Latest news with #R1.5-billion
Daily Maverick
12-06-2025
- Business
- Daily Maverick
Ramaphosa extols green hydrogen as future driver of Africa-wide growth
President Ramaphosa on Thursday championed green hydrogen as Africa's future, but can the continent's ambitious dream overcome the reality of prohibitive costs and a risk-averse international financial regimen? 'Africa is uniquely positioned to become a major player in green hydrogen because it has abundant renewable resources that manifest themselves in high solar irradiation, strong winds and hydropower potential,' said President Cyril Ramaphosa. He was speaking at what was once called the South Africa Green Hydrogen Summit, now positioned as the Africa Green Hydrogen Summit, in Cape Town on Thursday. 'The vast land of our continent lends itself to large-scale renewable energy projects. We are therefore perfectly placed to leverage the global shift towards cleaner energy sources for our collective advantage as the entire continent. 'Green hydrogen is a way to marry our continent's mineral riches with our renewable energy endowments to decarbonise particularly heavy industries, to create jobs, to stimulate investment and to unlock inclusive growth across the various borders,' said Ramaphosa. Green hydrogen is produced by using renewable energy sources such as wind or solar power to split water into hydrogen and oxygen through a process called electrolysis. This hydrogen can then be used as an emission-free energy source and carrier for applications such as fuel cells or industrial processes, and is seen as being key to decarbonising 'hard-to-abate' or 'hard-to-electrify' sectors such as long-haul transport, chemicals, and iron and steel. Green hydrogen is of particular interest in South Africa because of the country's strategic advantages. The independent non-profit economic research institution Trade & Industrial Policy Strategies says that 'South Africa's rich endowment of ideal weather conditions for solar and wind-power generation, technological capabilities around the Fischer-Tropsch process, and access to platinum resources place the country at an advantage for developing the hydrogen value chain and being a key supplier into the global hydrogen market.' Ramaphosa noted that more than 52 large-scale green hydrogen projects had been launched across the continent, including in South Africa. 'To date, South Africa has invested more than R1.5-billion in our Hydrogen South Africa programme,' he said. Yet despite the President's bullishness, the reality of green hydrogen projects in South Africa and beyond paints a more complex picture. Daily Maverick reported in April that Namibia's HyIron Oshivela plant successfully produced green hydrogen for the first time, giving South Africa's neighbour to the northwest the lead in its implementation of its green hydrogen-related plans. South Africa's Hydrogen Society Roadmap, adopted in 2021, outlines an ambitious vision. While the initiative — which includes plans for a Hydrogen Valley industrial cluster and the Boegoebaai project in the Northern Cape — is substantial on paper, its implementation has lagged significantly behind Namibia's. Pilot project A pilot project in Sasolburg is producing green hydrogen for domestic use, and the Koega green ammonia project in the Eastern Cape is 'at an advanced planning stage' for four additional flagship hydrogen projects, said Ramaphosa on Thursday. Beyond suboptimal implementation, there are also complications, which Ramaphosa duly acknowledged. Chief among them: cost. 'We are very much alive to the reality that green hydrogen production faces a number of challenges. There is the cost factor. Capital intensity and the high costs of financing are significant barriers, as is the cost of green hydrogen relative to other energy sources such as natural gas, for instance,' he said. Earlier this year, Daily Maverick was told that the ambitious plan to produce 'green steel' in the Freeport Saldanha industrial zone had been shelved, with Sasol and ArcelorMittal citing high costs and shifting priorities. Globally, the steel industry is responsible for roughly 2.6 billion tonnes of carbon dioxide emissions a year, which is about 8% of global emissions. When the conventional coal-fired blast furnaces are replaced with ones that run on carbon emission-free green hydrogen, the steel that is produced is, accordingly, considered green steel. The difficulties in realising green hydrogen projects are shared internationally. A study published in the journal Nature Energy earlier this year, which tracked 190 projects over three years, found that by 2023 only 7% of the announced green hydrogen production globally had