NEWSLETTERSUMMER 2012

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August Bank

holidays:

1st : Congo (Dem Rep)3rd : Equatorial Guinea7th : Ivory Coast9th : Republic of South Africa15th : Assumption day :all catholics countries concerned16th to 18 th : Gabon20th & 21st : Morocco24th : Liberia

Ramadan : all muslim countries concerned, began on July 20th and will end on August 19th

1

Ports

Liberia & Georgia's port agreement

The Georgia Ports Authority and the Liberia National Port Authority signed a memorandum extending the partnership they formed two years ago for three more years to expand trade between the southeast U.S. and the West African nation. The three year extension will see the two parties collaborate on areas including trade forecasts, technological advancements and developments in the shipping market, according to the Savannah Morning News. Liberia's ports have the potential to become a gateway to African commerce. Georgia’s Savan-

nah Port is the largest exporter to Liberia on the entire South Atlantic coast andthe second highest in imports from that country. Exports from Savannah to Libe-ria include automobiles, construction equipment, clothing, poultry. Liberia produces and exports such basic products as raw timber and rubber, as well as a variety of agricultural products, incuding coffee, cocoa, rice, palm oil, sugar cane and bananas. Liberia’s NPA system includes four ports, headed by the Freeport of Monrovia, and handles 90 % of the country’s trade.

Mozambique ports to get improved

Beira and Nacala are positioning them-selves as regional ports and attracting an increasing amount of traffic from East and West Africa. Port of Beira access channel had under-gone emergency dredging, an operation that had been finished in July 2011. As a result of the dredging the port recovered its original depth of 8.5 metres, which allows ships weighing up to 60,000 tons to moor at the port. The new equipment is part of the project to improve sea ope-rations at the port of Beira, which is financed by the Mozambican govern-ment, in cooperation with the Danish

government, to the value of 38.2 million euros. The port is expecting to get a new tug and two launches to improve marine operations.The tug boat and the launches will allow dredging company Empresa Moçambicana de Dragagens (Emodraga) to control and dredge around 2.5 million cubic metres of sedi-ment from the access channel into the port of Beira each year, as well as dred-ging mooring docks and manoeuvring basins. Improvements are also being made to the Sena and Machipanda railroads to improve capacity and safety.

Events to comeAugust 07-08, 2012, Breakbulk Africa Congress

Cape Town, South Africa http://www.breakbulkevents.com/index.php?section=breakbulk_africa2012

September 6th, 2012, 10th Intermodal Africa 2012 ICC

Durban, South Africahttp ://www.shipscene.com/Event/39

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2

Oil & Gas

Industry

Oil refinery project in Uganda

Commercially viable quantities of oil were established in western Uganda in the last five years with production set for 2013 at the earliest. Uganda's oil reserves are estimated at two billion barrels after exploration of less than half of the potential oil fields. The Net Present Value for a Ugandan refinery project to process 60,000 barrels of oil per day at an initial investment of $3.2b has post tax rate of 33%. Interestingly the cost of finding oil in Uganda is far cheaper com-pared to global trends. Finding oil in Uganda is less than a dollar per barrel. In the global scale the finding cost ranges between $5 and $20 per barrel. With the established asset base of 2.5 billion

barrels in place, Uganda intends to deliver natural gas as the initial feeds-tock to supply a 50 Megawatt dual power station to increase electricity supply. In addition to gas, heavy fuel oil from extended well tests will be used for the power station. Most important is that a detailed feasibility study for the develop-ment of refinery in Uganda confirmed economically feasible and beneficial compared to export of crude oil. Plans are underway to execute the project under the private public partnership. A raft of laws are being prepared to regu-late the sector and ensure the oil is exploited to the benefit of all Ugandans.

