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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.

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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.

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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

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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

 

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South Africa’s Professor Jonathan Jansen To Be Honored At Awards Gala In New York City, June 3, 2013

Posted on 18 May 2013 by Africa Business

NEW YORK /PRNewswire/ — Professor Jonathan Jansen , the Vice-Chancellor and Rector of the University of the Free State in South Africa who helped turn the university away from its apartheid legacy into an institution that is truly representative of what South Africa stands for, is set to receive the Education Africa Lifetime Achievement Award for Africa at a gala by the same name on Monday, June 3, 2013, at the Mandarin Oriental Hotel in New York City.

South Africa's Professor Jonathan Jansen To Be Honored At Awards Gala In New York City, June 3, 2013. (PRNewsFoto/Education Africa)

Jansen is being recognized for the great strides he has taken in ensuring integration at a university that once threatened to implode with racial tension and for his continued work towards the transformation of education in South Africa. In 2010, just two short years after Jansen joined the institution as its Vice-Chancellor, it was awarded the World Universities Forum Award for Best Practice in Higher Education for the racial integration and harmonisation of the student community.

Oprah Winfrey , who was awarded an honorary doctorate by the university in 2011, said at the time: “What has happened here at Free State in terms of racial reconciliation, of peace, of harmony, of one heart understanding and opening itself to another heart is nothing short of a miracle. It is truly what the new South Africa is all about.”

South Africa's Professor Jonathan Jansen To Be Honored At Awards Gala In New York City, June 3, 2013. (PRNewsFoto/Education Africa)

Grammy Award winning Roberta Flack , who is best known for a string of hits like Killing Me Softly With His Song; Set the Night to Music and The First Time Ever I Saw Your Face, inter alia, will give a special live performance at the event.

The awards are being hosted by Education Africa and Brand South Africa . Education Africa is a 501 (c) (3) non-profit tax exempt organization which is headquartered in Johannesburg, South Africa and has registered offices in the USA, Austria and the UK. Brand South Africa is a publicly funded trust with trustees appointed by South Africa’s president. It works with partners in and out of government to see that South Africa’s value proposition as a place to do business, invest in and visit – and from which to source products, ideas and inspiration – is fully appreciated.

For more information on this event and sponsorship opportunities, please visit:  http://www.educationafrica.org/documents/DIGITAL_INVITE_2013_June.pdf

SOURCE Education Africa

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Canadian Solar’s Partner Romano Wins Eskom Rooftop Project in Johannesburg

Posted on 15 May 2013 by Africa Business

About Eskom

Eskom generates approximately 95% of the electricity used in South Africa and approximately 45% of the electricity used in Africa. Eskom generates, transmits and distributes electricity to industrial, mining, commercial, agricultural and residential customers and redistributors. Additional power stations and major power lines are being built to meet rising electricity demand in South Africa. Eskom will continue to focus on improving and strengthening its core business of electricity generation, transmission, trading and distribution.  For more information, please visit www.eskom.co.za.

About Romano Group

The Romano Group is a multi-skilled provider of a broad range of sustainable solutions, to clients who are typically large commercial, industrial or retail property owners and tenants spread throughout Africa. Romano’s value-added offer includes the design, manufacture and installation of high-quality Solar PV, ECO-Lighting, Modular Construction and Signage & Print solutions, all of which are delivered on-time at a competitive price. The company celebrated its 60th birthday in 2012 and employs 150 people. For more information, please visit www.romano.co.za.

About Canadian Solar Inc.

Founded in 2001 in Canada, Canadian Solar Inc. (NASDAQ: CSIQ) is one of the world’s largest and foremost solar power companies. As a leading vertically integrated provider of solar modules, specialized solar products and solar power plants with operations in North America, South America, Europe, Africa, the Middle East, Australia and Asia, Canadian Solar has delivered more than 4GW of premium quality solar modules to customers in over 50 countries. Canadian Solar is committed to improve the environment and dedicated to provide advanced solar energy products, solutions and services to enable sustainable development around the world. For more information, please visit www.canadiansolar.com

 

JOHANNESBURG, May 15, 2013 /PRNewswire-FirstCall/ — Canadian Solar Inc. (NASDAQ: CSIQ) (the “Company” or “Canadian Solar”), one of the world’s largest solar companies, today announced the successful expansion of its partner Romano Sustainable Solutions in Africa. Romano, a pioneer company in the South African photovoltaic (PV) industry, was recently awarded the engineering, procurement and construction (EPC) contract for a 360 kW PV solar system installation. The roof top installation will be on the Johannesburg headquarters of Eskom, the largest producer of electricity in Africa.

