenario, in 2030, China will save far more than any other developing country — $9 trillion in 2010 dollars — with India a distant second with $1.7 trillion, surpassing the levels of Japan and the United States in the 2020s.

As a result, under the gradual convergence scenario, China will account for 30 percent of global investment in 2030, with Brazil, India and Russia together accounting for another 13 percent. In terms of volumes, investment in the developing world will reach $15 trillion (in 2010 dollars), versus $10 trillion in high-income economies. China and India will account for almost half of all global manufacturing investment.

“GDH clearly highlights the increasing role developing countries will play in the global economy. This is undoubtedly a significant achievement. However, even if wealth will be more evenly distributed across countries, this does not mean that, within countries, everyone will equally benefit,” said Maurizio Bussolo, Lead Economist and lead author of the report.

The report finds that the least educated groups in a country have low or no saving, suggesting an inability to improve their earning capacity and, for the poorest, to escape a poverty trap.

“Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor,” concluded Bussolo.

Regional Highlights:

East Asia and the Pacific will see its saving rate fall and its investment rate will drop by even more, though they will still be high by international standards. Despite these lower rates, the region’s shares of global investment and saving will rise through 2030 due to robust economic growth. The region is experiencing a big demographic dividend, with fewer than 4 non-working age people for every 10 working age people, the lowest dependency ratio in the world. This dividend will end after reaching its peak in 2015. Labor force growth will slow, and by 2040 the region may have one of the highest dependency ratios of all developing regions (with more than 5.5 non-working age people for every 10 working age people). China, a big regional driver, is expected to continue to run substantial current account surpluses, due to large declines in its investment rate as it transitions to a lower level of public involvement in investment.

Eastern Europe and Central Asia is the furthest along in its demographic transition, and will be the only developing region to reach zero population growth by 2030. Aging is expected to moderate economic growth in the region, and also has the potential to bring down the saving rate more than any developing region, apart from East Asia. The region’s saving rate may decline more than its investment rate, in which case countries in the region will have to finance investment by attracting more capital flows. The region will also face significant fiscal pressure from aging. Turkey, for example, would see its public pension spending increase by more than 50 percent by 2030 under the current pension scheme. Several other countries in the region will also face large increases in pension and health care expenditures.

Latin America and the Caribbean, a historically low-saving region, may become the lowest-saving region by 2030. Although demographics will play a positive role, as dependency ratios are projected to fall through 2025, financial market development (which reduces precautionary saving) and a moderation in economic growth will play a counterbalancing role. Similarly, the rising and then falling impact of demography on labor force growth means that the investment rate is expected to rise in the short run, and then gradually fall. However, the relationship between inequality and saving in the region suggests an alternative scenario. As in other regions, poorer households tend to save much less; thus, improvements in earning capacity, rising incomes, and reduced inequality have the potential not only to boost national saving but, more importantly, to break poverty traps perpetuated by low saving by poor households.

The Middle East and North Africa has significant scope for financial market development, which has the potential to sustain investment but also, along with aging, to reduce saving. Thus, current account surpluses may also decline moderately up to 2030, depending on the pace of financial market development. The region is in a relatively early phase of its demographic transition: characterized by a still fast growing population and labor force, but also a rising share of elderly. Changes in household structure may also impact saving patterns, with a transition from intergenerational households and family-based old age support to smaller households and greater reliance on asset income in old age. The region has the lowest use of formal financial institutions for saving by low-income households, and scope for financial markets to play a significantly greater role in household saving.

South Asia will remain one of the highest saving and highest investing regions until 2030. However, with the scope for rapid economic growth and financial development, results for saving, investment, and capital flows will vary significantly: in a scenario of more rapid economic growth and financial market development, high investment rates will be sustained while saving falls significantly, implying large current account deficits. South Asia is a young region, and by about 2035 is likely to have the highest ratio of working- to nonworking-age people of any region in the world. The general shift in investment away from agriculture towards manufacturing and service sectors is likely to be especially pronounced in South Asia, with the region’s share of total investment in manufacturing expected to nearly double, and investment in the service sector to increase by more than 8 percentage points, to over two-thirds of total investment.

Sub-Saharan Africa’s investment rate will be steady due to robust labor force growth. It will be the only region to not see a decrease in its saving rate in a scenario of moderate financial market development, since aging will not be a significant factor. In a scenario of faster growth, poorer African countries will experience deeper financial market development, and foreign investors will become increasingly willing to finance investment in the region. Sub-Saharan Africa is currently the youngest of all regions, with the highest dependency ratio. This ratio will steadily decrease throughout the time horizon of this report and beyond, bringing a long lasting demographic dividend. The region will have the greatest infrastructure investment needs over the next two decades (relative to GDP). At the same time, there will likely be a shift in infrastructure investment financing toward greater participation by the private sector, and substantial increases in private capital inflows, particularly from other developing regions.

Source: WorldBank.org

Comments (0)

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Developing countries to dominate global saving and investment, but the poor will not necessarily share the benefits, says report

Posted on 18 May 2013 by Africa Business

STORY HIGHLIGHTS
  • Developing world’s share of global investment to triple by 2030
  • China, India will be developing world’s largest investors
  • Boost to education needed so poor can improve their well-being

In less than a generation, global saving and investment will be dominated by the developing world, says the just-released Global Development Horizons (GDH) report.

By 2030, half the global stock of capital, totaling $158 trillion (in 2010 dollars), will reside in the developing world, compared to less than one-third today, with countries in East Asia and Latin America accounting for the largest shares of this stock, says the report, which explores patterns of investment, saving and capital flows as they are likely to evolve over the next two decades.

Titled ‘Capital for the Future: Saving and Investment in an Interdependent World’, GDH projects developing countries’ share in global investment to triple by 2030 to three-fifths, from one-fifth in 2000.

Productivity catch-up, increasing integration into global markets, sound macroeconomic policies, and improved education and health are helping speed growth and create massive investment opportunities, which, in turn, are spurring a shift in global economic weight to developing countries.

A further boost is being provided by the youth bulge. By 2020, less than 7 years from now, growth in world’s working-age population will be exclusively determined by developing countries. With developing countries on course to add more than 1.4 billion people to their combined population between now and 2030, the full benefit of the demographic dividend has yet to be reaped, particularly in the relatively younger regions of Sub-Saharan Africa and South Asia.

GDH paints two scenarios, based on the speed of convergence between the developed and developing worlds in per capita income levels, and the pace of structural transformations (such as financial development and improvements in institutional quality) in the two groups. Scenario one entails a gradual convergence between the developed and developing world while a much more rapid one is envisioned in the second.

In both scenarios, developing countries’ employment in services will account for more than 60 percent of their total employment by 2030 and they will account for more than 50 percent of global trade. This shift will occur alongside demographic changes that will increase demand for infrastructural services. Indeed, the report estimates the developing world’s infrastructure financing needs at $14.6 trillion between now and 2030.

The report also points to aging populations in East Asia, Eastern Europe and Central Asia, which will see the largest reductions in private saving rates. Demographic change will test the sustainability of public finances and complex policy challenges will arise from efforts to reduce the burden of health care and pensions without imposing severe hardships on the old. In contrast, Sub-Saharan Africa, with its relatively young and rapidly growing population as well as robust economic growth, will be the only region not experiencing a decline in its saving rate.

Open Quotes

Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor. Close Quotes

Maurizio Bussolo
Lead Author, Global Development Horizons 2013

In absolute terms, however, saving will continue to be dominated by Asia and the Middle East. In the gradual convergence scenario, in 2030, China will save far more than any other developing country — $9 trillion in 2010 dollars — with India a distant second with $1.7 trillion, surpassing the levels of Japan and the United States in the 2020s.

As a result, under the gradual convergence scenario, China will account for 30 percent of global investment in 2030, with Brazil, India and Russia together accounting for another 13 percent. In terms of volumes, investment in the developing world will reach $15 trillion (in 2010 dollars), versus $10 trillion in high-income economies. Again, China and India will be the largest investors among developing countries, with the two countries combined representing 38 percent of the global gross investment in 2030, and they will account for almost half of all global manufacturing investment.

“GDH clearly highlights the increasing role developing countries will play in the global economy. This is undoubtedly a significant achievement. However, even if wealth will be more evenly distributed across countries, this does not mean that, within countries, everyone will equally benefit,” said Maurizio Bussolo, Lead Economist and lead author of the report.

The report finds that the least educated groups in a country have low or no saving, suggesting an inability to improve their earning capacity and, for the poorest, to escape a poverty trap.

“Policy makers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor,” concluded Bussolo.

Regional Highlights:

East Asia and the Pacific will see its saving rate fall and its investment rate will drop by even more, though they will still be high by international standards. Despite these lower rates, the region’s shares of global investment and saving will rise through 2030 due to robust economic growth. The region is experiencing a big demographic dividend, with fewer than 4 non-working age people for every 10 working age people, the lowest dependency ratio in the world. This dividend will end after reaching its peak in 2015. Labor force growth will slow, and by 2040 the region may have one of the highest dependency ratios of all developing regions (with more than 5.5 non-working age people for every 10 working age people). China, a big regional driver, is expected to continue to run substantial current account surpluses, due to large declines in its investment rate as it transitions to a lower level of public involvement in investment.

Eastern Europe and Central Asia is the furthest along in its demographic transition, and will be the only developing region to reach zero population growth by 2030. Aging is expected to moderate economic growth in the region, and also has the potential to bring down the saving rate more than any developing region, apart from East Asia. The region’s saving rate may decline more than its investment rate, in which case countries in the region will have to finance investment by attracting more capital flows. The region will also face significant fiscal pressure from aging. Turkey, for example, would see its public pension spending increase by more than 50 percent by 2030 under the current pension scheme. Several other countries in the region will also face large increases in pension and health care expenditures.

Latin America and the Caribbean, a historically low-saving region, may become the lowest-saving region by 2030. Although demographics will play a positive role, as dependency ratios are projected to fall through 2025, financial market development (which reduces precautionary saving) and a moderation in economic growth will play a counterbalancing role. Similarly, the rising and then falling impact of demography on labor force growth means that the investment rate is expected to rise in the short run, and then gradually fall. However, the relationship between inequality and saving in the region suggests an alternative scenario. As in other regions, poorer households tend to save much less; thus, improvements in earning capacity, rising incomes, and reduced inequality have the potential not only to boost national saving but, more importantly, to break poverty traps perpetuated by low saving by poor households.

The Middle East and North Africa has significant scope for financial market development, which has the potential to sustain investment but also, along with aging, to reduce saving. Thus, current account surpluses may also decline moderately up to 2030, depending on the pace of financial market development. The region is in a relatively early phase of its demographic transition: characterized by a still fast growing population and labor force, but also a rising share of elderly. Changes in household structure may also impact saving patterns, with a transition from intergenerational households and family-based old age support to smaller households and greater reliance on asset income in old age. The region has the lowest use of formal financial institutions for saving by low-income households, and scope for financial markets to play a significantly greater role in household saving.

South Asia will remain one of the highest saving and highest investing regions until 2030. However, with the scope for rapid economic growth and financial development, results for saving, investment, and capital flows will vary significantly: in a scenario of more rapid economic growth and financial market development, high investment rates will be sustained while saving falls significantly, implying large current account deficits. South Asia is a young region, and by about 2035 is likely to have the highest ratio of working- to nonworking-age people of any region in the world. The general shift in investment away from agriculture towards manufacturing and service sectors is likely to be especially pronounced in South Asia, with the region’s share of total investment in manufacturing expected to nearly double, and investment in the service sector to increase by more than 8 percentage points, to over two-thirds of total investment.