Tanzania's energy projects

Tanzania has been experiencing growing interest from various investors across the globe.The government is willing to implement a gas pipeline construction project from Mtwara to Dar es Salaam. And China has offered a $1.2 billion loan to start the construction of a natural gas pipeline. United Arab Emirates (UAE) investors have expressed interest in various sectors in the Tanzanian economy inclu-ding oil and gas. Tanzania has put in place investment incentives which provide a soft landing platform to all investors during the initial stage of the projects implementation. Finaly, there is an ongoing drilling at exploration and development company

Uranium Resources’ 100%-owned Mtonya project, in south-west Tanzania, which is suggesting strong potential for becoming a roll-front uranium deposit suitable for in situ recovery. Uranium Resources is currently execu-ting a 20 000 m drilling programme at Mtonya to identify areas that present the best potential to generate a resource. The 2012 Mtonya exploration programme has been designed on the basis of a significantly enhanced redox interface model. Defining a sizeable resource at Mtonya would propel the company into a different weight category by making it a developer of one of the most sought-after types of uranium mineralization.

Located in Kenya’s waters, the upco-ming Mbawa exploration well which will be drilled by Tullow Oil targets oil rather than gas. Most oil companies prefer to find crude oil reserves rather than natural gas because it’s cheaper to produce and supply to customers. Crude can be loaded on a tanker and shipped worldwide from remote fields, while gas has to be chilled and liquefied before shipping, what requires higher investment in LNG plants. The drilling is targeting as much as 700 million barrels a resource valued at twice Kenya’s annual economic output at today’s oil prices. The Lamu basin, where Mbawa is sited, may hold as much as 5 billion barrels.

East Africa : hurry hunt !

East Africa has become one of the world’s most active exploration areas with its extraordinary exploration success in offshore wells in Tanzania and Mozambique, which recorded 100 trillion cubic feet recoverable gas reserves since mid-2010. Oil and gas exploration companies in East Africa think that there is the potential to double that figure. Recently, Anglo American has agreed to buy a majority stake in a coal project in Mozambique for $555m. It could gene-rate 17-million tons of run-of-mine coal to produce up to 4,5-million tons a year of coking coal and up to 2,5-million tons of thermal coal, based on the expected availability of rail and port capacity.

Raw

Material

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3

Oil & Gas

Industry

East Africa (followed)

An agreement between Aggreko and South African investment company Shanduka has led to a ground-breaking project that is expected to provide a 107 MW power plant, which will use gas from Mozambique to provide an interim power supply to South Africa. The project is expected to see the power plant come on stream early in the third quarter of this year. The power plant will be built on the site of Gigawatt Mozambique SA as part of their Concession Agreement at Res-sano Garcia, on the Mozambique / South African border. The total value of the project is likely to be in the region of $250 million over two years, including fuel costs.Ncondezi Coal Company, which is deve-loping a coal mine in Tete province, is proposing to build a power station gene-rating 1,800 megawatts of electricity. It expects to be generating 300 MW capa-city power plant by 2017. Phase two will expand this capacity to 1 800 MW. An additional 1,500 megawatts is to be generated at the planned Mphanda Nkuwa hydroelectric dam on the Zam-bezi River. In terms of getting the coal from Ncondezi to the coast for export, the company will be able to make use of the upgraded Sena railway line to Beira, which is planned to have a capacity of 20 Mtpy by 2017, and the new railway link across Malawi to link up with the Mozambique line to Nacala (which will be upgraded). The Malawi–Nacala line will have a capacity of between 18 Mtpy and 30 Mtpy and will start shipping coal in 2015. The export coal will be targeted at markets in Asia, particularly China and India.The South African Clean Carbon Indus-

