Novi Weekly Wrap - July 13 Edition

TAZARA receives $80m cash injection

The Governments of Zambia and Tanzania (the equal owners of TAZARA), are set to inject $80m  into the operations of TAZARA over the next 12 months. 11.5% of the amount will immediately be allocated toward paying two months of employee salary arrears as well as some working capital.

It's no secret that the entity has been facing many challenges of a financial and operational nature for a very long time which have not been adequately addressed. The railway was built 40 years ago by the Chinese government who had also ponied-up $500m dollars (in the 70s) for the project. TAZARA was among the top items on the agenda of the Chinese VPs recent visit to both Zambia and Tanzania. Last month, China Railway Construction Corporation (CRCC), who are the contractor and consultant of TAZARA said they were in the final stage of selecting a new management modality of running TAZARA which would see the entity move from a socialism type management to a more market-focused management.

This is a positive step for TAZARA because merely throwing money at it would not have solved the fundamental issues it is facing. The entity needs to be re-energized with new thinking, ifrastructure and better technology - is the current management up to task? And it not, will the two governments have the gumption to replace them? One can only hope that Beijing keeps a close eye on Tazara because they clearly have a lot of influence which they can exert...

Zambeef makes Boston Consulting Group's 'top 50 emerging market local dynamos' list

Zambeef Plc made global consulting firm Boston Consulting Group's (BCG) list of '50 Emerging Market Local Dynamos'.  The list (not exhaustive) contains 50 private companies that were selected by BCG under the following criteria:

- Identification of successful private companies that had strong reputations and a domestic focus but did not have traditional sources of advantage, such as government ownership, large land ownership, or a monopoly license. 
- The companies identified were narrowed to include only companies that were true dynamos i.e. those that were succeeding by adapting to the unique challenges of their home markets and were among the leading private-sector companies in their industries. 

Zambeef is a unique company because it is virtually completely vertically integrated - something that happened out of necessity which has also eneded up putting the company far ahead of its peers. Good to see a Zambian company deservedly getting positive recognition..

Barricks Lumwana mine rumored to be up for sale

Several prominent publications have reported that Barrick Gold could be open to a $1bn plus offer to take Lumwana mine off its hands. Barrick is looking to trim assets in order to trunaround 4 years of disappointing performance and pay down debt. 

Lumwana was purchased by Barrick in 2011 as part of the $7.3bn Equinox deal at a time when copper was trading at much higher prices than it has been recently. Barrick soon realised that Lumwana was going to be a rough ride when they took a $4.2bn writedown in Q4 of 2012! Lumwana is still a quality mining asset to hold but Barrick is simply not the miner to unlock its value. Lumwana is not short of potential buyers so a deal could happen very quickly - especially now that copper prices are starting to consolidate their recent gains.

The LuSE All Share Index closed Friday at 6,114.21 points. 44,835 shares were transacted in 9 trades resulting in a turnover of K50,476.