Sub-Saharan Africa’s investment rate will be steady due to robust labor force growth. It will be the only region to not see a decrease in its saving rate in a scenario of moderate financial market development, since aging will not be a significant factor. In a scenario of faster growth, poorer African countries will experience deeper financial market development, and foreign investors will become increasingly willing to finance investment in the region. Sub-Saharan Africa is currently the youngest of all regions, with the highest dependency ratio. This ratio will steadily decrease throughout the time horizon of this report and beyond, bringing a long lasting demographic dividend. The region will have the greatest infrastructure investment needs over the next two decades (relative to GDP). At the same time, there will likely be a shift in infrastructure investment financing toward greater participation by the private sector, and substantial increases in private capital inflows, particularly from other developing regions.

 

Source: WorldBank.org

Comments (0)

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Lithium Market Becoming More Reliant on Batteries for Continued Strong Demand Growth

Posted on 18 May 2013 by Africa Business

Rise in Consumption and Future Demand Driven by Lithium-ion Batteries

Roskill estimates that rechargeable batteries accounted for 27% of global lithium consumption in 2012, up from 15% in 2007 and 8% in 2002. This end-use was responsible for 44% of the net increase in lithium consumption over the last ten years, and 70% over the last five years. In the base-case growth scenario it is expected to contribute 75% of the growth in forecast demand to 2017, when total demand for lithium is expected to reach slightly over 238,000t lithium carbonate equivalent (LCE).

Other end-uses, including glass-ceramics, greases and polymers, have also shown high rates of growth, but are predicted to moderate over the next five years as emerging economy growth slows. The lithium industry is therefore becoming more reliant on rechargeable batteries to sustain high rates of future demand growth. In addition, in the period to 2017 Roskill forecasts that the main market driver for lithium-ion batteries will gradually switch from portable consumer electronics to electric vehicles, especially hybrid variants.

Reflecting the concentration of lithium-ion battery manufacturers and associated cathode material producers in China, Japan and South Korea, the East Asia region has become an increasingly important consumer of lithium products over the last decade. In 2012, East Asia accounted for 60% of total global consumption with Europe accounting for a further 24% and North America 9%.

Growing Supply-side Pressure is Predicted to Stall Further Lithium Price Rises

Roskill’s analysis suggests that the price of technical-grade lithium carbonate, the main product produced and consumed in the lithium market, recovered some of its global economic downturn losses as the market tightened in 2012, averaging US$5,300/t CIF, up 15% from 2010. This is below the 2007 peak of US$6,500/t, but well above the US$2,000-3,000/t levels seen in the early 2000s.

Lithium extraction, which totalled over 168,000t LCE in 2012, is undertaken predominately in Australia, Chile, Argentina and China, with roughly half of lithium output from hard rock sources and half from brine. Production is dominated by Talison Lithium in Australia, SQM and Rockwood Lithium in Chile, and FMC in Argentina. Just over two-thirds of lithium minerals extracted in Australia are processed into downstream chemical products in China, where producers such as Tianqi Lithium (who recently acquired Talison to secure a captive supply of mineral feedstock) operate mineral conversion plants.

Galaxy Resources commissioned a new 17,000tpy LCE mineral conversion plant in China in 2012. Canada Lithium is in the process of commissioning a 20,000tpy LCE plant in Quebec and several existing Chinese mineral conversion plants are also expanding capacity. FMC has increased brine-based processing capacity by a third in Argentina, while nearby Orocobre is also constructing a new brine-based operation due to be completed in 2014. In addition, Rockwood Lithium plans to complete a 20,000tpy LCE expansion in Chile in 2014. Combined, this additional capacity totals just under 100,000tpy LCE, enough to meet forecast demand to 2017.

As the opening of new and expanded capacity is concentrated over the next two years, Roskill forecasts that the lithium market could witness increased competition and supply-side pressure on pricing, with prices for technical-grade lithium carbonate potentially falling back to around US$5,000/t CIF in 2014.

Lithium: Market Outlook to 2017 (12th edition)is available at a price of £4900 / US$7900 / €6200 from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL ENGLAND.

Tel: +44-(0)20-8417-0087. Fax +44-(0)20-8417-1308.

Email: info@roskill.co.uk Web: http://www.roskill.com/lithium

Note to editors

The report contains 426 pages, 245 tables and 99 figures. It provides a detailed review of the industry, with subsections on the activities of the leading producing companies. It also analyses consumption, trade and prices.