tries (CCI) has announced that it is to produce fuel from coal in Mozambique.A factory is to be built with the capacity to produce 40,000 barrels of fuel per day. The aim of the Mozambican government is to reduce imports of fuel to satisfy the demands in the country. Fuel needs per annum are estimated at around 900,000 tonnes of fuel. The Australian mining company Rio Tinto is planning to build a power station at Benga, in the northwestern Mozambican province of Tete. The future power station will have the capacity to produce between 400 and 600 megawatts, and a plan to expend the grid is to be developed later on. It is expected to begin in 2014 and last three years. The electricity is also for a country as a whole and for neighboring South Africa. Recently, the first shipment of coking coal from Rio Tinto’s Benga mine left the port of Beira at the end of June.The South African petro-chemical com-pany, SASOL, is to start prospecting natu-ral gas in deep waters of the central coas-tal province of Sofala.The Project is to be developed about 130 kilometres off the Beira coast, the capital of Sofala.The discoveries open the way for Mozam-bique to become an exporter of liquefied natural gas, shipping fuel to Asian econo-mies including India and China. Madagascar Oil hopes that a boom in oil and gas exploration in East Africa will help attracting partners next year for its projects on the island of Madagascar. The company’s project is the develop-ment of the Tsimiroro oil field, which an independent estimate said could hold 1.7 billion barrels of oil and which the com-pany forecasts could produce up to 150,000 barrels a day.

Kilimandjaro coffee, climbing the

global market

Tanzania produces 9% of the 'Columbian Mild Arabica' coffee's world total produc-tion, which is considered the top quality bean and commands the best prices on international markets.According to the Director General of the Moshi-based Tanzania Coffee Board (TCB), Engineer Adolph Kumburu, Japan and Germany are the two main export destinations of Tanzanian Mild Arabica, accounting for between 60 and

70 % of the total exports while new mar-kets, such as USA, Italy and Belgium, are picking up. Tanzania has the theoreti-cal capacity to export mild Arabica as early as July/August, ahead of the Cen-tral American season, a time where the world market will be in short of supply of fresh Arabicas. Moreover, Tanzania benefits from a unique position in Japan, thanks to the existence of a 'Kilimanjaro' coffee appellation which has a strong marketing power. This has strongly contributed to an increase of Tanzania

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Rail & Road

Projects

4

New railway in Ethiopia

Ethiopia has signed two deals worth $3.2 billion with Chinese and Turkish compa-nies to construct a railway to link the country to Djibouti's Tadjourah port to export potash. Ethiopia hopes to exploit growing business ties with China, India and Turkey to boost its expanding economy. The railway will be built at a cost of $3.2 billion (2.6 billion euros). Turkish company Yapi Merkezi will construct 447 kilometres (277 miles) in the northeast, part of a project that stretches to Djibouti's third port of Tadjourah, which is under construction. China Communications Construction

Company will build 268 kilometres (166 miles) of the railway. Tadjourah, is the closest outlet for Ethiopia's Afar region, where a number of foreign firms, inclu-ding Canada's Allana Potash Corp, are developing potash mines. Ethiopia aims to construct 5,000 km of railway lines by 2020. The neighboring economies are reliant on each other with about 70 % of all trade through the Red Sea state. The project is expected to be completed by 2015. Railway construction is a central component of Ethiopia's five-year plan to boost economic growth, with plans to construct 1,200 kilometres of railway between 2010 and 2015.

Raw

Materials

&

Agriculture

Kilimandjaro coffee (followed)

coffee exports towards Japan over the last 20 years. While it initially referred to a Mild Arabica coffee from Kilimanjaro region of Tanzania, the all Japan Trade Council decided that all mild Arabica coffee produced in Tanzania could be labelled as 'Kilimanjaro' coffee, regardless of whether it is grown in

Kilimanjaro or in the Southern Highlands. Blended coffee comprising 30 % or more of Tanzanian Mild Arabica beans could equally be labelled 'Kilimanjaro,' but coffee produced in other African countries cannot be sold in Japan under the 'Kilimanjaro' label.