As one of the most experienced solar PV systems integrators in Africa, Romano designs, manufactures and installs solar PV systems to commercial clients spread throughout Africa. Most of Romano’s solar PV systems are grid-tied systems. When connected to the client side of the on-site electrical sub-station, the electricity generated is used on the site by the client. When connected to the utility side the electricity generated is exported to the national or municipal electricity grid.

“We are very proud to be involved with this prestigious project for Eskom, which we understand was awarded on the basis of our technical capability and track record, as well as the cost effectiveness of our offer,” said Alexi Romano , CEO of Romano.

“The solar energy market in Africa continues to develop and has considerable potential for growth. We are positioned to benefit through our relationships with experienced partners like Romano. We look forward to supporting their growth in this important market, including the high profile Eskom project,” said Dr. Shawn Qu , Chairman and CEO of Canadian Solar.”

 

SOURCE Canadian Solar

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Satellite ultra-broadband in Europe & Africa

Posted on 15 May 2013 by Africa Business

NEW YORK, May 15, 2013 /PRNewswire/ — Reportlinker.com announces that a new market research report is available in its catalogue:

Satellite ultra-broadband in Europe & Africa

http://www.reportlinker.com/p01029508/Satellite-ultra-broadband-in-Europe–Africa.html#utm_source=prnewswire&utm_medium=pr&utm_campaign=Broadband

In this report, IDATE identifies the latest developments and major trends in the broadband and ultra-fast broadband markets. After a detailed analysis of the various terrestrial networks and their coverage, it examines satellite technology and the opportunities for positioning it as a complementary service to terrestrial networks to reduce the digital divides that currently exist in Europe and Africa.

Region: Europe: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, Eastern Europe, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, TurkeyAfrica: Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Central African Rep., Chad, Congo, Dem. Rep., Congo, Rep., Côte d’Ivoire, Djibouti, Egypt, Equatorial Guinea, Eriteria, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Senegal, Sierra Leone, Somalia, South Africa, Sudan, Tanzania, Togo, Tunisia, Uganda, Zambia, Zimbabwe.

Contents • Part 1

Recalling the objectives of the Digital Agenda

• Part 2

Status of broadband market in Europe

• Part 3

Status of ultra-broadband market in Europe

• Part 4

Status of satellite broadband market in Europe

• Part 5

Satellite operator strategies

• Part 6

IDATE’s assessment and market forecasts up to 2017

• Part 7

Introduction to Africa

• Part 8

Status of broadband market in Africa

• Part 9

Satellite operator strategies

• Part 10

IDATE’s assessment and market forecasts up to 2017

• In this report, IDATE identifies the latest developments and major trends in the broadband and ultra-fast broadband markets.

• After a detailed analysis of the various terrestrial networks and their coverage, it examines satellite technology and the opportunities for positioning it as a complementary service to terrestrial networks to reduce the digital divides that currently exist in Europe and Africa.

Recalling the objectives of the Digital Agenda 9• Digital Agenda objectives are being met for basic broadband 10• Objectives of national plans diverging from Digital Agenda for ultra-broadband 112. Status of broadband market in Europe 12• DSL network coverage is improving 13• Rural coverage still needs to progress 14• As a consequence of the DAE, bitrates are improving fast 15• Competition from mobile networks gathers pace 163. Status of ultra-broadband market in Europe 17• Migration to ultra-fast broadband continues on the fixed market… 18• Adoption among households remains low 19• LTE is now launched in most European countries 20• Mobile operators are now tackling the residential fixed market 21• Towards the era of the Gbps 224. Status of satellite broadband market in Europe 23• Some

Figures

on satellite broadband consumers 24• Satellite access solutions are highly competitive 25• Satellite access solutions are tailored to tackle under-served terrestrial markets 26• Full satellite triple-play packages can be proposed 27• 5. Satellite operator strategies in Europe 28• Eutelsat 29• SES 31• Avanti 33• 6. IDATE’s assessment and market forecasts for Europe 34• 7. Introduction to Africa 36• A market with several barriers to entry 37• The fast deployment of submarine cables is a game changer 38• On land, fibre backbone networks are also being deployed 39• Impact of fibre deployment on satellite bandwidth princing 40• 8. Status of broadband market in Africa 41• Africa has less than 5% of world users 42• Fixed broadband prices are unsustainable 43• Mobile telephony is becoming the entry point for Internet access 44• Mobile broadband is progressing rapidly 45• Mobile broadband pricing is decreasing 46• 9. Satellite operator strategies in Africa 47• YahSat 48• SES and Eutelsat 49• 10. IDATE’s assessement and market forecasts for Africa 50• IDATE’s assessement and market forecats up to 2017 51• Who are we? 52