Table of Contents

Page

1.         Summary    1

2.         Lithium Mineralogy, Occurrences and Reserves    10

2.1        Occurrence of lithium    10

2.1.1      Lithium minerals    10

2.1.2      Lithium clays    12

2.1.3      Lithium brines    12

2.2        Lithium reserves    14

3.         Lithium mining and processing    16

3.1        Extraction and processing of lithium brines    17

3.1.1      Other methods of brine extraction    20

3.2        Mining and processing of lithium minerals    21

3.3        Processing lithium mineral concentrates to lithium compounds    23

3.4        Processing lithium bearing clays into lithium compounds    26

3.5        Lithium compounds and chemicals    27

3.6        Production costs    30

4.         Production of lithium    34

4.1        Lithium production by source    35

4.1.1      Production of Lithium Minerals    37

4.1.2      Production from Lithium Brines    39

4.1.3      Production of lithium compounds from mineral conversion    41

4.1.4      Production of downstream lithium chemicals    43

4.2        Outlook for production capacity of lithium to 2017    44

4.2.1      Outlook for production capacity of lithium minerals    45

4.2.2      Outlook for lithium production capacity from brines    48

4.2.3      Outlook on lithium compound production from mineral conversion    51

4.3        Forecast production of lithium to 2017    52

5.         Review of lithium producing countries    55

5.1        Afghanistan 55

5.2        Argentina 56

5.2.1      FMC Litihum (MineradelAltiplano S.A.)    58

5.2.2      ADY Resources    59

5.2.3      Lithium Americas    61

5.2.4      Galaxy Resources (Lithium 1)    66

5.2.4.1    Sal de Vida Project    66

5.2.4.2    James Bay Hard-rock Lithium Project    68

5.2.5      Orocobre Ltd.    69

5.2.5.1    Salar de Olaroz    71

5.2.5.2    Salinas Grandes (Cangrejillo)    74

5.2.5.3    Guayatoyoc Project    74

5.2.5.4    Cauchari Project    75

5.2.6      Rodinia Lithium Inc.    76

5.2.6.1    Rodinia Lithium USA 78

5.2.7      Marifil Mines Ltd.    78

5.2.8      International Lithium Corporation    79

5.2.9      Other prospects for Lithium Production    79

5.3        Australia 80

5.3.1      Talison Lithium    82

5.3.1.1    Resources and Reserves    82

5.3.1.2    Production    85

5.3.1.3    Products    86

5.3.2      Galaxy Resources Ltd.    87

5.3.2.1    Reserves and Resources    88

5.3.2.2    Production    90

5.3.3      Reed Resources Ltd.    91

5.3.4      Altura Mining Ltd.    92

5.3.5      Artemis Resources    93

5.3.6      Amerilithium    93

5.3.7      Reward Minerals    93

5.4        Austria 93

5.5        Belgium 94

5.6        Bolivia 96

5.6.1      Salar de Uyuni 97

5.6.2      Salar de Coipasa    99

5.6.3      New World Resource Corp.    99

5.7        Brazil 100

5.7.1      CompanhiaBrasileira de Litio    102

5.7.2      Arqueana de Minérios e Metais Ltda.    103

5.7.3      Advance Metallurgical Group (AMG)    104

5.8        Canada 104

5.8.1      Lithium resources in Canada 105

5.8.2      Canadian trade in lithium    107

5.8.3      Past producers of lithium in Canada 108

5.8.3.1    Tantalum Mining Corp. of Canada Ltd. (TANCO)    108

5.8.4      Potential new producers of lithium in Canada 109

5.8.4.1    Canada Lithium Corp.    109

5.8.4.2    Nemaska Lithium    112

5.8.4.3    Avalon Rare Metals Inc.    115

5.8.4.4    Perilya Limited    116

5.8.4.5    Rock Tech Lithium Inc.    117

5.8.4.6    Critical Elements Corporation    120

5.8.4.7    Glen Eagle Resources Inc.    120

5.8.4.8    Aben Resources Ltd.    121

5.8.4.9    Toxco Inc. Canada 122

5.8.4.10   Other Canadian Lithium Projects    122

5.9        Chile 126

5.9.1      Chilean lithium reserves    127

5.9.2      Chilean lithium production    127

5.9.3      Special Lithium Operations Contracts (CEOLs)    128

5.9.4      SociedadQuímica y Minera    129

5.9.4.1    Reserves and Resources    130

5.9.4.2    Production    131

5.9.4.3    Products    132

5.9.4.4    Markets    134

5.9.4.5    Exports    135

5.9.5      Rockwood Litihum (Salar de Atacama and La Negra Plant)    136

5.9.6      Simbalik Group    138

5.9.7      Li3 Energy Inc.    139

5.9.7.1    Maricunga Property    139

5.9.7.2    Li3 Energy Peruvian Projects    141

5.9.8      First Potash Corp.    141

5.9.9      CODELCO    142

5.9.10 Mammoth Energy Group Inc.    142

5.9.11 Lomiko Metals Inc.    143

5.9.12 Errázuriz Lithium    143

5.9.13 Exports of litihum from Chile 143

5.10       China 146

5.10.1     Chinese reserves of lithium    147

5.10.1.1   Lithium Mineral Reserves    147

5.10.1.2   Lithium Brine Reserves    148

5.10.2     Production of lithium    149

5.10.2.1   Mineral Production    150

5.10.2.2   Brine Production    151

5.10.2.3   Lithium Chemicals and Metal Production    152

5.10.3     Chinese trade in lithium    155

5.10.4     Chinese lithium brine producers    157

5.10.4.1   Tibet Lithium New Technology Development Co. Ltd.    157

5.10.4.2   Qinghai CITIC Guoan Technology Development Co. Ltd.    159

5.10.4.3   Qinghai Salt Lake Industry Co. Ltd.    160

5.10.4.4   Qinghai Lanke Lithium Industry Co. Ltd.    161

5.10.4.5   Tibet Sunrise Mining Development Ltd.    162

5.10.4.6   China MinMetals Non-Ferrous Metals Co. Ltd    163

5.10.5     Chinese lithium mineral producers    163

5.10.5.1   Fujian Huamin Import & Export Co. Ltd.    163

5.10.5.2   YichunHuili Industrial Co. Ltd.    164

5.10.5.3   GanZiRongda Lithium Co., Ltd.    164

5.10.5.4   Sichuan HidiliDexin Mineral Industry    165

5.10.5.5   Xinjiang Non-Ferrous Metals (Group) Ltd.    166

5.10.6     Chinese lithium mineral producers with mineral conversion capacity    166

5.10.6.1   Jiangxi Western Resources Lithium Industry    166

5.10.6.2   Sichuan Aba Guangsheng Lithium Co. Ltd.    167

5.10.6.3   Minfeng Lithium Co. Ltd.    167

5.10.6.4   Sichuan Ni&CoGuorun New Materials Co. Ltd.    168

5.10.7     Chinese mineral conversion plants    169

5.10.7.1   Sichuan Tianqi Lithium Shareholding Co. Ltd.    169

5.10.7.2   Galaxy Resources (Jiangsu Lithium Carbonate Plant)    171

5.10.7.3   General Lithium (Haimen) Corp.    172

5.10.7.4   China Non-Ferrous Metal Import & Export Xinjiang Corp.    173

5.10.7.5   Sichuan State Lithium Materials Co. Ltd.    174

5.10.7.6   Jiangxi Ganfeng Lithium Co. Ltd.    174

5.10.7.7   Sichuan Chenghehua Lithium Technology Co. Ltd.    176

5.10.8     Chinese lithium chemical producers    176

5.10.9     Specialist lithium bromide producers    177

5.10.10 Specialist lithium metal producers    178

5.11       Czech Republic 179

5.12       Democratic Republic of Congo (DRC)    179

5.13       Finland 180

5.13.1     KeliberOy    180

5.13.2     Nortec Minerals Corp.    181

5.13.3     Leviäkangas Deposit    182

5.13.4     Syväjärvi Deposit    182

5.14       France 182

5.15       Germany 184

5.15.1     Rockwood Lithium (Langelsheim Plant)    185

5.15.2     Helm AG    185

5.15.3     Lithium exploration in Germany 185

5.16       Greece 186

5.17       India 186

5.17.1     FMC India Private Ltd.    188

5.17.2     Rockwood Lithium    188

5.18       Ireland 189

5.19       Israel 189

5.20       Japan 190

5.21       Kazakhstan 192

5.22       Mali 193

5.23       Mexico 193

5.23.1     LitioMex S.A. de C.V. (PieroSutti S.A. de C.V.)    193

5.23.2     First Potash Corp. (Mexico)    195

5.23.3     Bacanora Minerals Ltd.    195

5.24       Mongolia 196

5.25       Mozambique 196

5.26       Namibia 197

5.27       Netherlands 198

5.28       Portugal 199

5.28.1     SociedadMineira de Pegmatites    200

5.29       Russia 200

5.29.1     Russian Lithium Reserves and Resources    201

5.29.2     Russian Lithium Production    202

5.29.2.1   JSC Chemical and Metallurgical Plant    202

5.29.2.2   JSC Novosibirsk Chemical Concentration Plant    203

5.29.3     Russian Imports and Exports of Lithium    204

5.30       Serbia    205

5.31       South Africa 206

5.32       South Korea 206

5.33       Spain 207

5.33.1     Minera Del Duero 208

5.33.2     Solid Resources Ltd.    209

5.34       Taiwan 209

5.35       Tajikistan 210

5.36       Turkey 210

5.37       UK    211

5.38       Ukraine 212

5.39       USA 212

5.39.1     Trade in lithium to/from the USA 213

5.39.2     Rockwood Lithium (Chemetall Group)    214

5.39.2.1   Silver Peak, Kings Mountain and New Johnsonville operations (USA)    215

5.39.3     FMC Corporation    216

5.39.3.1   FMC Lithium    217

5.39.3.2   Other FMC Corporation facilities    218

5.39.4     Western Lithium Corporation    219

5.39.5     Simbol Materials Corp.    222

5.39.6     Albemarle Corporation    223

5.39.7     Toxco Inc.    223

5.39.8     AusAmerican Mining Corp. Ltd.    223

5.39.9     Other USA Companies    224

5.40       Uzbekistan 226

5.41       Zimbabwe 226

5.41.1     Bikita Minerals Ltd    227

5.41.2     Zimbabwe Mining Development Corporation    228

5.41.3     Premier African Minerals    228

5.41.4     Cape Range Ltd.    229

6.         International trade in lithium    230

6.1        Trade in lithium carbonate    230

6.2        Trade in lithium hydroxide and oxides    233

6.3        Trade in lithium chloride    236

6.4        Trade in mineral concentrates    237

6.5        Trade in lithium brines    238

7.         Consumption of lithium    239

7.1        Consumption of lithium by end-use    239

7.2        Consumption of lithium by country/region    243

7.3        Consumption of lithium by product    245

7.4        Outlook for consumption of lithium by end-use    247

7.5        Outlook for lithium consumption by product    251

8.         Use of lithium in rechargeable batteries    253

8.1        Types of rechargeable batteries    253

8.1.1      Lithium-ion batteries    254

8.1.2      Lithium metal polymer batteries    256

8.1.3      Lithium-sulphur batteries    256

8.1.4      Lithium-air batteries    258

8.1.5      NiMH and NiCd batteries    258

8.2        Production of rechargeable batteries    258

8.2.1      Producers of rechargeable lithium batteries    261

8.2.2      Producers of nickel metal hydride batteries    262

8.3        Production of rechargeable lithium battery materials    262

8.3.1      Producers of rechargeable lithium battery materials    264

8.3.1.1    Cathode materials    264

8.3.1.2    Electrolyte salts    267

8.3.1.3    Anode materials    268

8.4        Consumption of rechargeable lithium batteries    268

8.4.1      Computing, communication and consumer (3C) market    269

8.4.2      Power devices and motive power    270

8.4.3      Heavy duty applications    272

8.4.4      Transportation    272

8.5        Consumption of NiMH and NiCd batteries    274

8.6        Consumption of lithium in rechargeable batteries    274

8.7        Outlook for demand for rechargeable batteries    278

8.8        Outlook for consumption of lithium in rechargeable batteries    281

9.         Use of lithium in ceramics    284

9.1        Use of lithium in ceramics    284

9.2        Production and consumption of ceramics    286

9.2.1      Ceramic tiles    287

9.2.1.1    Producers of ceramic tiles    289

9.2.2      Sanitaryware    291

9.2.2.1    Producers of sanitaryware    291

9.2.3      Tableware    293

9.2.3.1    Producers of tableware    294

9.2.4      Cookware and bakeware    295

9.3        Production and consumption of glazes and enamels    295

9.3.1      Producers of glazes and enamels    297

9.4        Outlook for ceramics production and consumption    298

9.5        Consumption of lithium in ceramics    299

9.5.1      Outlook for lithium demand in ceramics    300

10.        Use of lithium in glass-ceramics    302

10.1       Use of lithium in glass-ceramics    302

10.2       Production and consumption of glass-ceramics    304

10.2.1     Producers of glass-ceramics    305

10.3       Consumption of lithium in glass-ceramics    306

11.        Use of lithium in lubricating grease    309

11.1       Types of lubricating grease    309

11.2       Production of grease    311

11.2.1     Producers of lithium grease    314

11.3       Consumption of lithium greases    317

11.4       Consumption of lithium in greases    320

11.4.1     Outlook for demand for lithium in greases    321

12.        Use of lithium in glass    323

12.1       Use of lithium in glass    323

12.2       Production and consumption of glass    325

12.2.1     Container glass    326

12.2.2     Fibreglass    329

12.2.3     Speciality glass    330

12.3       Consumption of lithium in glass    330

12.3.1     Outlook for demand for lithium in glass    331

13.        Use of lithium in metallurgical powders    333

13.1       Continuous casting    333

13.1.1     Producers of continuous casting mould powders    334

13.1.2     Continually cast steel production    334

13.1.3     Consumption of continuous casting mould powders    335

13.1.4     Consumption of lithium in continuous casting mould powders    335

13.2       Traditional metal casting    337

13.3       Outlook for demand for lithium in casting powders    337

14.        Use of lithium in polymers    338

14.1       Types of polymers    338

14.2       Production of polymers    340

14.2.1     Producers of polymers    342

14.3       Consumption of polymers    344

14.4       Consumption of lithium in polymers    348

14.4.1     Outlook for lithium demand in polymers    348

15.        Use of lithium in air treatment    350

15.1       Absorption chillers    350

15.1.1     Production of absorption chillers    351

15.1.2     Producers of adsorption chillers    352

15.1.3     Producers of lithium bromide for absorption chillers    354

15.1.4     Consumption of lithium in absorption chillers    356

15.2       Dehumidification    357

15.2.1     Production of desiccant dehumidification systems    358

15.2.2     Producers of desiccant dehumidification systems    358

15.2.3     Consumption of lithium in desiccant dehumidifiers    359

15.3       Air purification    359

15.5       Outlook for demand for lithium in air treatment    360

16.        Use of lithium in primary batteries    362

16.1       Types of primary batteries    362

16.2       Production of lithium primary batteries    365

16.2.1     Producers of lithium primary batteries    367

16.3       Trade in primary batteries    369

16.4       Production of primary lithium battery materials    370

16.4.1     Producers of lithium primary battery anodes    371

16.5       Consumption of lithium primary batteries    373

16.5.1     Outlook for primary lithium battery consumption    374

16.6       Consumption of lithium in primary batteries    374

16.6.1     Outlook for demand for lithium in primary batteries    377

17.        Use of lithium in aluminium smelting    378

17.1       Process of aluminium smelting    378

17.2       Consumers of lithium in aluminium smelting    380

17.3       Consumption of lithium in aluminium smelting    382

17.3.1     Outlook for lithium demand in aluminium smelting    383

18.        Minor end-uses for lithium    385

18.1       Sanitization    385

18.2       Organic synthesis    386

18.3       Construction    388

18.4       Alkyd resins    388

18.5       Alloys    391

18.5.1     Aluminium-lithium alloy    391

18.5.1.1   Producers of aluminium-lithium alloys    394

18.5.1.2   Applications for aluminium-lithium alloys    395

18.5.1.3   Consumption of lithium in aluminium-lithium alloys    398

18.5.1.4   Outlook for demand for lithium in aluminium-lithium alloys    398

18.5.2     Magnesium-lithium alloy    400

18.6       Electronics    400

18.7       Analytical agents    402

18.8       Dyestuffs    402

18.9       Metallurgy    402

18.10      Photographic industry    402

18.11      Welding fluxes    402

18.12      Electrochromic glass    403

18.13      Pharmaceuticals    403

18.13.1    Producers of lithium-based pharmaceuticals    404

18.13.2    Production and consumption of lithium-based pharmaceuticals    404

18.13.3    Consumption of lithium in pharmaceuticals    405

18.14      Speciality lithium inorganics    405

19.        Prices of lithium    408

19.1       Technical-grade lithium mineral prices    409

19.2       Chemical-grade spodumene prices    412

19.3       Technical-grade lithium carbonate prices    413

19.4       Battery-grade lithium carbonate    415

19.5       Technical-grade lithium hydroxide prices    416

19.6       Battery-grade lithium hydroxide prices    418

19.7       Lithium chloride prices    419

19.8       Lithium metal prices    420

19.9       Outlook for lithium prices    421

19.9.1     Technical-grade lithium carbonate prices    421

19.9.2     Battery-grade lithium carbonate prices    424

19.9.3     Technical-grade lithium mineral prices    425

19.9.4     Chemical-grade spodumene prices    425

19.9.5     Lithium hydroxide prices    426

List of Tables

Page

Table 1: World: Forecast nominal and real prices for technical-grade lithium carbonate, 2012 to 2017     8

Table 2: Properties of lithium    10

Table 3: Significant lithium minerals    11

Table 4: Major lithium bearing smectite group members    12

Table 5: Brine concentrations at selected deposits    13

Table 6: Lithium reserves by country     15

Table 7: Composition of standard lithium concentrates     22

Table 8: Specifications for lithium carbonate produced by SQM and Rockwood Lithium     28

Table 9: Specifications for lithium carbonate produced by other suppliers     28

Table 10: Battery grade lithium hydroxide product specifications of major producers      29

Table 11: Production of lithium by country and company, 2005 to 2012     35

Table 12: Capacity and production of lithium minerals by company, 2011 to 2012     39

Table 13: Capacity and production of lithium compounds from brine-based producers, 2011 to 2012     40

Table 14: Capacity and production of lithium mineral converters, 2011 to 2012     42

Table 15: Production of lithium compounds from minerals, 2005 to 2012     43

Table 16: Planned expansions as reported by existing lithium mineral producers to 2017     46

Table 17: Potential lithium mineral producers to 2017     47

Table 18: Planned expansions by existing lithium brine producers to 2017     49

Table 19: Potential new lithium brine projects to 2017     50

Table 20: Planned expansions to production capacity for existing and potential mineral conversion plants     51

Table 21: Afghanistan: Spodumene bearing pegmatites identified in Nuristan, Badakhshan, Nangarhar, Lagman and Uruzgan provinces    55