been realised. A large part of the reason is renewable energy and electrolyser costs. Lack of competitiveness A Potsdam Institute for Climate Impact Research researcher and the lead author of that study, Adrian Odenweller, as well as co-author Falko Ueckerdt, said: 'Green hydrogen will continue to have difficulties meeting the high expectations in the future due to a lack of competitiveness.' The Just Energy Transition Project Management Unit in the Presidency and the Industrial Development Corporation of South Africa previously confirmed as much with Daily Maverick, explaining: 'Currently, grey hydrogen (from steam reformation of methane gas) costs $1.50/kg to produce. Green hydrogen produced via electrolysis of water using renewables-generated electricity costs $5 to $6/kg. Approximately 60% of this cost is for electricity, 30% for electrolysers and 10% for transport, storage and other externalities. 'So, a reduction in price depends very much on renewable electricity generating costs falling still further. Additionally, the appropriate pricing of carbon taxes is another factor that will contribute to project viability. 'The costs of green electricity and of electrolysers will reduce, but not overnight. Furthermore, penalties in key global markets on goods produced using non-green technologies are ramping up over the next decade. We can anticipate that the right price point will be reached within the next few years. 'Based on the downward price trajectory of renewable energy and electrolyser costs, it has been projected that South Africa will reach $1.50/kg by 2037.' Speaking at the summit on Thursday, Energy and Electricity Minister Dr Kgosientsho Ramokgopa said, 'Africa's choice is whether to be a passive site of resource extraction or a proactive architect of the green energy economy. 'With the right policy framework, investment enablers and regional coordination, green hydrogen can and must be [the] backbone of a new African industrial era. 'South Africa's approach to green hydrogen is not aspirational, it is deliberate, structured and already under way. As a country, we have a clear choice to develop hydrogen not just as a climate response but as a catalyst for reindustrialisation, economic transformation, regional competitiveness and energy sovereignty,' said Ramokgopa. DM
Daily Maverick
05-06-2025
- Business
- Daily Maverick
Saru declares significant loss in 2024 financial report – but 2025 outlook positive
Despite a large deficit, the South African Rugby Union is optimistic about the short-to-medium-term future. The South African Rugby Union (Saru) reported a R93-million loss for the 2024 financial year, which was expected and forecast, despite record earnings, its latest financial statements reveal. On the up side, new sponsorships and becoming a full shareholder of the United Rugby Championship (URC) from next month, has led to a bold prediction of a R100-million surplus in the current financial year. Summary 2024 financial year (reported) Loss: R93-million (expected and already offset in early 2025) Commercial revenue: R1.552-billion (up from R1.44-billion in 2023) Total income (including grants): R1.76-billion World Rugby grant: R186-million Merchandising: Doubled from R30-million to R62-million Expenses: R1.871-billion (up 2.9% from R1.816-billion) World Rugby events: R133-million Player image rights: R148-million (+R24-million) Private equity transaction costs: R13-million URC/northern hemisphere franchises: R446-million National teams including Springboks: R433-million (-R27m from 2023) 2025 outlook Forecast revenue: Above R2-billion Projected surplus: R100-million Drivers: New sponsorships Full URC membership Continued commercial growth According to the financial report, the R93-million deficit had already 'been wiped out' over the first six months of 2025. Overall, in 2024, group commercial revenues exceeded R1.5-billion for the first time (R1.552-billion), up from R1.44-billion in 2023. Total income with the addition of grants (principally from World Rugby of R186-million) took total income to R1.76-billion. Revenues for 2025 are forecast to exceed R2-billion. The 7.8% increase in revenues was attributable to increased broadcast revenues in a non-Rugby World Cup year, competition sponsorships and a strong performance in merchandising receipts, which more than doubled from R30-million to R62-million. Expenses increased from R1.816-billion to R1.871-billion. The 2.9% increase was put down to investment in hosting three World Rugby tournaments (R133-million), a R24-million increase in player image rights (to R148-million), and the costs associated with the mooted private equity transaction (R13-million). Total expenditure attributable to the northern hemisphere international franchise competition was R446-million, while Saru was still able to make a full distribution to member unions. Spending on the No 1 world-ranked team, the Springboks, and other national teams was R433-million, a reduction of R27-million on the Rugby World Cup-winning year of 2023 (R460-million). 