Figures

• Figure 1: Fixed broadband penetration in Europe 10• Figure 2: Digital agenda objectives 11• Figure 3: Total DSL network coverage in Europe, end-2011 (% of population) 13• Figure 4: Rural DSL network coverage in Europe, end-2011 (% of population) 14• Figure 5: Fixed broadband lines by speed, 2008-2012 15• Figure 6: Fixed broadband lines by speed, January 2012 15• Figure 7: Total HSPA coverage in Europe, end of 2011 16• Figure 8: Rural HSPA coverage in Europe, end of 2011 16• Figure 9: FTTx network coverage, end-2011 18• Figure 10: FTTH/B adoption, YE 2012 19• Figure 11: Other FTTx technologies adoption, YE 2012 19• Figure 12: Timetable for LTE spectrum in Western Europe 20• Figure 13: Evolution of LTE coverage in Portugal following use of the 800 MHz band 20• Figure 14: HomeFusion service offered by Verizon Wireless 21• Figure 15: LTE service for homes offered by TeliaSonera 21• Figure 16: Evolution of fixed broadband technologies up to 2030 22• Figure 17: LTE-Advanced performance 22• Figure 18: Bandwidth consumption, per subscriber 24• Figure 19: Bandwidth consumption, by application 24• Figure 20: Evolution of satellite broadband offering for basic package 25• Figure 21 : Price change of a broadband satellite reception terminal 25• Figure 22: Positioning of some satellite broadband offerings in France(as of February 2013) 26• Figure 23: In the USA, ViaSat and Hughes tackle 26• Figure 24: Dishnet satellite triple-play packages being offered by Dish (based on HughesNet Gen4 service) in the USA 27• Figure 25: Satellite broadband terminal proposed by Eutelsat with TV reception capability 27• Figure 26: Ka-Sat coverage 29• Figure 27: Selected packages based on Ka-Sat 29• Figure 28: Evolution of Tooway subscriber base 30• Figure 29: Evolution of Tooway download speeds 30• Figure 30: Hybrid vision of SES 31• Figure 31: Broadband for communities (launched in 2011) 31• Figure 32: Evolution of ASTRA2Connect subscribers 32• Figure 33: Evolution of ASTRA2Connect download speeds 32• Figure 34: Avanti coverage in Europe (Hylas-1 satellite) 33• Figure 35: Satellite broadband packages distributed by irish distributor, Qsat (downlink speeds from 4 to 10 Mbps) 33• Figure 36: Forecast of residential subscriptions to a two-way ultrabroadband satellite solution in Europe, 2013-2017 35• Figure 37: Literacy rates in Africa 37• Figure 38: PC penetration in Africa 37• Figure 39: Evolution of submarine cable deployments in Africa 38• Figure 40: Map of terrestrial fibre backbones in Africa, YE 2012 39• Figure 41: E1 pricing for a selection of African countries, 2012 39• Figure 42: Excerpt from Seacom commercial brochure 40• Figure 43: Average evolution of bandwidth prices over 2009-2012 40• Figure 44: Fixed broadband access penetration in Africa, end 2012 42• Figure 45: Fixed broadband penetration compared with literacy rate 42• Figure 46: Price of fixed broadband subscriptions based on per capita GDP 43• Figure 47: African mobile penetration, as of YE 2012 44• Figure 48: Top 5 African mobile markets, at YE 2012 44• Figure 49: Status of 3G, as of February 2013 45• Figure 50: Top 5 African 3G markets, at YE 2012 45• Figure 51: Monthly broadband basket, YE 2011 46• Figure 52: YahClick coverage 48• Figure 53: Eutelsat IP Easy coverage 49• Figure 54: Satellite broadband packages being offered as of year-end 2012 by Get2Net (SES ASTRA2Connect) 49• Figure 55: Forecast of residential subscriptions to a two-way ultrabroadband satellite solution in Africa, 2013-2017 51• Table 1: Basic coverage national objectives, in selected countries 10• Table 2: Objectives of national broadband plans, in selected countries 11• Table 3: Electrification rates in Africa 37• Table 4: Selection of mobile broadband basket (prepaid handsetbased), YE 2011 46• Table 5: Array of speeds offered by Vox Telecom in South Africa and Coolink in Nigeria (as of February 2013) 488