Table 22: Argentina: Exports of lithium carbonate, 2004 to 2012     57

Table 23: Argentina: Exports of lithium chloride, 2004 to 2012     58

Table 24:FMC: Brine reserves at the Salar del Hombre Muerto    58

Table 25: FMC: Production and value of lithium carbonate and chloride at the Salta plant, Argentina 2005 to 2012     59

Table 26: ADY Resources: Salar del Rincón reserve estimation, 2007    60

Table 27: Lithium Americas: Lithium and potash resource estimation for the Cauchari-Olaroz property, July 2012 61

Table 28: Lithium Americas: Lithium and potash reserve estimation for the Cauchari-Olaroz property, July 2012 61

Table 29: Lithium Americas: Estimated capital costs for Lithium carbonate production at the Cauchari-Olaroz project, July 2012 63

Table 30: Lithium Americas: Estimated operating costs for Cauchari-Olaroz project, July 2012 65

Table 31: Galaxy Resources: Resource estimation for the Sal de Vida project, January 2012 66

Table 32: Galaxy Resources: Reserve estimate for the Sal de Vida project, April 2013 67

Table 33: Galaxy Resources: Estimated capital costs for Sal de Vida project, October 2011 68

Table 34: Orocobre: Agreements between Borax Argentina and other lithium companies    70

Table 35: Orocobre: Resource estimation for the Salar de Olaroz project, May 2011 71

Table 36: Orocobre: Assay results of first battery grade lithium carbonate product from the Orocobre pilot plant    72

Table 37: Orocobre: Capital costs for 16,400tpy LCE operation at the Salar de Olaroz, May 2011 73

Table 38: Orocobre: Operating costs for battery grade lithium carbonate for the Salar de Olaroz, May 2011 73

Table 39: Orocobre: Resource estimation for the Salinas Grande project, April 2012 74

Table 40: Orocobre: Averaged assay results from pit sampling of brine at the Guayatoyoc project    75

Table 41: Orocobre: Maiden resource estimation for the Salar de Cauchari project, October 2012 75

Table 42: Rodinia Lithium: Salar de Diablillos resource estimation, March 2011 76

Table 43: Rodinia Lithium: Estimated capital costs for the Salar de Diablillos project    77

Table 44: Rodinia Lithium: Estimated operating costs for the Salar de Diablillos project    77

Table 45: Rodinia Lithium: Other Argentine lithium projects    78

Table 46: Australia: Exports of mineral substances NES (excl. natural micaceous iron oxides) 2005 to 2012     81

Table 47: Australia: Unit value of mineral substances NES (excl. natural micaeous iron oxides) 2005 to 2011     81

Table 48: Talison Lithium: Resource estimation for the Greenbushes deposit, December 2012 83

Table 49: Talison Lithium: Lithium mineral reserve estimation for the Greenbushes deposit,  December 2012    83

Table 50: Talison Lithium: Li, K and Na content of brines, Salares 7 project saline lakes 1998, (ppm)    84

Table 51: Talison Lithium: Li, K and Na content of brines, Salares 7 project saline lakes 2009, (ppm)    84

Table 52: Talison Lithium: Production and sales of lithium mineral concentrates and ores, 2005 to 2011     85

Table 53: Talison Lithium: Standard lithium mineral concentrate product specifications    87

Table 54: Galaxy Resources: Mount Cattlin mineral resource estimate, February 2011 89

Table 55: Galaxy Resources: Mount Cattlin mineral reserve estimate, December 2011 89

Table 56: Galaxy Resources: James Bay mineral resource estimate, November 2010 89

Table 57: Galaxy Resources: Mt. Cattlin mine and plant production, Q3 2010 – Q4 2011    90

Table 58: Reed Resources : Mt Marion resource estimation, July 2011 91

Table 59: Altura: Mineral resource estimation for the Pilgangoora lithium project, October 2012 92

Table 60: Belgium: Trade is lithium carbonate, 2005 to 2012     95

Table 61: Belgium: Trade in lithium hydroxide and oxide, 2005 to 2012     96

Table 62: Salars and Lagunas in Bolivia identified by Gerencia Nacional de Recursos Evaporíticos    97

Table 63: Results of sampling campaign by Université de Liegé and Universidad Tecnica de Oruro at the Salar de Coipasa, 2002    99

Table 64: Assay data for brines intercepted during drilling at the Pastos Grandes Salar, August 2011 100

Table 65: Brazil: Lithium resource estimation by mineral type, 2009    101

Table 66: Brazil: Trade in lithium chemicals and concentrates, 2004 to 2011     102

Table 67: CBL: Production of lithium concentrates and lithium salts, 2005 to 2011    102

Table 68: Arqueana: Production of lithium concentrates, 2008 to 2011    103

Table 69: Canada: Resources estimations for Canadian lithium projects    106

Table 70: Canada: Imports and exports of lithium compounds 2005 to 2012     108

Table 71: TANCO: Spodumene concentrate production 2005 to 2011     109

Table 72: Canada Lithium: Resource estimation for the Quebec Lithium project, December 2011 109

Table 73: Canada Lithium: Reserve estimation for the Quebec Lithium project, December 2011 110

Table 74: Canada Lithium: Estimated capital expenditure for Quebec Lithium project (inc.LiOH and Na2SO4 plant costs), October 2012 111

Table 75 :Canada Lithium: Estimated operating expenditure for Quebec Lithium project, October 2012 111

Table 76: Nemaska Lithium: Resource estimation for the Whabouchi project, June 2011 113

Table 77: Nemaska Lithium: Reserve estimation for the Whabouchi project, October 2012 113

Table 78: Avalon Rare Metals: Separation Rapids NI 43-101 resource and reserve estimation, 1999    116

Table 79: Perilya Ltd: Mineral resource estimation for Moblan deposit, May 2011 117

Table 80: Rock Tech Lithium: Structure of the Georgia Lake project, November 2011 118

Table 81: Rock Tech Lithium: Updated mineral resource estimation for Georgia Lake project, July 2012 119

Table 82: Glen Eagle: Resource estimation for Authier lithium property, January 2012 121

Table 83: Canada: Lithium exploration projects in Canada with uncompleted scoping studies or PFS in October 2012 122

Table 84: Chile: Lithium carbonate, chloride and hydroxide production, 2004 to 2011     128

Table 85: Chile: Special operating licence bidders for the September 2012 auction    129

Table 86: SQM: Majority shareholders of SQM as of December 31st 2011    130

Table 87: SQM: Reserves within brines at the Salar de Atacama project    131

Table 88: SQM: Production, revenue and value per tonne of lithium compounds, 2003 to 2012    132

Table 89: SQM: Specifications for lithium carbonate     133

Table 90: SQM: Specifications for lithium hydroxide     134

Table 91: RWL: Gross tonnage, value and unit value of lithium carbonate exports, 2006 to 2012    137

Table 92: RWL: Gross tonnage, value and unit value of lithium chloride exports, 2006 to 2012    138

Table 93: Li3 Energy: Resource estimation for the Maricunga property, April 2012 140

Table 94: Chile: Exports of lithium carbonate by destination, 2004 to 2011    144

Table 95: Chile: Lithium carbonate export volume, value and unit price by company, 2005 to 2011    144

Table 96: Chile: Lithium chloride exports by destination, 2004 to 2012    145

Table 97: Chile: Lithium hydroxide exports by destination, 2004 to 2012    146

Table 98: China : Estimated resources and reserves of both lithium mineral and brine operations and projects    148

Table 99: China: Production of lithium, 2003 to 2012    149

Table 100: China: Producers of lithium minerals, 2011 to 2012    151

Table 101: China: Production and capacity of Chinese lithium brine operations, 2011    152

Table 102: China: Mineral conversion plant production and production capacity, 2012    154

Table 103: China: Producers of battery grade lithium metal, 2012    154

Table 104: China: Imports and exports of lithium carbonate, 2005 to 2012     155

Table 105: China: Imports and exports of lithium chloride, 2005 to 2012     156

Table 106: China: Imports and exports of lithium hydroxide, 2005 to 2012     157

Table 107: China: Imports and exports of lithium oxide, 2005 to 2012     157

Table 108: Tibet Lithium New Technology Development: Lithium production, 2010 to 2012    158

Table 109: Qinghai CITIC: Lithium carbonate production, 2008 to 2012     160

Table 110:  Dangxiongcuo reserve estimation from 2006 qualifying report    163

Table 111: Jiangxi Western Resources: Lithium Production, 2010    167

Table 112: Sichuan Tianqi: Production and sales of lithium products, 2010 to 2011     169

Table 113: Galaxy Resources: Battery grade lithium carbonate chemical specifications    172

Table 114: KeliberOy: Claims, reservation and mining concessions for lithium projects held by Keliber in Finland, 2012    181

Table 115: France: Imports and exports of lithium carbonate, 2005 to 2012     183

Table 116: France: Imports and exports of lithium hydroxide and oxide, 2005 to 2012     184

Table 117: Germany: Imports and exports of lithium carbonate, 2005 to 2012     184

Table 118: India: Trade in lithium hydroxide and oxides, 2005 to 2012     187

Table 119: India: Trade in lithium carbonate, 2005 to 2012     187

Table 120: India: Producers of lithium chemicals    188

Table 121: Japan: Trade in lithium carbonate, 2005 to 2012     190

Table 122: Japan: Trade in lithium hydroxide and oxide, 2005 to 2012     191

Table 123: Mexico: LitioMex S.A. concessions and resource estimations    194

Table 124: Namibia: Production of lithium minerals, 1990 to 1998     197

Table 125: Netherlands: Trade in lithium carbonate, 2005 to 2012     198

Table 126: Netherlands: Trade in lithium hydroxide and oxide, 2005 to 2012     199

Table 127: SociedadMineira de Pegmatites: Production of Lithium, 2004 to 2012     200

Table 128: Russia: Deposits of lithium    201

Table 129: Russia: Imports of lithium carbonate, 2002 to 2012     204

Table 130: Russia: Exports of lithium hydroxide, 2002 to 2012     204

Table 131: Russia: Imports of lithium hydroxide, 2002 to 2012     205

Table 132: South Korea: Trade in lithium carbonate, 2005 to 2012     207

Table 133: South Korea: Trade in lithium hydroxide, 2005 to 2012     207

Table 134: Spain: Imports of lithium compounds, 2005 to 2012     208

Table 135: Minera Del Duero: Production of lepidolite in Spain, 2003 to 2011     208

Table 136: Inferred mineral resource estimation for the Doade-Presquerias project, October 2011 209

Table 137: Taiwan: Imports of lithium carbonate, 2005 to 2012     210

Table 138: UK: Imports of lithium carbonate and lithium hydroxides and oxides 2005 to 2012     211

Table 139: USA: Imports and exports of lithium carbonate 2005 to 2012     213

Table 140: USA: Imports and exports of lithium oxide and hydroxide 2005 to 2012     214

Table 141: FMC: Product range    218

Table 142: WLC: Resource estimation for the Kings Valley project, January 2012 219

Table 143: WLC: Reserve estimation for the Kings Valley project, December 2011 220

Table 144: WLC: Estimated operating and capital costs for ‘Case 1’ and ‘Case 2’ scenarios at the Kings Valley project.    221

Table 145: USA: Lithium exploration projects yet to reach scoping study or PFS stage in development    224

Table 146: Zimbabwe: South African imports of mineral substances from Zimbabwe, 2005 to 2012     227

Table 147: Bikita Minerals: Mine production and lithium content 2003 to 2011    228

Table 148: World: Total exports of lithium carbonate, 2005 to 2012     230

Table 149: World: Total imports of lithium carbonate, 2005 to 2012     232

Table 150: World: Total exports of lithium hydroxide and oxide, 2005 to 2012     234

Table 151: World: Total imports of lithium hydroxide and oxide, 2005 to 2012     236

Table 152: World: Major importers and exporters of lithium chloride, 2005 to 2012     237

