Egypt launches air raids on Libya after Christians killed
MINYA, Egypt Egyptian fighter jets carried out strikes on Friday directed at camps in Libya which Cairo says have been training militants who killed dozens of Christians earlier in the day.
JOHANNESBURG New Zambian President Michael Sata is likely to back away from shaking up the nation's vital copper industry significantly, despite his past attacks on foreign mining investment -- especially when it comes from China.
Chinese companies, which have sunk $2 billion into Zambia to secure a share of its mineral wealth, may still be unnerved by Sata's past accusations that they had created slave labor conditions with scant regard for safety or the local culture.
But Sata toned down such rhetoric and his call for windfall taxes late in campaigning for this week's presidential election when he scored an surprise win over President Rupiah Banda.
A period of uncertainty may follow Sata's swearing in on Friday if, as some analysts expect, he reviews contracts with foreign companies struck by the Banda administration.
Zambia's mining industry aims to double annual copper output to 1.5 million tonnes by 2016 and Sata will try to wring more revenue from it. However, he is likely to tread carefully with an industry which is vital to the Zambian economy.
"Significant changes to economic policy remain extremely unlikely even though Sata is going to look to the copper industry in particular for a larger slice," said Gary van Staden, political analyst with NKC Independent Economists.
"But he is no fool and he's not about to kill off the golden goose," said Staden.
Banda's government was itself already pressing for more revenue from big players such as First Quantum Minerals and Glencore and so a Sata administration may not prove to be such a radical departure.
Sata has ditched many of the more populist policies he championed in a 2008 election which he narrowly lost, though his reputation forged then will keep investors wary.
"It is negative ... Last time it was a narrow margin and he wanted to push through 25 percent state ownership, was pushing for a windfall tax and local listing on the Lusaka stock exchange," said Cailey Barker, analyst at Numis Securities in London.
Still, Barker agreed that a Sata government wouldn't rock too many boats. "They are not going to do anything that will turn away companies like First Quantum and Vedanta. The potential for something worse is there, but it is unlikely to be hugely damaging or enough to turn these companies away."
DaMina Advisors disagreed, saying a Sata administration was going to have "dramatic consequences" for the sector. "Sata's upset victory will likely usher in a new era for a resource nationalist mining sector policy," DaMina said.
Sata told Reuters in an interview last week that he would not revive windfall taxes but exporters would be compelled to keep their foreign exchange earnings in Zambia and would be allowed to send out only their profits.
This could have implications for the kwacha currency. If it strengthened significantly as a result, this would hurt miners whose costs in Zambia are mostly in the local currency but who earn foreign currency.
The kwacha initially slid in reaction to Sata's victory, signaling that investors are jittery.
In other areas, analysts say, Sata's party is sending mixed signals. "The Patriotic Front manifestos are vague," said Leon Myburgh, sub-Saharan Africa strategist at Citibank.
On monetary policy, the PF seemed to favor lower interest rates which could stoke inflation but its vagueness suggested "empty electioneering." "They say mines need to make a larger contribution to the economy but they don't spell out any specific proposal, and say they are not committed to any particular name or formula for mine taxes," said Myburgh.
MORE REVENUE, TRANSPARENCY
Banda's administration had already begun a drive to boost tax revenue from mining companies and this could improve social stability if the nation's mineral wealth is more evenly spread.
According to the World Bank, copper accounts for 70 to 75 percent of export earnings, but the mining industry as a whole contributes only about 10 percent of Zambia's tax revenue.
Banda told Reuters in March audits had revealed that up to $200 million was owed in back taxes.
But while any moves to get more cash from miners may signal continuity with Banda, it does not mean the industry will like it. A well-known anti-corruption campaigner, Sata has also questioned copper export data and some experts say his concerns are legitimate.
According to Zambian figures, much of the copper exports are destined for Switzerland but little of them show up in Swiss customs data, raising questions about transparency.
"If Sata follows up on commitments to ensure greater transparency around Zambia's resource revenues, then it might not just be good for Zambia but might have a good demonstration effect across the region," said Alex Cobham, chief policy adviser for UK charity Christian Aid.
"The risk is that he is coming in at exactly the moment when global commodity prices may have just gone into reverse and we have seen before, including in Zambia, that when prices are falling it becomes much easier for investors to pressure the government to relax transparency," he said.
If the commodity price cycle is set for a major reversal, this would also prove a setback to any attempts to raise more taxes from miners and could also hurt short-term investment in the copper sector, regardless of who is at the helm.
(Additional reporting by Clara Ferreira Marques in London,; Editing by Ed Cropley and David Stamp)
WASHINGTON Two Chinese fighter jets intercepted a U.S. Navy surveillance plane over the South China Sea on Wednesday, with one coming within 200 yards (180 meters) of the American aircraft, U.S. officials told Reuters.
TRIPOLI Heavy clashes erupted in the Libyan capital Tripoli on Friday, as armed groups aligned with the U.N.-backed government fought to fend off a major offensive by rival Islamist-leaning forces and militia fighters.