Women & food security

A new index on food security released by the Economist Intelligence Unit (EIU), commissioned by DuPont, unveils recently a strong correlation between women's economic opportunity and access to affordable, safe food. The Global Food Security Index shows a hefty 0.93 correlation with the EIU's Women’s Economic Opportunity Index, which measures female economic parti-cipation. As the report states: "The Food and Agriculture Organisation (FAO) estimates that if women had access to the same productive resources as men -better seeds, fertilisers and fungicides- they could increase their yield by 20% to 30%. As women make up 43% of the

world’s farmers, this would increase total agricultural output in developing countries by 2.5% to 4%, and reduce hunger globally by 12% to 17%, accor-ding to the FAO." The EIU's index ranks 105 countries with a model that analyzes 25 individual indicators in the areas of affordability, availability and quality and safety.The good news is that several of the countries at the very bottom of the index, notably Mozambique, Ethiopia, Rwanda and Nigeria, are also ones with strong economic growth, suggesting that their food situation may improve as living standards rise and as sound policies are hopefully put in place.http://foodsecurityindex.eiu.com/

Mining infrastructure in central Africa

The government of Cameroon signed a 242 billion-franc loan(($463.11 million) with the Export-Import Bank of China, Eximbank to build a 260-kilometer (162-mile) six lane motorway linking Yaoun-nden and the port city of Douala, whichis expected to be completed within a maximum of five years. The expressway will cut the distance travelled between the two cities from 265 km (165 miles) on the existing road to about 215 km and it is also expected to benefit trade for the

entire central African sub-region, particu-larly Central African Republic and Chad that rely on Douala for much of their trade.A recent agreement between iron-ore producer Sun-dance Resources and the government of Cameroon regarding key terms underpinning the Mbalam iron-ore project convention will also serve to promote extensive development of rail and port infrastructure and may thus encourage investment into the region.

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Rail & Road

Projects

5

Industry

Mining infrastructure (followed)

The Mbalam project is based on a group of large-scale iron-ore deposits spanning the border between the Republic of Cameroon and the neighboring Republic of Congo in central West Africa. The European Union will also disburse 11.8 billion CFA francs to build a road between Maroua and Maga in northern

Cameroon. And a fourth 15 billion-franc accord was signed also with the World Bank to finance projects in the mining industry. Economic growth in Cameroon, is expected to accelerate to 4.5 % in 2013 from an estimated 4.1 % this year, according to the International Monetary Fund.

Container lines to recover

Container lines could reduce their overall losses for the year as a whole to $1.3 billion or even turn a profit of $1.3 billion, depending on the overall development of costs, particularly fuel, according to the latest Drewry Container Forecaster. After total carrier losses of more than $6 billion in 2011, most container lines are opera-ting above the break-even level on the major east-west trades because of the successful implementation of significant rate increases, the quarterly publication

said. This should provide a decent platform for 2013 when demand will improve slightly. Yield management and the movement of rates to more accep-table levels are key aims for all carriers, and if spot rates hold for the rest of the year, carriers will be in a strong position for the renegotiation of shipper contracts in 2013. Drewry is forecasting global container volume growth at 4.3 % for the year as a whole.

Survey on industry shipping confi-

dence

Overall confidence levels in the shipping industry increased in the three months ended May 2012, to reach their highest level since February 2011, according to the latest Shipping Confidence Survey from the shipping consultant Moore Stephens. This is the fourth successive quarter in which there has been an improvement in confidence, leading to an increased expectation of new invest-ment on the part of respondents, despite an anticipated increase in the cost of finance over the next twelve months. In May 2012, the average confidence level expressed by respondents in the mar-kets in which they operate was 5.7 on a scale of 1 (low) to 10 (high), compared to the figure of 5.5 recorded in the previous survey in February 2012, and to the 5.6 recorded one year previously, in May 2011.Two familiar causes of concern were emerging in the survey: - too many ships coming onto the market - technical innovations which turn new-buildings currently being delivered tech-nically obsolete in five years’ time by new ships being ordered today which, and may be up to 20 % cheaper to operate.Demand trends, competition and finance costs were the top three factors as those likely to influence performance most