Table 153: World: Exports of lithium minerals by major lithium mineral producing nations (excl. China), 2005 to 2012     238

Table 154: Chile: Exports of lithium chloride brine1 by SQM to China, 2005 to 2012     238

Table 155: World: Consumption of lithium by end-use, 2002, 2007 and 2012    240

Table 156: World: Estimated consumption of lithium by country/region, 2002, 2007 and 2012     244

Table 157: World: Consumption of lithium by end-use, by product, 2012    246

Table 158: World: Forecast consumption of lithium by end-use, 2012 to 2017     248

Table 159: Japan: Producers of lithium-ion battery cathode materials, 2012    265

Table 160: South Korea: Producers of lithium-ion battery cathode materials, 2012    265

Table 161: China: Producers of lithium-ion battery cathode materials, 2012    266

Table 162: World: Producers of lithium salts for electrolytes, 2012    267

Table 163: World: Lithium battery consumption in 3C products, 2012    269

Table 164: World: Lithium battery consumption in power devices and motive power, 2012    271

Table 165: World: Lithium battery consumption in heavy duty applications, 2012    272

Table 166: World: Lithium battery consumption in transport applications, 2012    274

Table 167: World: Lithium consumption in rechargeable lithium batteries end-use, 2012    275

Table 168: World: Lithium consumption in NiMH and NiCd batteries, 2012    275

Table 169: World: Consumption of lithium in rechargeable batteries by type, 2007 to 2012     277

Table 170: Japan: Consumption of lithium in rechargeable batteries, 2007 to 2012     277

Table 171: World: Consumption of lithium in rechargeable batteries by country, 2007 to 2012     278

Table 172: World: Rechargeable lithium battery demand by market, 2012 and 2017    278

Table 173: World: Comparison of EV production estimates in 2017 by industry consultant    280

Table 174: World: Forecast rechargeable battery consumption in EVs, 2017    281

Table 175: World: Lithium consumption in rechargeable lithium batteries by end-use, 2017    281

Table 176: World: Forecast demand for lithium in rechargeable lithium batteries, 2012 to 2017     282

Table 177: World: Forecast demand for lithium in rechargeable batteries by battery type, 2012 to 2017     282

Table 178: World: Forecast demand for lithium in rechargeable batteries by product type, 2007 to 2012     283

Table 179: Typical whiteware body compositions     285

Table 180: World: Production of ceramic tiles by leading country, 2007 to 2012     287

Table 181: World: Consumption of ceramic tiles by leading countries, 2007 to 2011     289

Table 182: World: Leading ceramic tile manufacturing companies, 2010    290

Table 183: World: Leading sanitaryware manufacturing companies, 2010    292

Table 184: World: Consumption of lithium in ceramics, 2012    300

Table 185: World: Consumption of lithium in ceramics, 2007 to 2012     300

Table 186: World: Forecast demand for lithium in ceramics, 2012 to 2017     301

Table 187: Glass-ceramic matrices    302

Table 188: Compositions of commercial glass-ceramics    303

Table 189: Japan: Consumption of lithium carbonate in glass-ceramics, 2007 to 2012     306

Table 190: World: Consumption of lithium in glass-ceramics by end-use and product type, 2012     307

Table 191: World: Consumption of lithium in glass-ceramics, 2007 to 2012     307

Table 192: World: Forecast demand for lithium in glass-ceramics, 2012 to 2017     308

Table 193: Properties of commercial greases    311

Table 194: World: Producers of lubricating grease    315

Table 195: World: Forecast demand for lithium in greases, 2012 to 2017    322

Table 196: Typical batch compositions for glass by type     323

Table 197: Main sources of lithium used in glass    324

Table 198: EU: Production of glass by type, 1998 to 2012     328

Table 199: USA: Production of container glass, 1999 to 2008    328

Table 200: Typical chemical composition of types of textile-grade fibreglass     329

Table 201: World: Estimated consumption of lithium in glass, 2012     331

Table 202: World: Consumption of lithium in glass, 2007 to 2012     331

Table 203: World: Forecast demand for lithium in glass, 2012 to 2017     332

Table 204: World: Consumption of lithium in continuous casting mould powders, 2007 to 2012     336

Table 205: Japan: Consumption of lithium in fluxes, 2007 to 2012     336

Table 206: World: Forecast demand for lithium in casting powders, 2012 to 2017     337

Table 207: Microstructure of different types of polybutadienes    339

Table 208: World: Producers of SSBR, BR and SBC, 2012    343

Table 209: World: Planned new/expanded SBR, BR and SBC plants    344

Table 210: World: Forecast demand for lithium in synthetic rubber and thermoplastics, 2011 to 2017    349

Table 211: World: Capacity for lithium bromide production, end-2012     355

Table 212: Japan: Consumption of lithium bromide, 2007 to 2012    356

Table 213: World: Forecast demand for lithium in air treatment, 2012 to 2017    361

Table 214: Characteristics of primary lithium batteries    363

Table 215: Japan: Production of primary batteries by type, 1998 to 2012     367

Table 216: World: Trade in lithium primary batteries, 2007 to 2011     369

Table 217: Primary lithium batteries and their material compositions    371

Table 218: Specifications for battery-grade lithium metal     371

Table 219: World: Producers of battery-grade lithium metal, end-2012    372

Table 220: Japan: Consumption of lithium in primary lithium batteries, 2007 to 2012    375

Table 221: Japan: Unit consumption of lithium in primary batteries, 2007 to 2012    375

Table 222: World: Imports of battery-grade lithium metal, 2007 to 2012    376

Table 223: World: Forecast demand for lithium in primary batteries, 2012 to 2017    377

Table 224: Effects of additives and temperatures on properties of molten cryolite    379

Table 225: World: Aluminium smelters using Söderberg technology, end-2012    381

Table 226: World: Forecast demand for lithium in aluminium smelting, 2012 to 2017     384

Table 227: World: Consumption of lithium in other end-uses, 2007, 2012 and 2017     385

Table 228: Examples of uses for lithium in organic synthesis    387

Table 229: Physical properties of Al-Li alloys    392

Table 230: Chemical composition of Al-Li alloys     393

Table 231: Use of Al-Li alloys in selected aircraft    397

Table 232: World: Forecast demand for lithium in aluminium-lithium alloys, 2012 to 2017    399

Table 233: Properties of lithium niobate and lithium tantalite    401

Table 234: Applications for SAW components    401

Table 235: Applications for speciality inorganic lithium compounds    406

Table 236: Prices of lithium minerals, 2000-2013     410

Table 237: Comparison of prices for lithium minerals and carbonate, 2004 to 2012    411

Table 238: Comparison of prices for chemical-grade spodumene concentrate and lithium carbonate, 2004 to 2012    412

Table 239: Comparison of technical- and battery- grade lithium carbonate prices, 2004 to 2012     416

Table 240: Average values of exports/imports of lithium oxides and hydroxides by leading exporting/importing country, 2004 to 2012     417

Table 241: Average values of exports of lithium chloride by leading producing country, 2004 to 2012    420

Table 242: Average values of exports of lithium metal by leading producing country, 2004 to 2012    421

Table 243: World: Forecast nominal and real prices for technical-grade lithium carbonate, 2012 to 2017     423

Table 244: World: Forecast nominal prices for technical-grade lithium carbonate and chemical-grade lithium minerals, 2012 to 2017     425

Table 245: World: Forecast nominal prices for technical-grade lithium carbonate and technical-grade lithium hydroxide, 2012 to 2017     426

List of Figures

Figure 1: Lithium product flow chart and main end-uses, 2012     1

Figure 2: Consumption of lithium by end-use, 2000 to 2012     2

Figure 3: Production of lithium by country, 2000 to 2012     4

Figure 4: Price history of lithium carbonate, 1990 to 2012    6

Figure 5: World: Forecast real prices for technical-grade lithium carbonate, 2012 to 2017     9

Figure 6: Overview of lithium production    16

Figure 7: Extraction and processing of brines from the Salar de Atacama, Chile and Silver Peak, Nevada by Rockwood Lithium    18

Figure 8: Flow sheet showing the processing of brines at Salar de Carmen by SQM    19

Figure 9: Simplified flow sheet of the Li SX™ method patented by Bateman Lithium Projects    21

Figure 10: Simplified mineral concentrate production flow sheet for a typical hard rock lithium operation    22

Figure 11: Simplified flow sheet for lithium carbonate production from spodumene mineral concentrate using the acid-roast method    24

Figure 12: Simplified flow sheet for lithium hydroxide and lithium hydroxide monohydrate production from spodumene mineral concentrate using the lime-roast method    25

Figure 13: Simplified flow sheet for lithium carbonate production from hectorite clay developed by Western Lithium    27

Figure 14: Mining and milling costs for hard rock lithium mineral operations/projects    31

Figure 15: Lithium carbonate cash operating costs, 2012    32

Figure 16:  Potential new producers production costs    33

Figure 17: World: Production of lithium by country, 2000 to 2012     34

Figure 18: Production of lithium from mineral and brine sources, 2005 to 2012     37

Figure 19: Production of lithium minerals by company, 2012     38

Figure 20: Production of lithium from brines by country, 2005 to 2012     40

Figure 21: Planned production capacity and consumption for lithium, 2012 to 2017     45

Figure 22: Forecast production and consumption of lithium, 2012 to 2017     54

Figure 23: Pilot plant flow sheet developed for Lithium Americas at SGS Mineral Services    62

Figure 24: Brazil: Production of Lithium products 2005 to 2010     101

Figure 25: SQM: Lithium sales by destination 2011, 2009, 2007 and 2005     135

Figure 26: SQM: Destination of lithium carbonate exports, 2006 to 2011     136

Figure 27: China: Location of mineral conversion and lithium chemical/metal plants in China, 2012    153

Figure 28: Japan: Imports of lithium carbonate, hydroxide & oxide and combined LCE, 2005 to 2012     191

Figure 29: World: Leading exporters of lithium carbonate, 2006, 2008, 2010 and 2012    231

Figure 30: World: Leading importers of lithium carbonate, 2006, 2008, 2010 and 2012    233

Figure 31: World: Leading exporters of lithium hydroxide and oxides, 2006, 2008, 2010 and 2012    235

Figure 32: World: Growth in consumption of lithium, 2000 to 2012    239

Figure 33: World: Consumption of lithium by end-use, 2012    240

Figure 34: World: Consumption of lithium by end-use, 2000 to 2012     241

Figure 35: World: Consumption of lithium by end-use, 2000 to 2012     241

Figure 36: World: Estimated consumption of lithium by country/region, 2002, 2007 and 2012     244

Figure 37: World: Consumption of lithium by product, 2012     245

Figure 38: World: Consumption of lithium by type, 2000 to 2012     247

Figure 39: World: Historical and forecast consumption of lithium by end-use, 2007 to 2017     248

Figure 40: World: Forecast consumption of lithium by form, 2007, 2012 and 2017     252

Figure 41: Specific energy and energy density of rechargeable batteries    253

Figure 42: Lithium-ion battery schematic    254

Figure 43: Lithium metal polymer battery schematic    256

Figure 44: Lithium-sulphur cell schematic    257

Figure 45: Lithium-air cell schematic    258

Figure 46: World: Production of rechargeable batteries1, 1995 to 2012     259

Figure 47: World: Production of rechargeable batteries1, 1995 to 2012     260

Figure 48: World: Rechargeable lithium battery production by country, 2000 to 2012     260

Figure 49: Lithium-ion battery materials value chain    263

Figure 50: World: Production of lithium cathode materials by type, 2000 to 2012    264

Figure 51: World: Market for rechargeable lithium batteries by end-use, 2002, 2007 and 2012     268

Figure 52: World: Market for rechargeable lithium batteries by end-use, 2012     269

