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Moody's warns that local debt markets can protect Africa from funding cuts.
Marie Diron, global head of sovereign risk at Moody's, says that African countries need to develop liquid local debt markets within their own currencies in order to protect themselves from the volatility of global markets and fickle investors. After a series of downgrades and cuts, some credit ratings on the continent are now rising. This is due to the strain the COVID-19 pandemic has put on sovereign financial statements. Diron noted that as geopolitical risks and trade wars roiled global markets, those countries who have increased local funding are doing the best. These include Benin and Ivory Coast. She said in an interview at the Mo Ibrahim Foundation event in Marrakech that "domestic funding" was needed to bridge the gap. Diron stated that the liquidity of South Africa's domestic debt markets has helped to shield its rating and borrowing costs from the turmoil caused by President Donald Trump's antagonistic approach towards President Cyril Ramaphosa and his government. She said that reducing foreign currency exposure, increasing maturity and using revenue efficiently were all key factors in boosting the credit ratings of African countries and their market access. Moody's Research shows that the median interest rates on local currency debts in Africa are around 12%. This compares to 8% in Latin America, and 5.5% in Asian Emerging Markets. These findings highlight cost savings African sovereigns can achieve by developing their local markets. Diron stated that African governments were able to access more financing options in the past decade. These included the World Bank and affordable international bond markets. Sources are now more limited and constrained, as rich nations cut aid and the concessional financing is shrinking. She said that the flow of money from China - a major source for Angola, Zambia and other countries - is now negative, as repayments are due and new lending slows. Diron, speaking of China, said: "We are looking at a couple years where net flows will be negative because repayments will be greater." The decline in oil prices has also affected crude exporters' revenue, particularly Angola. Diron stated that Moody's expects Brent to remain at around $65 per barrel. This is a decrease of about $10 from the previous forecast. Diron stated that multilateral development banks were filling in gaps. However, the amounts are in the "tens and billions" but not enough to cover the $400 billion annual financing gap estimated by the African Development Bank. Moody's also monitored any further cuts to U.S. financing Diron said that international institutions such as the World Bank, the IMF, and the AfDB are all important. She said: "It's a risk to conclude that multilateral banks cannot lend as much money as they do now, at a time where borrowing needs, if anything are increasing."
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IAEA chief: No way to restart Zaporizhzhia Nuclear Plant at this time
The head of UN's nuclear watchdog stated on Tuesday that the conditions for restarting Ukraine’s Zaporizhzhia plant, which is occupied by Russia, do not exist due to the lack of cooling water and the absence a stable electricity supply. In an interview with the Kyiv-based IAEA director general Rafael Grossi, he said that the Zaporizhzhia Nuclear Power Plant would need to be restarted by pumping water from the Dnipro River. In March 2022, Russia occupied the facility in Ukraine's Zaporizhzhia Region, just a few months after it invaded its neighbor. Grossi stated that the Russians "never hid the fact" they wanted to restart the factory, but would not be able do so anytime soon. "We do not have a situation where the plant is about to restart imminently." Grossi stated that it would be a long time before the plant could be restarted. The IAEA chief said that before restarting the plant, all of its machinery would be inspected thoroughly. The Ukraine has stated that a Russian attempt to restart the Zaporizhzhia Plant would be dangerous as they are not certified operators. Grossi stated that Russian nuclear staff was capable of restarting the reactor, and the certification issue was more political than technical. Ukraine also protested against the IAEA monitoring mission that visited the plant via Russian-occupied territory. Grossi explained that he was doing this to protect his staff and because he did not yet have the guarantees necessary from the Russians to transit IAEA personnel safely through the frontlines into Ukraine-controlled territory as a number of times previously. (Reporting and editing by William Maclean, Max Hunder)
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Zimbabwe issues permits to cull at least 50 elephants
Wildlife authorities in Zimbabwe said that they have issued permits for the culling of at least 50 elephants from a reserve with three times as many elephants as it can support. Zimbabwe Parks and Wildlife Management Authority stated in a press release that the Save Valley Conservancy, in southern Zimbabwe, is home to approximately 2,550 elephants. However, it only has "carrying capacities" for 800 elephants. In the last five years, the conservancy has already relocated 200 elephants from its reserve to another reserve to control elephant numbers. The meat from the cull is distributed to the locals for consumption, and the ivory of the animals killed will be given to the park authority. Zimbabwe has one of the world's largest elephant populations. Climate change has exacerbated conflict between humans and wildlife as elephants are encroaching on human settlements in search of water and food. Last year, the country in Southern Africa authorized a second cull of around 200 elephants. This was the first time since 1988. Authorities said at the time they would distribute the meat from the cull among communities that were suffering a severe drought in the region. This was shortly after Namibia announced it would do so. (Reporting and editing by Alexander Winning and William Maclean; Alessandro Parodi, Nelson Banya)
