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Hi All

In chatting to some friends during the month I mentioned this will be my most positive letter as regards SA Inc. in quite a while. Which is saying something because perhaps I have been relatively local-positive over the recent past anyway.

What keeps me positive? A fair number of things I guess, combining to produce a “Goldilocks” outcome for the meanwhile. The local stock market has been playing along, giving us excellent returns virtually across the board with previously beaten up sectors prospering again. Resources are regaining their long lost position as a market leader while the manufacturing boom continues around the world. These cycles normally last around 18 months to 2 years so, with the current one just under a year old, there still seems to be some legs in it. We see many local money managers still happy to be invested in the sector on a selective basis which gives hope that there remains money to be made.

91 recently hosted an interview with Neal Froneman the CEO of Sibanye Stillwater. How enlightening and encouraging to hear one of our foremost mining houses talk about the long term potential of the local Platinum industry. Cynics may say he is paid to talk this way but I give him benefit of the doubt which says he can carry on developing a world class miner right here in SA. To be fair he did say the majority of their future expansion will be non-SA due to uncertainty with the mining charter. We would all like to see a more reasonable charter to encourage domestic fixed investment and there are moves in that direction, but still a way to go.

Other miners are similarly poised to take advantage of the commodity shortages currently being experienced worldwide. There is talk of another commodity super-cycle which I think is premature and just plain unnecessary in practical terms. What our industry needs is to focus on delivering as much as we can to willing buyers while demand and prices are high. Virtually every locally listed player is better prepared than at any time since the last boom, so here’s hoping.

We need our ports to come to the party so we can participate while it is still going on and there are efforts around that. We can worry about the rest afterwards, upscaling our output on an intelligent basis, protecting balance sheets unlike what we have seen before.

I know firsthand from one of our clients that mining investment by foreigners in Zimbabwe is happening. That’s a major turnaround from the past 20 years or so. Perhaps their leaders have realized that killing the goose that lays the golden egg isn’t actually the best strategy and hopefully that will rub off on our leaders.

Also from a client are revelations that President Ramaphosa’s office is interested in a plan to revive rail freight to take advantage of billions of rand of neglected infrastructure which served the economy for so long, plus to get a lot of unnecessary trucks off the road to free those arteries as well. We can only hope there is the political will and money to follow through with this vitally necessary initiative.

The President is also directly involved with another of our client’s firms in connectivity rollout to under/unserviced areas around the country. This public-private initiative has the potential to enable millions of unemployed and uneducated individuals to advance themselves. Who knows the value this can possibly add?

I could go on, but want to reserve your time to read the attached article by JP Landman courtesy of our friends at Nedgroup Investments. JP is a serial glass-half-full character, but if one looks back at what he said, most of it comes to pass. He takes the time to reveal some facts and statistics of things that are actually happening, but vastly under-reported (media doesn’t make money from good news). Many of them dovetail with what I was saying, so enjoy the read.

More next time

Kind regards,

Ricky Williams

Read the full article here.

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