Figure 53: World: Production of rechargeable batteries and consumption of lithium, 2000 to 2012    276

Figure 54: World: Market for rechargeable lithium batteries by end-use, 2002 to 2017     279

Figure 55: World: Ceramic tile production by region, 2007 and 2012     288

Figure 56: World: Sanitaryware production by region/country, 2010    291

Figure 57: World: Production of tableware by country/region, 2008    293

Figure 58: USA: Shipments of cookware, bakeware and kitchenware, 2001 to 2010    295

Figure 59: World: Shipments of white goods by region, 2000 to 2020    296

Figure 60: World: Year-on-year growth in construction spending and GDP, 2000 to 2017    298

Figure 61: World: Production of lubricating grease by additive type, 2011     312

Figure 62: World: Production of lubricating grease by type, 2000 to 2012    313

Figure 63: World: Production of lithium grease by region/country and by type,  2000 and 2011     314

Figure 64: World: Output of automobiles by region, 2000 to 2012    318

Figure 65: World: Deliveries of commercial aircraft, 2000 to 2012    318

Figure 66: World: Shipbuilding deliveries, 2000 to 2012    319

Figure 67: World: Relative industrial and transport output and lithium grease production, 2002 to 2011    320

Figure 68: World: Production of grease and consumption of lithium, 2000 to 2012    321

Figure 69: World: Estimated production of glass by type, 2012    326

Figure 70: World: Production of container glass by region/country, 2012    326

Figure 71: World: Consumption of glass packaging by region, 2011    327

Figure 72: World: Production of continuously cast steel by region, 1998 to 2012     335

Figure 73: World: Capacity for synthetic rubber production by country/region, 2012    340

Figure 74: World: Capacity for BR, ESBR and SSBR rubber by country/region, end-2011    341

Figure 75: World: SBC capacity by region/country, end-2010    341

Figure 76: World: Production of synthetic rubber by region, 1996 to 2011     342

Figure 77: World: Consumption of synthetic rubber by type, 2012    345

Figure 78: World: consumption of BR by end-use, 2010    346

Figure 79: World: Consumption of SBC by region/country, 2010    347

Figure 80: Consumption of SBC by end-use, 2007    347

Figure 81: World: Production of absorption chillers, 2003 to 2012    352

Figure 82: World: Consumption of lithium bromide in air treatment, 2001 to 2012    356

Figure 83: Specific energy and energy density of primary batteries    362

Figure 84: Primary and secondary battery gravimetric energy density    365

Figure 85: World: Production of primary lithium batteries by country, 1998 to 2012     366

Figure 86: Primary lithium battery schematics    370

Figure 87: World: Demand for lithium metal in primary batteries, 2000 to 2012    376

Figure 88: World: Aluminium output by type and lithium consumption, 2000 to 2012    383

Figure 89: World: Consumption of alkyd-based paints and coatings, 2010    390

Figure 90: Development of Al-Li alloys    392

Figure 91: World: Deliveries of commercial aircraft and lithium consumption, 2007 to 2019    399

Figure 92: Price history of lithium carbonate, 1990 to 2012    408

Figure 93: Compound annual prices of lithium minerals, 2000 to 2013     411

Figure 94: Prices for technical-grade lithium carbonate, 1999 to 2012     414

Figure 95: Prices for battery-grade lithium carbonate, 1999 to 2012     415

Figure 96: Comparison of lithium hydroxide and lithium carbonate prices, 2000 to 2012     418

Figure 97: Japan: Quarterly average import value of lithium hydroxide from the USA, 2008 to 2012     419

Figure 98: World: Forecast nominal prices for technical-grade lithium carbonate, 2012 to 2017     423

Figure 99: World: Forecast real prices for technical-grade lithium carbonate, 2012 to 2017     424

For further information on this report, please contact Robert Baylis (rbaylis@roskill.co.uk).

SOURCE Roskill Information Services

 

Comments (0)

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Binghamton researcher studies oldest fossil hominin ear bones ever recovered

Posted on 15 May 2013 by Africa Business

Recently published paper indicates discovery could yield important clues on origins of humankind

 

BINGHAMTON, N.Y. /PRNewswire-USNewswire/ — A new study, led by a Binghamton University anthropologist and published this week by the National Academy of Sciences, could shed new light on the earliest existence of humans. The study analyzed the tiny ear bones, the malleus, incus and stapes, from two species of early human ancestor in South Africa. The ear ossicles are the smallest bones in the human body and are among the rarest of human fossils recovered. Unlike other bones of the skeleton, the ossicles are already fully formed and adult-sized at birth. This indicates that their size and shape is under very strong genetic control and, despite their small size, they hold a wealth of evolutionary information.

The skull of Paranthropus robustus (SKW 18 SK 52) from the site of Swartkrans (South Africa). The specimen dates to approximately two million years ago and has yielded the oldest complete ossicular chain (malleus, incus and stapes) of a fossil hominin discovered to date. (PRNewsFoto/Binghamton University)

The study, led by Binghamton University anthropologist Rolf Quam , was carried out by an international team of researchers from institutions in the US, Italy and Spain. They analyzed several auditory ossicles representing the early hominin species Paranthropus robustus and Australopithecus africanus. The new study includes the oldest complete ossicular chain (i.e. all three ear bones) of a fossil hominin ever recovered. The bones date to around two million years ago and come from the well-known South African cave sites of Swartkrans and Sterkfontein, which have yielded abundant fossils of these early human ancestors.

The researchers report several significant findings from the study. The malleus is clearly human-like, and its size and shape can be easily distinguished from our closest living relatives, chimpanzees, gorillas and orangutans. Many aspects of the skull, teeth and skeleton in these early human ancestors remain quite primitive and ape-like, but the malleus is one of the very few features of these early hominins that is similar to our own species, Homo sapiens. Since both the early hominin species share this human-like malleus, the anatomical changes in this bone must have occurred very early in our evolutionary history. Says Quam, “Bipedalism (walking on two feet) and a reduction in the size of the canine teeth have long been held up as the ‘hallmark of humanity’ since they seem to be present in the earliest human fossils recovered to date. Our study suggests that the list may need to be updated to include changes in the malleus as well.” More fossils from even earlier time periods are needed to corroborate this assertion, says Quam. In contrast to the malleus, the two other ear ossicles, the incus and stapes, appear more similar to chimpanzees, gorillas and orangutans. The ossicles, then, show an interesting mixture of ape-like and human-like features.

The anatomical differences from humans found in the ossicles, along with other differences in the outer, middle and inner ear, are consistent with different hearing capacities in these early hominin taxa compared to modern humans. Although the current study does not demonstrate this conclusively, the team plans on studying the functional aspects of the ear in these early hominins relying on 3D virtual reconstructions based on high resolution CT scans. The team has already applied this approach previously to the 500,000 year-old human fossils from the Sierra de Atapuerca in northern Spain. The fossils from this site represent the ancestors of the Neandertals, but the results suggested their hearing pattern already resembled Homo sapiens. Extending this type of analysis to Australopithecus and Paranthropus should provide new insight into when our modern human pattern of hearing may have evolved. The study has just been published in the Proceedings of the National Academy of Sciences.

SOURCE Binghamton University

Comments (0)

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

China and Russia commit to World Energy Congress

Posted on 14 May 2013 by Africa Business

“Most important energy event in the world this year”

SEOUL – May 14, 2013: The Chinese and Russian governments have committed to sending high-level delegations to the World Energy Congress in South Korea in October, organizers said.

The Organizing Committee for the 2013 World Energy Congress said it had been notified that China’s National Energy Administration (NEA) would send a ministerial-level delegation to the event and that the government body had advised Chinese energy companies of its plan to attend.

The Chinese delegation will be one of the largest to the Congress, which will host up to 5,000 delegates from around the world, organizers said.

The Committee further announced that Alexander Novak, the Minister of Energy of the Russian Federation, would lead a delegation that will include the Russian ministries of Natural Resources and Environment, and of Foreign Affairs, as well as Gazprom, Transneft, Rosneft, RusHydro, the State Atomic Energy Corporation and other major energy companies.

The Russian delegation is planning a “Russia Day” event at the Congress.

The World Energy Congress is the world’s premier energy gathering and will take place on 13–17 October in the city of Daegu.

More than 200 prominent speakers, including energy ministers, industry CEOs and top experts and researchers, will answer the most pressing questions facing the global energy industry today

Under the theme of ‘Securing Tomorrow’s Energy Today’, topics range from the future prospects of the oil & gas, coal, nuclear, and renewables sectors to the tough policy decisions needed to balance the often conflicting priorities of energy security, universal access to affordable energy, and environmental protection. Delegates will also be given insights into how finance and innovation are shaping our energy future.

“We are delighted with the decision by the governmental and industry leaders in China and Russia,” said Dr. Christoph Frei, Secretary General of the London-based World Energy Council, which hosts the triennial event. “Having just been in China and Russia I know that this high level participation in the Congress will provide a fascinating overview of the opportunities and challenges of our energy world in transition. Such engagement by the world’s biggest players is crucial for a meaningful event.”

“Both countries are in the centre of many critical energy developments. We want to understand, within the global energy transformation, whether there is a refocus of ambition within the respective governments,” he said.

“We look forward to hearing more about developments in Russia and the energy challenges and opportunities in China at the World Energy Congress in October,” said Cho Hwan-eik, Chair of the Organising Committee of the 2013 World Energy Congress.

He added: “This will be the first time in the 90-year history of the event that China will have participated in such a significant way. For both the Chinese and Russians now to commit to the Daegu event underscores the fact that the Congress is the most important event on the global energy calendar this year.”

The Organising Committee also confirmed that a number of other governments are currently planning significant activity for the Congress. Mr. Cho added, “The discussions we are having with many governments at this early stage in our planning only serve to highlight the importance of this global event being staged in the heart of Asia at a time of significant transition in the energy sector.”

Media Enquiries:

Organizing Committee, World Energy Congress

Inang Park

Tel: +82 (2) 739 7016

M: 010 3213 7465

Email: inang.park@insightcomms.com

John Burton

Tel: +82 (2) 739 7045

M: +82 (0)10 2437 6265

Email: john.burton@insightcomms.com

World Energy Congress – international

Seán Galvin

Tel: +44 (0)20 7269 7133

M: +44 (0)7788 568 245

Email: sean.galvin@fticonsulting.com

World Energy Council

Monique Tsang

Tel: +44 (0)20 3214 0616

Email: tsang@worldenergy.org

About the World Energy Congress

The World Energy Congress is the world’s premier energy gathering. The triennial World Energy Congress has gained recognition since the first event in 1923 as the premier global forum for leaders and thinkers to debate solutions to energy issues. In addition to the discussions, the event provides an opportunity for executives to display their technologies and explore business opportunities. With the upcoming Congress in Daegu the event will have been held in 20 major cities around the world since its founding.

Further details at www.daegu2013.kr and @WECongress

About the World Energy Council (WEC)

The World Energy Council (WEC) is the principal impartial network of leaders and practitioners promoting an affordable, stable and environmentally sensitive energy system for the greatest benefit of all. Formed in 1923, WEC is the UN-accredited global energy body, representing the entire energy spectrum, with more than 3000 member organisations located in over 90 countries and drawn from governments, private and state corporations, academia, NGOs and energy related stakeholders. WEC informs global, regional and national energy strategies by hosting high-level events, publishing authoritative studies, and working through its extensive member network to facilitate the world’s energy policy dialogue.

Further details at www.worldenergy.org and @WECouncil

Comments (0)

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

SA ECONOMIC GROWTH HIT BY MINING SECTOR

Posted on 14 May 2013 by Africa Business

Will the Chinese purchase divested mining interests?

South Africa’s economic growth is lagging somewhat behind that of its peers in the developing world. IMF forecasts for 2013 indicate that emerging and developing economies will grow by 5,5% while SA’s GDP is expected to grow between 2,5% and 3%.