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Liulin Senze Coal & Aluminum, a Chinese company, will produce alumina using low-grade ore
The developer of the new technology said that in July, a Chinese company Liulin Senze Coal & Aluminum would begin producing alumina in its Shanxi factory from low-grade bauxite thanks to a technology developed in France. China's bauxite reserves are large, but many of them are of poor quality. This makes the country dependent on imports of bauxite to meet the demand for alumina, a critical input for the production of aluminium. China is the largest producer of aluminum in the world. Romain Girbal, CEO of IB2, said that the process developed by French green technology company IB2 allows low-grade bauxite to be converted into high-quality aluminum by neutralizing impurities like silica and sulfur. He said that the plant in Shanxi is expected to produce 50,000 tons of bauxite a month by December, and IB2 plans to increase this to 3,000,000 tons per year over the next two-years. He said that IB2 technology was being used in a 22-year contract signed with Liulin Senze Coal & Aluminum. Liulin Senze Coal & Aluminum has not responded to any requests for comment. Girbal stated that IB2 has advanced discussions about providing technology with five other Chinese manufacturers. The technology may help China reduce its reliance on imported Bauxite to produce alumina, but the long-term production scale that can be achieved using this technology is still unknown. The global bauxite supply is in doubt after Guinea's military-led government cancelled 129 mineral exploration licenses, including some relating to bauxite. Customs data shows that Chinese bauxite exports increased 12.4% in 2024, from 158.77 to 158.77 millions tons. According to the International Aluminium Institute, China produced 72 million tonnes of primary aluminum last year. Reporting from Ashitha Shivaprasad, Bengaluru. Editing by Pratima Deai and Susan Fenton.
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Lobby group warns that China's export restrictions on rare earths could stop German auto production.
The German auto lobby has warned that China's export bans on rare earths - used in everything from anti-lock brake sensors to windshield wiper motors - could cause production delays. This is the latest industry group which has raised the alarm about supply delays. In a recent statement, Hildegard Müller, head of the auto lobby VDA said that delays in export clearance and slow granting of licenses meant that suppliers were unable to produce essential components to keep production of cars running smoothly. This was the first time that the lobby warned of a possible production stoppage. Sources said earlier Tuesday that diplomats, automakers, and other executives, from India, Japan, and Europe, are seeking urgent meetings with Beijing officials in order to press for a faster approval of rare-earth magnet exports. This is after China implemented new rules, requiring exporters to obtain licenses from Beijing, back in April. Beijing is seen by many as using controls as a major diplomatic tool because there are few alternatives outside China. Trade groups representing automakers in the U.S., India, and other countries, including General Motors and Toyota, have warned that their factories could close within weeks if their suppliers were unable to supply critical components, such as sensors, cameras, and transmissions. China has granted some permits to rare earth producers including Volkswagen suppliers, but not enough, according to VDA's Mueller. Last week, German auto parts manufacturer Bosch stated that China's stricter procedures for granting export permits have caused delays in the supply chain. Mueller stated that "production delays or even production outages cannot be ruled out if the situation does not change quickly."
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VW Wolfsburg may switch to a four-day work week in 2027, according to the workers' council
Daniela Cavallo, the head of the Wolfsburg works council, told employees on Tuesday that Volkswagen's restructuring its Wolfsburg factory from 2027 in order to allow for EV production only could lead to a temporary four day working week. Cavallo was a key figure in negotiations last year with management over cost reductions. He said that unions had agreed on a minimum capacity utilization for the transition period. However, he urged workers to work extra shifts to compensate for the possibility of reduced working hours in the future. Cavallo stated that a four-day work week was not unreasonable from 2027. Volkswagen's agreement with unions to reduce costs in Germany last December included the production of the combustion engines Golf from Wolfsburg, Germany to Mexico by 2027. This prompted concern from some employees of the company's headquarters about the future of the factory. Cavallo tried to assure the workers that the future of the plant was in better hands by announcing plans to produce an electric Golf as well as the successor to its T-Roc small SUV, before the end of this decade. He cited the decline in demand for VW's iconic combustion engine car. A graph created by the Wolfsburg works council, and seen by, showed that golf production has dropped from more than a million cars in 2015 to less than 300,000 by 2024. This year, only 250,000 vehicles are expected. The Golf must move to Mexico. Sooner or later. Cavallo, in comments posted on the intranet of the company, said that if we don't, we will be at the bottom end of the statistics I showed.
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Lobby group warns that China's export restrictions on rare earths could stop German auto production.
