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Glencore set to conclude sale of Mopani stake this week

January 19, 2021by Nicholas Kabaso0
  • Vedanta Resources Plc has reportedly settled with more than 600 children who brought a claim stemming from environmental damage in Zambia and a settlement for adult claimants may now follow. Two thousand adult claimants say their lives were blighted by pollution from the nearby Nchanga copper mine, which resulted in water contamination.
  • According to a report from the Zambian National Broadcasting Corporation, citing President Lungu, Glencore is set to conclude the sale of the Mopani stake this week. Glencore yesterday also released a statement that read as follows, “Glencore confirms that it is in the final stage ne-gotiations relating to a possible sale of Carlisa’s 90% stake in Mopani to ZCCM”.  Detail of ZCCM-IH’s acquisition of Glencore’s stake will be an-nounced by Mining Minister Richard Musukwa.
  • Copper remains underpinned by the strong economic data released by China at the start of the week.  That said, the bulls have not managed to run away with the price action given that COVID-19 infections are rising in China and other parts of the world. There is a genuine concern surrounding the new variants of the virus and what this means, for now we move ahead with vaccines, but the “new normal” baseline of eco-nomic and social interaction is yet to be cemented.
  • Stateside, Treasury Secretary Nominee Janet Yellen is expected to call for “Big” action at her Senate confirmation hearing. She is likely to fa-vour using fiscal policy to help support the economy in the immediate future and to worry about curtailing the deficits to a later date. Her con-tention is that failing to act now will risk more damage to the economy over a longer period of time and that the scarring within the economy will be greater. What that might eventually mean for fiscal policy and how conservative it will need to turn remains debatable, especially with interest rates as low as they are and the Fed fully committed to reflating the US economy through the encouragement of a fresh credit cycle.
  • Although the Trump administration may be seeking to lift the ban on international travellers from the UK and Europe, Biden has already indi-cated that he will keep the bans in place. Biden is likely to take a much tougher stance on tackling the pandemic and that will include stricter enforcement of social distancing rules, as well as curtailing possible inflows of infections from hotspots such as the UK and Europe.
  • One of the fears of a Democrat government, is that it will seek to force outcomes, especially in industries which it inherently distrusts. Wall St is bracing for the imposition of more regulations to address social injustices and climate change, where companies will be forced into doing busi-ness differently. It is unclear what this will look like, but at this point it is safe to say that the individuals Biden has tasked with leading the SEC and the CFPB are considered “progressives” in their ideological stance. Gary Gensler has been appointed as head of the SEC and Rohit Chopra as head of the CFPB.
  • Shifting to the FX markets, it has been a sea of red across the Southern African currency complex on a YTD basis. While the Kwacha is not the worst-performing currency against the USD, a broader bearish bias remains entrenched. As noted in previous commentary, in the absence of clarity on debt restructuring and the implementation of meaningful reforms, the ZMW might struggle to rebound in the near-to-medium term.
  • Janet Yellen’s testimony to the Senate later today will hold some interest for FX traders. She has tended to favour a strong USD policy, but it is difficult to reconcile how that might be possible given the massive twin deficits and the ultra-accommodative stance by the Fed. Most of the policies currently implemented are USD negative. It is interesting that the USD retreated slightly off its highs ahead of Yellen’s comments to-day. It may say something about the perceived role Yellen might play in the USD’s performance given her stance at the Fed and her comments concerning worrying about fiscal deficits at a later point in time.

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Nicholas Kabaso

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