Global ranking

Country Name

GDP in Millions of US dollars (2011)

27

South Africa

408,237

39

Nigeria

243,986

60

Angola

104,332

88

Kenya

33,621

105

Zambia

19,206

One of the key reasons for slower growth is SA’s foreign trade structure and reliance on Europe. President Zuma used the opportunity at the World Economic Forum in Davos earlier this year to ensure foreign investors that South Africa is on the right track.

2012 will be remembered for the negative impact of labour unrest and resultant production stoppages in the mining sector. Mining reduced GDP by 0,5% in the first three quarters of the year. This excludes the biggest slump in the sector during the fourth quarter 2012.

Other significant features of the growth slowdown in 2012 were the slowdown in household consumption spending, poor growth in private fixed investment spending and a slump in real export growth.

South African’s inflation rate slowed to a five-month low in January 2013 after the statistics office adjusted the consumer price basket while food and fuel prices eased. In December, the inflation rate fell to 5,4% from 5,7% Statistics South Africa stated.

Government cut the price of fuel by 1,2% in January 2013, as a stronger rand in the previous month helped to curb import costs. Since then, the currency has plunged 4,8% against the dollar and fuel prices are on the rise, with prices increasing in March by a further 8%, adding to pressure on inflation.

South Africa’s strengths

· South Africa is the economic powerhouse of Africa, leading the continent in industrial output and mineral production, generating a large portion of the continent’s electricity.

· The economy of South Africa is the largest in Africa, accounting for 24% of the continent’s GDP in terms of PPP, and is ranked as an upper-middle income economy by the world bank.

· The country has abundant natural resources, well developed financial, legal and transport sectors, a stock exchange ranked amongst the top 20 in the world, as well as a modern infrastructure supporting efficient distribution of goods throughout the Southern African region.

South Africa’s weaknesses

· South Africa suffers from a relatively heavy regulation burden when compared to most developed countries.

· Increasing costs for corporates with rising wages.

· Poverty, inequalities sources of social risk mixed with high unemployment and shortage of qualified labour.

Mining

Output in the mining sector remained weak in December with total mining production down by 7,5% y-o-y after falling by a revised 3,8% (previously -4,5%) in November. On a monthly basis production rose by a seasonally adjusted 1,2% compared with 12,0% in November. Non-gold output was down by 5,0% y-o-y, while gold production slumped by 21,2% in December. For the fourth quarter, total mining production fell by a seasonally-adjusted and annualised 4,6% q-o-q as output of most minerals dropped.

For 2012 as a whole, mining volumes fell by 3,1% after contracting by 0,9% in 2011. Mineral sales were down by 15,6% y-o-y in November after falling 13,7% in October. On a monthly basis sales rose by a seasonally-adjusted 2,3% in November, but sales were down by a seasonally-adjusted 10,2% in the three months to November after declining by 6,8% in the same period to October. These figures indicate that the mining sector is still reeling from the devastating effects of widespread labour strikes in the third and early fourth quarters.

Prospects for the mining sector remain dim as the industry faces headwinds both on the global and domestic fronts. Globally, commodity prices are not likely to make significant gains as demand conditions remain relatively unfavourable. Locally, tough operating conditions persist. Rapidly rising production costs, mainly energy and labour costs, are likely to compel mining companies to scale back operations or even halt them in some cases.

This will have a negative impact on production, with any improvements coming mainly from a normalisation of output should strike activity ease. These numbers, together with other recent releases, suggest that GDP growth for the fourth quarter was around 2,0%, with overall growth of 2,5% for the year as a whole. Overall economic activity in the sector therefore remains generally sluggish while upside risks to inflation have increased due to the weaker rand.

Retail

Annual growth in retail sales slowed to 2,3% in December from 3,6% in the previous month. Over the month, sales rose by a seasonally-adjusted 1,0%, causing sales for the last quarter of 2012 to decline by 0,2% following 2,1% growth in the third quarter.

As a whole, 2012 retail sales rose by 4,3%, slightly down from 5,9% in 2011. Consumer spending is likely to moderate during 2013 as weak consumer confidence, heightened worries about job security and high debt, make consumers more cautious about spending on non-essential items. The overall economic outlook remains weak and fragile, while inflation may increase due to the weaker rand.

Manufacturing

Annual growth in manufacturing production slowed to 2,0% in December 2012 from 3,7% in the previous month, versus the consensus forecast of 2,9%. The increase in output was recorded in seven of the ten major categories. Significant contributions came from petroleum, chemical products, rubber and plastic products. Over the month, total production fell by 2,2% on a seasonally adjusted basis following a 2,6% rise in November.

On a quarterly basis, however, production improved by 1,6% in the final quarter of 2012 following two quarters of weaker growth. Both local and international economic conditions are expected to improve only moderately during 2013. A weak Eurozone will continue to hurt the large export-orientated industries.

The recent recovery in infrastructure spending by the public sector will probably support the industries producing capital goods and other inputs for local projects. But the growth rate will be contained by slower capital expenditure by the private sector in response to the bleaker economic environment both locally and internationally.

Therefore, while a moderate recovery in manufacturing production will continue in 2013, no impressive upward momentum is expected. Overall economic activity remains generally sluggish while upside risks to inflation have increased due to a weaker rand.

Infrastructure

A new economic plan, the National Development Plan (NDP), is likely to be adopted in 2013 promoting low taxation for businesses and imposing less stringent employment requirements. This a measure that the ANC is pursuing ahead of the 2014 national elections. The NDP will encourage partnerships between government and the private sector, creating opportunities in petrochemical industries, metal-working and refining, as well as development of power stations.

Construction companies are especially likely to benefit from government plans to invest $112-billion from 2013 in the expansion of infrastructure as part of the NDP. Some 18 strategic projects will be launched to expand transport, power and water, medical and educational infrastructure in some of the country’s least developed areas.

Energy companies will also benefit, following the lifting of a moratorium on licences for shale gas development. Meanwhile, there will be significant opportunities, especially for Chinese state-owned enterprises that have recently made high-profile visits to South Africa, to acquire divested assets in the platinum and gold mining sector as large mining houses withdraw from South Africa.

According to government reports, the South African government will have spent R860-billion on new infrastructure projects in South Africa between 2009 and March 2013. In the energy sector, Eskom had put in place 675 kilometers of electricity transmission lines in 2012, to connect fast-growing economic centers and also to bring power to rural areas. More than 200 000 new households were connected to the national electricity grid in 2012. Construction work is also taking place in five cities including Cape Town, Port Elizabeth, Rustenburg, Durban and Pretoria to integrate different modes of transport.

Business Climate

Due to South Africa’s well-developed and world-class business infrastructure, the country is ranked 35th out of 183 countries in the World Bank and International Finance Corporation’s Doing Business 2012 report, an annual survey that measures the time, cost and hassle for businesses to comply with legal and administrative requirements. South Africa was ranked above developed countries such as Spain (44) and Luxembourg (50), as well as major developing economies such as Mexico (53), China (91), Russia (120), India (132) and Brazil (126).

The report found South Africa ranked first for ease of obtaining credit. This was based on depth of information and a reliable legal system.

Foreign trade

SA’s trade deficit narrowed to R 2,7-billion in December from R7,9-billion in November on account of seasonal factors. The trade balance usually records a surplus in December due to a large decline in imports. Exports declined 9,8% over the month. The decrease was mainly driven by declines in the exports of base metals. Vehicles, aircraft and vessels (down R1,1-billion), machinery and electrical appliances (down R0,9-billion) and prepared foodstuffs, beverages and tobacco (down 0,8-billion). Imports dropped 15,8% m-o-m.

Declines in the imports of machinery and electrical appliances (down R3,3-billion), original equipment components; (R1,8-billion), products of the chemicals or allied industries (R1,5-billion) and base metals and articles thereof (R1,2-billion) were the main drivers of the drop.

The large trade deficit for 2012 is one of the major reasons for the deterioration in the 2012 current account deficit forecast to 6,2% of GDP from 3,3% in 2011. South Africa’s trade performance will remain weak in the coming months on the back of unfavourable global conditions and domestic supply disruptions. Weak global economic conditions will continue to influence exports and growth domestically.

Skills and education

The need to transform South Africa’s education system has become ever more urgent, especially given the service delivery issues that have plagued the system. While government continues to allocate a significant amount of its budget to education (approximately 20%), it has not been enough to transform the schooling system. Coface expects the government to continue to support this critical sector, but that an opportunistic private sector will take advantage of government inefficiencies.

South Africa’s education levels are quite low compared to other developed and developing nations. South Africa began restructuring its higher education system in 2003 to widen access to tertiary education and reset the priorities of the old apartheid-based system. Smaller universities and technikons (polytechnics) were incorporated into larger institutions to form comprehensive universities.

Debt

The total number of civil judgments recorded for debt in South Africa fell by 9,8% year on year in November 2012 to 35 268, according to data released by Statistics South Africa. The total number of civil judgments recorded for debt decreased by 15,2% in three months ended November 2012 compared with the three months ended November 2011.

The number of civil summonses issued for debt fell 23,9% year-on-year to 70 537. During November, the 35 268 civil judgments for debt amounted to R414,1-million, with the largest contributors being money lent, with R142,5-million. There was a 21,9% decrease in the total number of civil summonses issued for debt in the three months ended November last year compared with the same period in 2011. A 23,9% y-o-y decrease was recorded in November.

South Africa maintains respectable debt-to-GDP ratios, although these grew to 39% of GDP by end-2012, substantially higher than the 34% for emerging and developing economies as a whole. When Fitch downgraded SA earlier this year, it specifically mentioned concerns about SA’s rising debt-to-GDP ratio, given that the ratio is higher than the country’s peers.

South Africa is uniquely exposed to foreign investor sentiment through the deficit on the current account combined with liquid and deep fixed interest markets. SA’s widening deficit on the current account is a specific factor that concerns the rating agencies and is one of the metrics the agencies will use to assess SA’s sovereign risk in the near future. Further downgrades are the risk – potentially driven by foreign investor sentiment about political risks.

Political landscape

Persistent unemployment, inequality and the mixed results of BEE (Black Economic Empowerment) intended to favour access to economic power by the historically disadvantaged populations have led to disappointment and resentment.

Social unrest is increasing. Recent events weakened the ruling coalition which came under fire for its management of these events. Tensions could intensify in the run up to the 2014 presidential elections. South Africa has a well-developed legal system, but government inefficiency, a shortage of skilled labour, criminality and corruption are crippling the business environment. South Africa also has a high and growing youth unemployment, high levels of visible inequality and government corruption so we would keep an eye on the escalating service delivery protest trends.

Labour force

The unemployment rate fell to 24,9% in the fourth quarter of 2012 from 25,5% in the third quarter, mainly reflecting an increase in the number of discouraged work seekers. Over the quarter, a total of 68 000 jobs were lost while the number discouraged work seekers rose by 87 000. The formal non-agricultural sector lost 52 000 jobs over the quarter, while the informal sector, in contrast, employed 8 000 more people. The breakdown shows that the highest number of jobs were lost in the private households category (48 000), followed by the trade and transport sectors, which shed 41 000 and 18 000 jobs respectively.

The agricultural sector led employment creation over the quarter, adding 24 000 jobs. Both local and international economic conditions are expected to improve only moderately during 2013.

Weak confidence and high wage settlement will make firms more cautious to expand capacity and employ more people this year. Government is likely to be the main driver of employment as it rolls out its infrastructure and job creation plans. The unemployment rate will therefore remain high in the short term.

Although the reduction in the unemployment rate is good news, it mainly reflects the large number of discouraged work seekers. Overall economic activity remains generally sluggish while upside risks to inflation have increased due to a weaker rand. Coface believes that this will persuade the Monetary Policy Committee to keep policy neutral over an extended period, with interest rates remaining unchanged for most of 2013. A reversal in policy easing is likely only late in the year or even in 2014.