The German auto lobby warned that China's export restrictions on rare earth alloys, magnets, and mixtures pose a serious threat to the industry. This could lead to production delays and even outages if no solution is found. In a recent statement, Hildegard Müller, head of the auto lobby VDA said that the slow granting of licenses and delays in the customs clearance for exports with valid licences were causing major problems for automakers. This was the first time VDA has warned about an imminent stop in production. Sources said earlier Tuesday that diplomats, automakers, and other executives, from India, Japan, and Europe, are seeking urgent meetings with Beijing officials in order to press for a faster approval of rare-earth magnet exports. This is after China implemented new rules, requiring exporters to obtain licenses, from Beijing, back in April. "Although some licences have been granted, they are not enough to guarantee smooth production..." Mueller warned that if the situation does not change quickly, delays in production and even production shutdowns are no longer a possibility. The shortage of rare earths threatens to further strain the supply chains for automakers such as Volkswagen, Mercedes-Benz, and BMW. It will also affect suppliers like Bosch and other companies who use them for motors in electric cars.
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JPM estimates that Saudi Arabia will issue bonds worth $12.6 billion by the end of the year.
JPMorgan reported on Tuesday that Saudi Arabia will issue bonds worth $12.6 billion for the rest of the year. The kingdom is resorting to debt markets as it makes huge investments in order to revamp its economy and reduce oil prices. The Gulf nation, which is forecasting a budget gap of $26,93 billion for this year, seeks funds to invest into new industries, and wean itself off oil, under its Vision 2030 Plan, by investing in tourism, manufacturing, and technology. Reports in April indicated that Saudi Arabia faces increasing pressure to increase debt or reduce spending following a drop in crude oil prices. The Kingdom enjoys a low ratio of debt to GDP and the confidence of lenders. It was also among the largest emerging markets debt issuers by 2024. JPMorgan Chase said that it has issued $14.4 billion in bonds so far this fiscal year. It is the largest issuer of emerging market debt in the first five month of 2025. This was despite the market volatility caused by President Donald Trump’s trade policies. JPM stated that "an uncertain macro-economic environment around the world and higher borrowing costs were deterrents to new issue activity in emerging markets over the last three months". The bank stated that, "supply could increase in June, if market conditions remain stable," but warned that volatility was still a major risk. Saudi Arabian companies, such as the state oil giant Aramco, and sovereign wealth fund PIF have also tapped into the debt market. Saudi Aramco raised $5 billion last week through bonds. It also published a prospectus for Islamic Bonds, which could indicate a future issuance. JPM reported on Tuesday that Kuwait was one of the other emerging market countries with the "largest issuance expectations" from now until the end of this year. Kuwait is forecasting an $8 billion debt issuance before year's end. This small Gulf state is also the fourth largest oil producer in the Middle East. It issued this law earlier this year to regulate public borrowing, as it prepares to return to the international debt markets, after an eight-year absence. (Reporting by Federico Maccioni, editing by Yousef Saba, William Maclean)
Oil prices rebound after OPEC+ maintains same production increase in July versus the previous month
Monday, oil prices rose by more than $1 a barrel after OPEC+ announced that it would increase production in July in the same proportion as in the two previous months. This was in line with expectations on the market.
Brent crude futures rose $1.19 or 1.9% to $63.97 per barrel at 0044 GMT, after closing 0.9% lower Friday. U.S. West Texas Intermediate Crude was $62.09 per barrel, up $1.30 or 2.14% after a 0.3% drop in the previous session. Both contracts were lower than 1% over the past week.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have decided to increase output by 411,000 barges per day for July. This is the third time the group, known as OPEC+, has increased production by the same amount.
The group was expected to discuss an increase in production.
Harry Tchilinguirian, an analyst at Onyx Capital Group, wrote on LinkedIn that if they had gone with a larger surprise amount then Monday's opening price would have been very ugly.
Brent and WTI oil futures already reflect the increase of 411,000 bpd in production.
Analysts said that low fuel stock levels in the United States have caused supply concerns ahead of an expected hurricane season above average.
In a recent note, ANZ analysts noted that the surge in implied demand for gasoline was "more encouraging" as it coincided with the beginning of what is considered the U.S. summer driving season. They added that the increase of almost 1 million bpd marked the third highest weekly gain in the past three years.
The impact of the lower crude oil prices in the United States, which have hit production levels, is also being closely monitored by traders.
all-time high
13 49 Mbpd was produced in March.
Baker Hughes' weekly report said that the number of oil rigs operating in the U.S. dropped for the fifth consecutive week. It fell four to 461 - the lowest level since November 2021.
(source: Reuters)