significantly over the coming twelve months.Geographically, demand trends remai-ned the most significant factor for respondents in Asia (24 %) and in Europe (21 %). In Asia, fuel costs (16 %) supplanted finance costs in third place. Fuel costs were also a significant factor in North America, quoted by 18 % of respondents. In Europe, finance costs (19 %) featured in second place, ahead of competition, unchanged at 18 %.In the container ship market, 34 % of respondents overall expected rates to go up, compared to 31 % in the previous survey. 40 % of owners rate their pros-pects of making a new investment over the next twelve months at 7 out of 10, or higher. Fuel costs are a major expense, and what it is doing already is starting to explore the possibility of a future based on eco-friendly ships powered by fuel other than diesel oil. Eco-friendly designs are being advanced by shipyards as a marketing gimmick to persuade companies to order more ships at a time when they already have too many. Richard Greiner declared “confi-dence is something the industry does not lack... as evidenced by the Posidonia exhibition in Piraeus. In shipping, the show must go on".

ndlr :http://www.posidonia-events.com

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6

Risks &Piracy

Economics

& Politics

Economics

& Politics

Angola's economic outlook

A few years ago, a hundred or so ships could usually be counted outside the harbor of Luanda, waiting their turn to dock. But with the deepening of Luanda's port and the opening of others down the coast, only half a dozen ships are now in the queue, helping to cut Angola's costs. Angola is now one of Africa's economic successes-thanks almost entirely to oil. With a population of 20m, it has Africa's fifth-biggest economy. Between 2004 and 2008 its GDP surged by an average of 17% a year, topping 22% in 2007. It is the continent's second-biggest oil produ-

cer after Nigeria. Angola is set to export 1.81 million barrels of crude oil per day (bpd) in August, up about 14.5 % from July. China is the largest buyer of Ango-lan crude. Foreign investment is pouring in at a rate of more than $10 billion a year. The nation plans to ship 61 cargoes, totaling 58.01 million barrels, or 1.87 million barrels a day, the most since October 2009. This compares with 51 cargoes amounting to 1.58 million barrels a day in July.

Kenya's GDP growth

Consumption should drive Kenya’s economy to grow at 5% in 2012 and 2013, according to the World Bank. Kenya’s economy is showing signs of rebounding after good rains this year eased drought and boosted agriculture, an industry that generates a quarter of output, and helped curb inflation that

accelerated to a peak of 20% in Novem-ber. The container traffic grew 24% in the first half of 2012, indicator of economic activity. The country is building a $300 million second container terminal in Mombasa to handle increased trade within the region.

Mozambique & sea

At a meeting of the International Mari-time Organization (IMO) Sub-Committee on Safety of Navigation (July 2-6 in London) the International Chamber of Shipping (ICS) has welcomed the deci-sion of rejecting the proposal to establish a new recommended route for all ships in the Mozambique channel that would have been about 1.000 miles long. The main aim of the proposal was advised to be a reduction and grounding in the Mozambique Channel. However, despite vessels favoring certain routes, shipping currently is free to use the entire width of the Channel, which is in international waters. The proposed measure sought to

concentrate shipping into restricted lanes and could potentially have increased the risk of collision. Even at its narrowest point the Mozambique Chan-nel is over 200 miles wide, and today many ships make use of this width and keep well away from the routes used by transiting tankers and similar vessels. Recently, Mozambique has become the 20th State to sign the Djibouti Code of Conduct on July 6th. The Code of Conduct, which has been in effect since January 29th, was set up by IMO to develop regional capacity to counter piracy in the Western Indian Ocean and the Gulf of Aden.

APS program to tackle piracy

APS is an international security coopera-tion initiative,that has grown over the past five years to include more than 30 African, European and North and South American countries aimed at strengthe-ning global maritime partnerships through training and collaborative activi-ties in order to improve maritime safety and security in Africa. Swift, a Military Sealift Command-chartered High Speed

Vessel, is making port calls throughout Africa in support of APS and Theater Security Cooperation visits. Participants are working together to develop capacity among countries along the Gulf of Guinea so they can control their territo-rial waters and crack down on illicit trafficking and other criminal activity.