 


Issued by:                                                                              Sha-Izwe/CharlesSmithAssoc

ON BEHALF OF:                                                   Coface

FURTHER INFORMATION:                                  Charles Smith

Tel:          (011) 781-6190

Email: charles@csa.co.za

Web:       www.csa.co.za

Media Contact:

Michele FERREIRA /
SENIOR MANAGER: MARKETING AND COMMUNICATION
TEL. : +27 (11) 208 2551  F.: +27 (11) 208 2651   M.: +27 (83) 326 2268
michele_ferreira@cofaceza.com

 

BUILDING D, DRA MINERALS PARK, INYANGA CLOSE

SUNNINGHILL, JOHANNESBURG, SOUTH AFRICA
T. +27 (11) 208 2500 –
www.cofaceza.com

About Coface

The Coface Group, a worldwide leader in credit insurance, offers companies around the globe solutions to protect them against the risk of financial default of their clients, both on the domestic market and for export. In 2012, the Group posted a consolidated turnover of €1.6 billion. 4,400 staff in 66 countries provide a local service worldwide. Each quarter, Coface publishes its assessments of country risk for 158 countries, based on its unique knowledge of companies’ payment behaviour and on the expertise of its 350 underwriters located close to clients and their debtors. In France, Coface manages export public guarantees on behalf of the French state.

Coface is a subsidiary of Natixis. corporate, investment management and specialized financial services arm of Groupe BPCE.. In South Africa, Coface provides credit protection to clients. Coface South Africa is rated AA+ by Global Ratings.

www.cofaceza.com

Comments (0)

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Successful infrastructure project bonds require improved regulatory frameworks, says AfDB study

Posted on 14 May 2013 by Africa Business

TUNIS, Tunisia /African Press Organization (APO)/ African countries need to improve their regulatory frameworks in order to ensure the successful launch of African infrastructure project bonds, says a new report launched by the African Development Bank (http://www.afdb.org).

Read the report: http://j.mp/10RPwzm

Africa is ready for the launch of such infrastructure bonds provided some conditions are met, says the report, titled “Structured Finance – Conditions for infrastructure project bonds in African markets”.

With Africa having now no other option than to tap into its own internal resources, the book “points in the right direction,” said Donald Kaberuka, President of the African Development Bank, in the foreword. “I hope it will be useful for all Africans who are involved in infrastructure development.”

The report is of the view that domestic capital markets can contribute to funding some of the most important local and regional infrastructure projects. Given the limited ability of local banks to provide long-term funding and the shrinking international assistance, the report encourages project sponsors to turn to domestic institutional investors by issuing infrastructure project bonds.

The legal and regulatory framework for bond issuance exists in many countries which are active issuers of bonds for their own funding needs. However, competition between the sovereign and other issuers is a potential issue in all markets.

Many of the ingredients for infrastructure project bond issuance are present, but more needs to be done to make it attractive for sponsors to tap local markets. From a sponsor’s perspective, issuing an infrastructure project bond must offer the optimal tenor and pricing compared to other options. It is therefore essential that governments do more to reduce local market rates and lengthen the yield curve.

According to the report, a crucial barrier in African markets is the enabling environment for infrastructure. The regulatory and tariff framework in many sectors is incomplete. Many countries have established public-private partnership (PPP) laws and institutions, but often they lack the resources and capacity to prepare bankable projects for the market. As important, there is often a lack of advocacy and political support for driving concessions and PPP projects through government, and too few are coming to market, although it remains early days in many countries.

There is a crucial role for governments in promoting infrastructure project bonds. Governments can play a greater role in supporting stable economic conditions, developing local capital markets and strengthening institutions. Those actions will encourage all issuers to come to market, particularly corporations for whom bond issuance has been limited to date. Promoting reform and corporatization of utilities and parastatals, including professional management and a clear regulatory environment, are preconditions for such entities to issue in the local bond markets – an important landmark in the development of local capital markets and the emergence of infrastructure project bonds.

“The African Development Bank can play various roles in that regard,” said Cedric Mbeng Mezui, the report’s lead author. “It can provide technical assistance in infrastructure, capital markets and domestic issuance, and work with intermediaries. For specific projects, it can use instruments such as the partial credit guarantee as well as any new tailored instruments, to enhance bond issuance and catalyze the market. Direct funding for projects in early-stage preparation and through debt and equity investments at financial close will help promote the overall market. Finally, the AfDB can play a role in unblocking the political bottlenecks that obstruct projects from being developed and implemented,” he added.

For Moono Mupotola, Regional Integration Manager, AfDB, “the book was prepared with a number of objectives in mind: firstly, to highlight the opportunity for project bonds; secondly, to elaborate on the conditions for efficient capital markets; thirdly, to explain the crucial role of constructive government policies; and finally to highlight lessons learned in other markets that might be useful for Africa.”

The report was launched during the IMF and World Bank Spring Meetings in April 2013 by Charles Boamah, AfDB Finance Vice-President.

 

SOURCE

African Development Bank (AfDB)

Comments (0)

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

IMF Mission Concludes the 2013 Article IV Mission to the Republic of Congo

Posted on 14 May 2013 by Africa Business

BRAZZAVILLE, Republic of the Congo, May 14, 2013/African Press Organization (APO)/ An International Monetary Fund (IMF) mission led by Mr. Mbuyamu Matungulu visited Brazzaville during April 29–May 13, 2013, to conduct discussions for the 2013 Article IV consultations. The mission met with the Honorable Obami Itou, President of the Senate; the Honorable Koumba, Speaker of Parliament; State and Finance Minister Ondongo, Special Presidential Advisor Gokana, National Director of the BEAC Ondaye Ebauh, and other senior officials. It held discussions with development partners and representatives of the private sector, including members of the banking profession.

At the end of the mission, Mr. Matungulu issued the following statement:

“In 2012, real GDP growth rebounded to about 4 percent despite a marked decline in oil production. Activity in the non-oil sectors was robust, driven by a surge in public spending in response to the ammunitions depot explosion of March 2012. The brisk increase in spending put pressures on prices, bringing end-year inflation to 7.5 percent as domestic supply response was limited. Reflecting the high import content of increased government outlays, the external current account turned negative in 2012. Credit growth remained robust. The basic non-oil primary budget deficit increased considerably, stemming from the expansion of government spending. However, the deficit was smaller than projected, with domestically-funded investment outlays somewhat lower than anticipated.

“Real GDP growth is expected to strengthen to 5.8 percent in 2013 despite a further decline of oil production, underpinned by continuing strong activity in construction and public works, telecommunications, as well as a timid start of iron ore production. Inflation eased to a monthly average of -0.1 percent in January-February 2013, and is projected to remain subdued during the remainder of the year as pressures from the 2012 ammunitions explosions fallout gradually recede. While the current account is expected to improve, the country remains vulnerable to adverse changes in external conditions, particularly on terms of trade. Compared to the initial budget, the mission’s current fiscal projections for 2013 reflect a shortfall in oil revenue equivalent to 4.8 percent of non-oil GDP, a reduction in government spending, as well as much higher-than-anticipated payments on arrears to social sectors. While the basic non-oil primary budget deficit should be contained below the projected level, the build-up of government deposits with the central bank would likely be much lower than targeted under the 2013 budget. The mission urged stronger treasury management and discussed quarterly fiscal targets for the remainder of the year to minimize slippages.

“The authorities’ medium-term development agenda seeks to foster private sector development, facilitate economic diversification, and secure growth inclusiveness. It appropriately emphasizes preservation of macroeconomic stability, improvements in governance and transparency and in business conditions, as well as a scaling up of investment to begin closing large infrastructure and skills gaps, while seeking further gains in budget consolidation. The mission encouraged the authorities to expedite reforms to improve the quality of spending; and welcomed World Bank involvement in the efforts to improve the management of the public investment program and enhance the productivity of the development budget. It underscored accelerated implementation of World Bank-supported reforms to improve the business environment, including in financial sector; and to roll out envisaged social protection systems. Regarding the management of oil resources, the mission reiterated calls for early adoption by Parliament of the draft law on budget transparency and accountability, following the achievement last February of compliant status under the Extractive Industries Transparency Initiative (EITI). As Congo moves ahead with the establishment of Special Economic Zones, the staff team urged caution. In particular, the mission encouraged the authorities to refrain from extending special fiscal incentives, and to focus instead on revamping infrastructure, including the inadequate electricity network, and advancing administrative facilitation. The staff team favored implementation of economy-wide reforms that improve the business environment for all so as to prevent abuses. It confirmed Congo’s low risk of debt distress but noted the need for continuing prudent borrowing policies to maintain long-term debt sustainability in the post-HIPC era.

“The mission discussed a medium- and long-term fiscal framework aimed at protecting spending from oil revenue volatility and ensuring budget and debt sustainability while supporting growth and guarding against the risks in the face of declining oil reserves. The framework makes provisions for scaled up investment and a buildup of net wealth that would sustain expenditures when oil resources are depleted. Under the agreed framework, nearly 65 percent of projected total oil revenue for 2013–2019 would be spent (two thirds of which on capital goods), and 35 percent saved; and the basic non-oil primary budget deficit would be limited to 36.1 percent of non-oil GDP by 2015.

“The authorities concurred with the need to improve coordination of economic policy management through development of appropriate reform-monitoring mechanisms. In this context, staff welcomed the government’s support to the ongoing review of the Economic and Monetary Community of Central African States (CEMAC)’s reserves pooling framework. Finally, the mission reminded the authorities of Congo’s legal obligations under Article VIII, Section 5, including the obligation to provide data to Fund staff on official holdings of foreign exchange.

“The mission wishes to express gratitude to the authorities for their hospitality. Upon its return to Washington D.C., the team will prepare a staff report to be discussed by the IMF’s Executive Board.”

 

SOURCE

International Monetary Fund (IMF)

Comments (0)

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

African energy company to expand operations in the continent

Posted on 14 May 2013 by Wallace Mawire

Cennergi, a recently-formed African energy company which is committed to providing energy solutions to Africans, is reported to be gearing up to acquire sizeable operational energy assets in generation on the African continent, according to  Liz Hart, Siyenza Management.

According to Hart, Cennergi (Pty) Ltd, is a 50:50 joint venture between South African-based diversified resources company Exxaro Resources Limited (Exxaro) and The Tata Power Company Limited (Tata Power), of India, through its subsidiary Khopoli Investments Limited.

Cennergi is based in South Africa and will focus on the, development, ownership, operation, maintenance, acquisition and management of electricity generation assets in South Africa, Botswana and Namibia. The initial project pipeline focuses on renewable energy projects in South Africa and Cennergi’ s strategy is to create a balanced portfolio of diverse generation assets.

Liz says the company having spent the past year developing its business model and putting together a dynamic management team,  is now looking for African partners who can broaden its horizons.

“The company is seeking established and credible partners across Africa who own profitable, high quality operational energy generating assets, not limited to renewables, to boost its asset portfolio on the continent,” Hart said.

Cennergi is reported to have launched its operations in the South African renewable energy sector in 2012 and were awarded the bids for two wind farm projects in the Eastern Cape by participating in the Department of Energy’s Renewable Energy Independent Power Producer’s Programme (REIPPP).

“Whilst the company is proud of this early achievement, and although it aims to focus on using cleaner energy technologies, it has a much broader vision for its African operations. The Cennergi team will focus on building a diversified portfolio of energy assets which includes coal, gas, hydro, wind and solar,” Hart said.

 

Comments (0)

AfricaBusiness.com Newsletter



Business in UAE
Copyright © 2009 - 2016. African Business Environment. All Rights Reserved. AfricaBusiness.com Business Magazine