To order this report:Broadband Industry: Satellite ultra-broadband in Europe & Africa

Contact Clare: clare@reportlinker.com
US:(339) 368 6001
Intl:+1 339 368 6001

 

SOURCE Reportlinker

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Morningstar Announces Findings from Third Global Fund Investor Experience Report; United States Scores the Best and South Africa the Worst

Posted on 15 May 2013 by Africa Business

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individuals, financial advisors, and institutions.

 

CHICAGO, May 15, 2013 /PRNewswire/ — Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today released its Global Fund Investor Experience report, which assesses the experiences of mutual fund investors in 24 countries across North America, Europe, Asia, and Africa. Morningstar’s evaluation of investor-friendly practices in fund markets worldwide identified the United States as the best market for fund investors based on criteria such as investor protection, transparency, fees, taxation, and investment distribution, while South Africa scored the worst. This year’s report also includes first-time reviews of fund investor experiences in Korea and Denmark.

“We launched the first Global Fund Investor Experience report in 2009 to examine the treatment of mutual fund shareholders in 16 countries with the goal of advancing a dialogue about best practices worldwide. Since that time we’ve had numerous conversations with regulators and investment companies in multiple countries about their existing policies and ways to improve,” John Rekenthaler , vice president of research for Morningstar, said. “Working with our analysts around the world, we expanded our survey to 24 countries this year. We hope our survey findings will help investment companies, distributors, and regulatory bodies around the globe continue to focus on improving the environment for investors.”

Morningstar researchers evaluated countries in four categories: Regulation and Taxation, Disclosure, Fees and Expenses, and Sales and Media. Morningstar weighted the questions and answers to give greater importance to factual, empirical answers as well as the high-priority issues of fees, taxes, and transparency. Morningstar assigned countries a letter grade for each category and then added the category scores to produce an overall country grade. The report’s authors gathered information from available public data and from Morningstar analysts. Below are the overall country grades, from highest to lowest scores and then in alphabetical order:

United States:  A

Sweden: B-

Korea:  B+

Switzerland: B-

Netherlands:  B

United Kingdom: B-

Singapore:  B

Australia: C+

Taiwan:  B

Belgium: C+

Thailand:  B

Canada: C+

China:  B-

France: C+

Denmark:  B-

Italy: C+

Germany:  B-

Japan: C

India:  B-

Hong Kong: C-

Norway:  B-

New Zealand: C-

Spain:  B-

South Africa: D

The United States garnered the highest score for the third time with a top grade of A. While the United States is not a leader in the area of Regulation and Taxes, it has the world’s best disclosure and lowest expenses. South Africa, in contrast, received the lowest grade largely because of poor disclosure practices. The new countries reviewed in this year’s report—Korea and Denmark—earned grades of B+ and B-, respectively.

New Zealand showed the largest improvement from the 2011 study rising to a C- from a D- because of positive regulatory changes and an encouraging expansion of disclosure requirements. Morningstar anticipates that the New Zealand government’s ongoing review of all fund regulations will result in even more improvements and investor-friendly practices in the years to come.

Among the key findings of the study:

  • Bans on advisor commissions are spreading around the world. In the UK, the Retail Distribution Review (RDR) has already brought such a ban into effect, while similar moves are underway in Australia and the Netherlands.
  • While the U.S. and European fund markets are roughly similar in size, U.S. investors pay significantly lower fees than European investors.
  • Fund companies in most countries continue to treat the names of portfolio managers as trade secrets, leaving investors no way to determine who is responsible for a fund’s success or failure.
  • Australia and New Zealand do not require funds to publicly disclose full portfolio holdings, while France, South Africa, Korea, and the UK only disclose holdings to current owners.

To read Morningstar’s complete Global Fund Investor Experience report, click here.

SOURCE Morningstar, Inc.

