South Africa: The Bottom Line - Aluminium May Have More Lustre Than Gold

Johannesburg — GOLD has broken records for three successive days, but what about the other metals? And what are their prospects? The answer to the first question is that gold has, in fact, been the underperformer . Nickel is up almost 200% from its low at the end of last year, zinc 176% and copper 109%. After such rises , one would not think there was much upside left. But Royal Bank of Scotland has just released its latest Commodity Companion, which speculates that copper will hit record levels in 2013. This is based on a world gross domestic product rebound of 3,6% next year. But such has been the rebound, the bank is expecting commodities to pause for some time before tracking upwards again. The surprise metal is aluminium, which has rebounded only 40% from its low. Taking the anticipated economic growth into account, together with the fact that aluminium has rebounded the least, it is this metal which may well have the greatest upside over the medium term. CLIMATE change is often seen as a burden that business must bear. But perhaps it should rather be seen as an opportunity. And with the United Nations climate change conference in Copenhagen -- which will set targets for reducing carbon emissions -- taking place in December, a sense of urgency would not go amiss. Richard Worthington, climate change programme manager for the World Wildlife Fund for Nature SA, points out that 80% of SA's emissions are related to energy supply and use. This is high compared with other countries. In reducing our emissions (and, sooner or later, we will have to, despite the foot-dragging), there is an opportunity to grow the services sector of the economy, Worthington says. We know that renewable energy developments create more jobs than conventional energy, and many of these jobs are in rural areas -- precisely the places where the most concerted efforts at development are needed. We also know that climate change will have the most severe effect on the poorest communities, so sustainable development and poverty alleviation should be a priority for SA. David Hampton, managing partner at London-based consultancy Irbaris, says companies do not have to choose between being successful and being sustainable. Rather, success and sustainability go hand in hand. Groups that choose to cut carbon footprints often gain competitive advantage and reap the benefits of an enhanced reputation. Nedbank managed to secure cheaper financing through the International Finance Corporation because of its commitment to sustainability. SUPER Group 's shareholders have a lot riding on the company's rights issue, considering they spurned the advances of Middle Eastern logistics group Agility. The share price is a shadow of its former self -- it traded at about R15 barely three years ago and closed at 94c yesterday. The rights issue promises to clean up Super Group's balance sheet and may console some investors, at least those who take up the offer, which comes at a knocked-down price tag of 45c. Even if shareholders do not subscribe, Super Group will raise at least R1bn. Major banks and minority shareholders such as Allan Gray have committed to underwrite the subscription of 2,2-billion shares. Larry Lipschitz, the former CEO and founder who seems to have been forced out, borrowed heavily and continued making acquisitions -- many of which were outside the company' s core business of supply chain and logistics. The economic crisis has further battered earnings. But, after the rights issue, many of the liquidity concerns will be put to bed. The net debt, excluding its Australian operation and its full maintenance lease, will drop from R1,29bn to R357m. The trade gearing ratio will decline from 120% to 18%.