SAGA cannot guarantee that the information made available on this newsletter is correct, accurate or exhaus-tive. It is therefore recommended that readers check the information by other means.

Bolloré Africa Logistics cannot guarantee that the information made available on this newsletter is correct, accurate or exhaustive. It is therefore recommended that readers check the information by other means.

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General

News

General

News

Grand Bassam, added to Unesco's

heritage list

The Site of Xanadu (China), the Bassari Country(Senegal) and the Historic Town Grand Bassam, the first capital of Côte d’Ivoire have been added to Unesco’s World Heritage List.The first capital of Côte d’Ivoire, the Historic Town of Grand-Bassam, is an

example of a late 19th and early 20th-century colonial town. The site includes the N’zima African fishing village alon-gside colonial architecturer. Grand-Bassam was the most important port, economic and judicial centre of Côte d’Ivoire and it attracted populations from all parts of Africa, Europe and the Mediterranean Levant.

Sources:www.afp.comwww.allafrica.comwww.bbcnews.comwww.macauhub.comwww.reuters.comUnescowww.economist.comlocal African newspapers The Maritime executiveNewspapers

This newsletter is published by theCustomer Service Shipping Departmentand is available on the website.

Printable version attached

Melting for North

There has been a big increase in Arctic shipping in recent years. The North Sea road (NSR) is likely to shorten the jour-ney between continents. The 34 vessels that traversed it last year shipped 820,000 tonnes of cargo; official Russian forecasts suggest that this year’s figure will be 1.5m tonnes. By 2020, according to American estimates, that will rise to 64m tonnes. Using the NSR would cut the distance between Rotterdam and Shanghai by 22%. Taking the north-west passage, could reduce the distance by 15%. This would mean a shorter journey time, or alternatively allow ships to go more slowly, saving on bunker fuel. The Arctic passages are also free of the piracy that is rampant in some parts of the world.But there are drawbacks. If something goes wrong there is a strong chance of disaster. And there is no rescue service in the Arctic. Only ice-capable vessels will venture there, generally with expen-sive escorts and insurance, and requiring experienced Arctic hands on board. The shortness of the shipping season, the unpredictability of the ice, the high cost of icebreakers and the shortage-or absence in some classes-of ice-capable vessels will all be a drag on Arctic ship-ping. Environmental protests, especially concerning soot emissions from ship exhausts, will be another hurdle. Yet the number of vessels using the NSR will continue to rise steeply, driven by the development of Arctic natural resources.The Arctic’s glaciers, including those of

Greenland’s vast ice cap, are retreating. The area covered by snow in June is roughly a fifth less than in the 1960s. The Arctic is warming roughly twice as fast as the rest of the planet. According to a 2008 study by the US Geological Survey, the Arctic may hold 90 billion barrels of oil and 1,669 trillion cubic feet of natural gas, respectively 13% and 30% of the world’s estimated undiscovered reserves. (see the maps on p 8)

Oil has long been produced in the Arctic. The first onshore wells were sunk in Canada’s Mackenzie River valley in 1920; since then over 400 Arctic oil and gas fields have been discovered. But because of the high cost of operating in the Arctic, their development has been slow. Half the Arctic’s basins are unex-plored. But this is now changing. Progress in horizontal drilling, is another boon for the Arctic. The United States, Norway, Russia and Greenland have all opened more of their Arctic offshore to exploration in recent years, leading to several big discoveries. According to a recent report for Lloyd’s, the Arctic could attract $100 billion of investment in the next decade, mostly in offshore energy. The technical difficulties remain daun-ting. Exploratory drilling generally cannot be done through ice, so the drilling season will be short. And a serious acci-dent, such as a blowout under sea ice, could be disastrous. Greenland will probably be mining lots of iron, uranium, gold, rare earths, diamonds and rubies before it gets an oil industry.

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General

News

General

News

Sources:

www.economist.com

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