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Global Trade Partners in the 21st Century

Posted on 15 May 2013 by Africa Business

WASHINGTON, May 15, 2013/African Press Organization (APO)/ — Remarks

Robert D. Hormats

Under Secretary for Economic Growth, Energy, and the Environment

World Economic Forum

Pretoria, South Africa

May 14, 2013

 

 

As Prepared

 

Thank you Lyal for the kind introduction.

I am delighted to be in South Africa again. I visited last fall with Secretary of State Hillary Clinton.

What was most striking then, and continues to be the case today, is the extent to which the image of Africa has changed. According to the IMF, growth in sub-Saharan Africa will surge to 6.1% next year, well ahead of the global average of 4%.

Africa is booming in nearly every sector, ranging from massive energy developments in Mozambique, Tanzania, Ghana, and other countries; to the growth of Rwanda and Kenya’s information and communications technology sectors; to South Africa’s thriving auto industry. And, though far from declaring victory, Africa is reaching a turning point in its hard-fought battles against poverty and corruption.

Today’s Africa looks nothing like what, in 2000, The Economist referred to as the “Hopeless Continent.” It is critical that we concentrate the world’s eyes on the new image of Africa, that of progress and promise. Perspectives are evolving—in 2011, The Economist referred to Africa as the “Rising Continent” and, last March, as the “Hopeful Continent.”

Trade is at the heart of Africa’s economic resurgence. So, in this context, I will speak first about America’s vision for global trade in the 21st century and then, focus on implications and, indeed, opportunities for Africa. America’s global trade agenda in the 21st century is shaped by a foundation laid, in large part, in the mid-20th century. After World War II, American and European policymakers worked together to build a set of international institutions that embodied democratic and free market principles.

The GATT—which led to the WTO—World Bank, IMF, and the OECD were designed to foster international economic cooperation. These institutions were vital to the economic prosperity of the United States, and to the success of America’s foreign policy and national security for the next three generations.

As we move into the 21st century, a new multi-polar global economy has surfaced. The emergence of a new group of economic powerhouses—Brazil, Russia, India, and China, of course, but also countries in Africa—has created momentum (if not necessity) for greater inclusiveness in the global trading system.

At the same time, these new players must assume responsibilities for the international economic system commensurate with the increasing benefits they derive from the global economy. In addition to the geography of international trade, the nature of trade and investment has evolved to include previously unimaginable issues such as e-commerce and sustainability.

So, part of our vision for trade in the 21st century is to build a system that is more inclusive, recognizes the new realities of economic interdependence, and matches increased participation in the global trading system with increased responsibility for the global trading system.

We are making progress with bringing new players into the global trading system as equal partners. Free Trade Agreements with Korea, Colombia, and Panama entered into force last year.

And, we are continuing negotiations on the Trans-Pacific Partnership—or TPP as it is more widely known. With Japan’s anticipated entry into the negotiations, TPP will grow to include 12 countries of different size, background, and levels of development. The agreement, when finalized, will encompass nearly 40% of global GDP and one-third of global trade.

In addition to TPP, we are embarking on a Transatlantic Trade and Investment Partnership with the European Union. TTIP—as it is being called—will strengthen economic ties between the United States and Europe, and enhance our ability to build stronger relationships with emerging economies in Asia, Africa, and other parts of the world.

TPP and TTIP are truly historic undertakings. Our objective is not only to strengthen economic ties with the Asia-Pacific and Europe, but also to pioneer approaches to trade and investment issues that have grown in importance in recent years.

These agreements will seek to break new ground by addressing a multitude of heretofore unaddressed non-tariff barriers, setting the stage for convergence on key standards and regulations, and establishing high quality norms and practices that can spread to other markets. TPP, for example, will raise standards on investment and electronic commerce, and afford protections for labor and the environment.

Our agenda also includes strengthening the multilateral trading system through the World Trade Organization. For example, the United States would like to see a multilateral Trade Facilitation Agreement, which would commit WTO Members to expedite the movement, release, and clearance of goods, and improve cooperation on customs matters. A Trade Facilitation Agreement would be a win-win for all parties—Africa especially.

Cross-border trade in Africa is hindered by what the World Bank calls “Thick Borders.” According to the latest Doing Business Report, it takes up to 35 days to clear exports and 44 days to clear imports in Africa. Clearing goods in OECD countries, in contrast, takes only 10 days on average and costs nearly half as much. Countries like Ghana and Rwanda have benefited tremendously from the introduction of trade facilitation tools and policies.

