It looks like Government is set to review the draft Bill on mining royalties, according to Minerals and Energy Minister, Buyelwa Sonjica. She says complaints about the bill have been received from both mining companies and trade unions, and, as government, she says, we must pay attention to what they have raised.

The mining companies say the draft Bill will hit output and make the industry less competitive than other countries at a time when an electricity shortage has already hurt the sector. Unions fear possible job losses.

Sonjica says that the NUM, COSATU and the industry had spoken out against the bill in its present form, saying that it is tantamount to double taxation.

A recession in the United States, Trevor Manuel says, will have a profound impact on the global economy. Any test of vulnerability would be felt across the world including South Africa, he told reporters, adding that we are simply going to have to weather the storm.

The Rand slipped to a five-year low against the dollar yesterday – and a record low against the Euro as investors dropped riskier assets on fears about fall-out from the US crisis.

Speaking at a tax symposium in Pretoria, Trevor Manuel warned that the large current account deficit is a major chink in the country’s armour – given a low savings rate and global financial market turmoil.

The current account deficit sits around 8% of GDP – and is expected to stay at those levels for at least the next three years.

We are dependent on foreign capital inflows, Manuel told his audience, to fund the rising current account deficit.

First National Bank’s Cees Bruggemans, who describes the falling Rand as the shock absorber of the moment, shielding the economy from the fallout from the global credit and banking contagion.

Bruggemans, quoted this morning by Fin24, explains that the country’s two precious metals, gold and platinum, along with other rising commodity export prices, are effectively paying for rising oil import costs.

But Bruggemans also concedes that the world is – in his words – fixated on our large current account deficit. The result is a weaker Rand – and he thinks that the Rand faces more weakness in tandem with the Dollar’s descent. So far, he says, the Rand is 20% weaker than in 2007 – that weakness could still grow to 30%, if not 40%.

Gold Fields – the company that raised the original spectre of job losses as a result of the electricity cut-backs – says its electricity has been restored to 95%. A Gold Fields spokesman says its South African mines are now back at the 95% level. The additional 26 megawatts, it says, will go a long way towards saving jobs at its Kloof and Driefontein mines although it would not change its forecast of production losses of more than 20% in the third quarter.

The market is expecting to lower interest rates on the US Fed. We had the emergency cut in the discount rate over the weekend – today, it’s expected that the main target interest rate will also be lowered.

But perhaps as important are the Q1 results from two major investment banks – Goldman Sachs and Lehman Brothers, both of whom report today.
Clearly, the market will be watching like a hawk for any sign of weakness in these big players, following the collapse of the fifth biggest investment bank in the US on Friday – Bear Stearns.

The expectation is that both will reveal a sharp drop in profits – but neither will go the same way as Bear Stearns. For one, both are bigger and much more diversified, for two both are much more liquid.
Having said that, Lehman Brothers shares were down 40% yesterday – their lowest price since early 2000. Goldman was down – but only 6%.
We’ll have to wait and see….

Will the Fed cut interest rates again when it meets later on today – the markets seem to think so and look as though they are taking a breather.

Overnight, the Dow in New York was up 0.2% at 11,972.

That’s had some effect in the Far East: the Nikkei in Tokyo this morning is up 1.5%

Hong Kong, though, remains down: 0.6% adrift.

The ASX in Sydney is down 0.2%

London’s FTSE was on yesterday’s downward cycle – off 3.9% to 5,632.

Ditto the JSE’s All Share, which was down 2.4% - 29,928

The JSE’s Top 40 was down 2.3% down to 27,831.

- Gold this morning is $1000.20-$1001.00

- Platinum: $1942

- Brent Crude is $105.15

- The dollar/Euro - $1.57.68

- The Rand/Euro – R12.74

- Rand-Pound –R16.18

- And Rand-dollar – R8.08

According to the Bureau for Economic Research, manufacturing confidence is sharply down. The BER is – which shows manufacturing confidence at a 4-1/2 year low in Q1 2008 – hit by slowing consumer demand, higher input prices and power shortages.

The BER reports the index at 46 points – compared with 69 points in the final quarter last year.

Manufacturers, it says, are faced with the perfect storm – a slowdown in both the domestic and global real economies coupled with continued pressure on input prices and competitive issues in general – aggravated by the effects of the electricity crisis.

The drop a manufacturing confidence follows a similar drop in the more general overall business confidence index.

All eyes are on two major investment banks who will be reporting their first quarter results today. They are Goldman Sachs and Lehman Brothers and clearly, the market will be watching extremely closely for any sign of weakness in these big players. This in the wake of the collapse of the fifth biggest investment bank in the US on Friday – Bear Stearns.

The expectation is that both will reveal a sharp drop in profits – but neither will go the same way as Bear Stearns. For one, both are bigger and much more diversified, for two both are much more liquid.
Having said that, Lehman Brothers shares were down 40% yesterday – their lowest price since early 2000. Goldman was down – but only 6%.
We’ll have to wait and see….