Poultry sector in dark mood over power cuts
They say that a week is a long time in politics, but in SA generally, a week is a long time and always has been.
Last week, it was reported the share price of Astral Foods, one of the plump birds in the JSE’s poultry sector, jumped more than 10% in the first few trading days of 2017. Alas, a day later, the company put out a statement that epitomises the rot in SA’s economy, saying that Eskom’s planned power cuts to the Lekwa Local Municipality in Mpumalanga would severely affect its operations.
Power supply interruptions to the municipality will begin on January 23 as a result of outstanding payments to Eskom. This will interrupt Astral’s operations. There is a risk that Eskom will disconnect the power indefinitely.
Astral says its operations in the region provide jobs for 4,115 people. Astral says it will not be able to feed 11.5-million chickens a day if the cuts go ahead.
The warning comes as SA’s chicken industry is already aflutter. Producers say imports, mainly from Brazil and the EU, are killing it. Government intervention has not been enough, it says, citing “dumping”.
Critics of this viewpoint, including the Association of Meat Importers and Exporters of SA, say the imports, which make up less than 20% of SA’s production and markets, provide cheaper protein for the poor.
The EU blames SA’s drought for having pushed up local feed costs. Meanwhile, the oscillating rand cannot be helping matters.
But Eskom’s role in all this has pointed to darker economic undercurrents. The economy is in a mess, and the good ship SA is going in circles.
One mining commentator has called this the year of “mining lawfare”, with a number of critical legal battles set to be fought in coming weeks and months.
The Department of Mineral Resources has taken a beating in three important cases, not only losing the contest, but having its shortcomings highlighted.
The industry has clearly lost patience with a dithering and incompetent department, with Sibanye Gold the first to line up lawsuits against officials in their personal capacities.
There were two judgments in the mining sector — Bert’s Bricks and AngloGold Ashanti — in which the judges said officials could have been held personally liable for damages for closing down entire operations for relatively minor infringements.
The common thread was that officials had acted out of proportion with the terms of the Mine Health and Safety Act.
Holding officials personally liable will certainly focus their minds but it will also add to the friction between the industry and regulator. Late in 2016, Chamber of Mines CEO Roger Baxter was uncharacteristically outspoken about the offhand way it felt it had been dealt with in developing the third iteration of the Mining Charter.
One of the biggest challenges to the department will be when the case brought by law firm Malan Scholes goes to court in February. Malan Scholes wants the charter to be declared void.
The department is fighting a number of legal battles on a variety of fronts. It needs to appoint experienced, sensible officials who can avoid these legal confrontations. It needs to remove all taint of corruption and the sense that it, as in the Aquila Resources judgment, favours state-owned entities over privately held companies.