Ghana, for instance, introduced reforms in 2003 that decreased the cost and time of trading across borders by 60%, and increased customs revenue by 50%. A multilateral Trade Facilitation Agreement will create a glide path for increased trade with and within Africa.

Our views for 21st century global trade partnerships go beyond Europe and the Asia-Pacific, and efforts at the WTO. We are committed to supporting Africa’s integration into the global trading system. The cornerstone of our trade relationship with sub-Saharan Africa is the African Growth and Opportunity Act—known as AGOA. Of all of our trade preference programs, AGOA provides the most liberal trade access to the U.S. market.

Exports from Africa to the United States under the AGOA have grown to $34.9 billion in 2012. While oil and gas still represent a large portion of Africa’s exports, it is important to recognize that non-petroleum exports under AGOA have tripled to nearly $5 billion since 2001, when AGOA went into effect. And, compared to a decade ago, more than twice the number of eligible countries are exporting non-petroleum goods under AGOA.

South Africa, in particular, has made great strides in diversifying its exports to the United States. Thanks to AGOA, the United States is now South Africa’s main export market for passenger cars, representing more than 50% of exported value in 2012. Because AGOA is such an important mechanism for African countries to gain access to the U.S. market, the Administration is committed to working with Congress on an early, seamless renewal of AGOA. Our trade relationship with Africa goes beyond AGOA. For instance, AGOA represents only one-quarter of South African exports to the United States. The composition of South Africa’s exports to the United States, moreover, reflects complex interdependencies and industrial goods.

And, our trade relationship with Africa is not just about one-way trade. There is an immense opportunity for U.S. companies to do business on the continent.

We recently launched the “Doing Business in Africa Campaign” to help American businesses identify and seize upon trade and investment opportunities in Africa. The campaign was announced in Johannesburg, in part, because South Africa can play a prominent role in directing U.S. investment into other parts of the continent.

Although progress has been made on diversifying exports beyond energy, there is much more to be done. African ingenuity and entrepreneurship must be unleashed to drive innovation and growth throughout the continent. This requires closer integration to share ideas, transfer knowledge, and partner on solutions. Through AGOA and the “Doing Business in Africa Campaign”, we are promoting a business climate in Africa that enables and encourages trade and investment. However, realizing these goals is goes beyond trade preferences and commercial linkages.

Africa is also featured in America’s vision for global trade in the 21st century.

For example, we recently launched the U.S.-East African Community Trade and Investment Partnership—the first of its kind—to expand two-way trade and investment. The Partnership is designed to build confidence among the private sector by building a more open and predictable business climate in East Africa. We are considering a variety of mechanisms to accomplish this, including a regional investment treaty and trade facilitation agreement. The Partnership highlights our desire to help Africa integrate and compete in today’s global economy.

I will conclude with one final point. I began by saying that trade is at the heart of Africa’s economic resurgence. Trade is also at the heart of America’s economic recovery. We have a common interest and a common goal.

When it comes to enhanced trade, what is good for Africa is good for America. And what is good for America is good for Africa.

Thank you.


SOURCE

US Department of State

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SA tooling and Manufacturing tackle revival challenge

Posted on 14 May 2013 by Africa Business

South Africa’s tooling and manufacturing sectors are aggressively tackling skills challenges, and modernising and growing their operations, with a view to taking on global manufacturing giants.

AfriMold, is the 4th annual manufacturing trade fair and conference for the design, precision engineering & machining, automotive component, tooling, tool making, production and application development sectors, and is taking place 4 – 6 June at the NASREC Expo Centre in Johannesburg.


Speaking ahead of this year’s AfriMold manufacturing trade fair from 4 – 6 June at the NASREC Expo Centre in Johannesburg, key industry players said South Africa’s manufacturing sector is experiencing a new spirit of revival, on the back of an aggressively modernising and growing tooling sector.

Dirk van Dyk, CEO of the National Tooling Initiative Programme, and representative of the Tooling Association of South Africa (TASA), noted that statistics released by ISTMA (International Specialized Tooling and Machining Association at the recent World Tooling Conference in Toronto, Canada, indicate that up to 50% of any manufactured component’s cost competiveness is governed by Tooling. However, the local TDM sector only provides approximately 20% of the local manufacturing sector’s tooling requirements. “The opportunity is there for the local TDM sector to increase this percentage significantly,” he said.

“There are more than 500 local Tool, Die and Mould manufacturing companies involved in local support of the manufacturing value chain ranging from 1st to 4th tier suppliers. The local tooling sector is gearing up for growth, presenting a positive outlook for manufacturing, and with it – job creation.”

Skills development is a key component of the tooling and manufacturing industry’s growth plans, says industry heads.

Van Dyk said the TDM Powered Pilot project, which started in 2010 as part of the turnaround strategy for the distressed tooling industry, has entered its 4th year of piloting with 408 students on Level II and Level III of the Apprenticeship Programme at 12 FET institutions in the country.

The National Skills Fund has allocated funding to Instimbi through the dti to fund another apprenticeship programme with 650 students at 12 FET institutions in the country.  It is envisaged that these students should be placed by May 2013.

In addition, enterprise development is reaching companies country wide through benchmarking exercises (based on international best practice and comparison to peers) to guide local Tool, Die and Mould manufacturing companies towards increased competiveness. Intervention projects are launched to aid companies on this journey.  A new round of benchmarking will start with 30 companies in April 2013.

Coenraad Bezuidenhout, Executive Director of Manufacturing Circle, says the Manufacturing Circle is launching two important initiatives to support government’s local procurement initiative and set an important example to the private sector, and to broaden its membership. The organisation plans to rapidly increase the approximately 200 000 manufacturing jobs that the Circle membership gives direct representation to today, and to include many more smaller and medium-sized manufacturers in the Manufacturing Circle. On 16 May, the Manufacturing Circle will launch its 2013 Q1 Manufacturing Circle Quarterly Survey on manufacturing business conditions, with a new component that will provide an indicator of the measure to which manufacturers procure locally, as well as the degree to which government’s local procurement impacts on manufacturers.

Meanwhile, the automotive sector, seen as a potentially promising growth area for local manufacturing, is seeking greater engagement with local organisations.

Roger Pitot, Executive Director of the National Association of Automotive Components and Allied Manufacturers (NAACAM) says: “We must double vehicle production volumes to over a million, and we must significantly increase local content from the present dismal 35%.”

Pitot says NAACAM members employ almost 50,000 people with a turnover last year of R57 billion. The total automotive sector, including vehicle assemblers, employs over 100,000 in manufacturing and 200,000 in sales and service operations.

“Unfortunately, the automotive trade deficit has been growing and reached an all-time high of R49 billion in 2012, mainly due to a record 72% of all cars sold in South Africa being imported. Exports in 2012 at R87 billion almost recovered to the record achieved in 2008, but the outlook for the future depends largely on the global economic situation, particularly in Europe, our biggest market.  The local auto industry has to compete globally, therefore our focus is on improving our competitiveness through efficiencies and cost reductions.”

Pitot adds: “Areas of uncompetitiveness include certain materials such as steel, wages, logistics and, increasingly, electricity. So opportunities lie in improving our efficiencies and our technological capabilities. These include manufacture of higher-level tooling, more local R&D and developing capabilities to produce the lighter and greener components that will form part of vehicles in future.”

The challenges and potential growth areas for design, precision engineering & machining, automotive component, tooling, tool making, production and application development sectors will come under the spotlight at the 4th annual AfriMold conference and trade fair. The event, a partner of the highly successful EuroMold trade fair, is endorsed by major industry bodies, as well as by the Department of Trade and Industry.

Ron MacLarty, Managing Director of AfriMold, says: “AfriMold 2013 will continue to innovate and push boundaries for the manufacturing industries’ continued growth and improved competitiveness as we strive for collaboration and cohesion on the home front.”

Bob Bond, Chairman of the Plastics Institute of South Africa (PISA) Northern Branch and AfriMold Conference Convenor, says the event’s theme, ‘Enabling For Tomorrow with a focus on precision engineering and tooling as a key enabler for the South African manufacturing sector, was chosen in light of the renewed drive for competitiveness.

Among the issues to be addressed at the conference are:

· What the SA Automotive sector expects from the local tooling industry

· Industrial Design: The Competitive Edge for Tooling and Manufacture

· Solutions for super profitable tool rooms

· How to fund equipment with IDC money

· Initiatives to boost Toolmaking Enterprises Development.

The AfriMold Trade Fair and Conference will also include the PISA/ AfriMold Student Design Presentations and PISA Member Awards.

For more information about AfriMold, visit www.afrimold.co.za or contact Terri Bernstein at Tel: +27 83 635 3539 or terri@afrimold.co.za

 

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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

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