'Reporting a loss can never be desirable, but the irony is that we are more than satisfied with our position,' said Saru CEO Rian Oberholzer. 'We had budgeted for a loss in 2024 in the expectation that the members would approve the private equity transaction that they had sought, releasing funds to cover the deficit. 'When that did not happen, we continued with our planned commercial reset, and other revenue generation plans, which have borne fruit. We are in the very rare position among our international peers of continuing to be debt-free and confident of posting a surplus in 2025.' European costs Saru's biggest accumulated cost over the past eight years has been paying to participate in URC (and the Pro14 competition before that). The cost of securing South Africa's place in northern hemisphere rugby, which was accelerated by the collapse of Super Rugby in 2020, has been R2.2-billion. According to the finance notes, Saru currently pays R392-million annually for top club teams to compete in URC and European Professional Club Rugby (EPCR). Without this contribution, the Bulls, Cheetahs, Lions, Sharks and Stormers would have no international competition. Another R54-million is paid to travel and other associated costs for the teams. Saru also paid R347-million to member unions (the 15 provinces) to ensure their existence. Saru president Mark Alexander highlighted a period of significant challenges and growth for the organisation. Despite the unsuccessful private equity transaction, it elevated Saru's profile and led to the exploration of alternative commercial initiatives, including a new commercial app and digital platform to diversify revenue streams. The Saru president acknowledged a financial loss for the period, but emphasised that the R2.2-billion investment was made to secure future participation and full membership in the URC and EPCR by the end of June 2025. He also noted that budgets for 2025-2027 had been secured, ensuring financial stability. Plans include digital transformation and leveraging partnerships for growth beyond 2028. Alexander also praised the Springboks' continued world-class performance, ranking No 1 in 2023 and 2024. Oberholzer said the financial outlook beyond next year was equally healthy, with strong revenues forecast for 2026 with new competition formats in the pipeline. 'The income that SA Rugby generates all goes back into supporting the growth and promotion of rugby in the country,' he said. 'It allows us to fund Springbok campaigns, expand women's rugby programmes and fuel our other national teams. It pays for our members' activities in their communities as well as their professional teams. 'It underwrites our rugby safety programme BokSmart; supports referee and coaching development and our age group competitions as well as development programmes, and allows us in turn on sell-out Test match entertainment and our domestic competitions. 'Ultimately, every rand that we earn goes into powering the game in some shape or form and after a challenging 2024, we have a good news story to tell our South African rugby community as we look ahead.' DM
Daily Maverick
23-04-2025
- Business
- Daily Maverick
Pick n Pay pushes for a financial comeback by backing the Boks and partnering with FNB
In a few months, Pick n Pay's logo will sit on the back of the Springbok jersey – a bold move from the retailer that reported mounting financial losses in 2024. On Thursday, 27 March, SA Rugby announced that Pick n Pay would become a Tier 1 sponsor of the Springboks, placing its logo squarely on the back of the country's most iconic jersey. Just a year before, the retailer had reported a full-year trading loss of R1.5-billion. Its most recent interim results showed a 9.1% increase in trading losses year-on-year. To stem the bleeding, the group proposed a R4-billion recapitalisation plan, complete with a rights offer and plans to list its stronger-performing Boxer brand on the JSE to keep the ship afloat. It has been reported by News24, and Planet Rugby that the estimated cost of the Springbok sponsorship is worth R70-billion. Neither Pick n Pay or SA Rugby has confirmed this figure. Allies in the aisle Pick n Pay's Springbok debut follows hot on the heels of a newly inked partnership with First National Bank (FNB), which includes Smart Shopper-linked eBuck benefits and discounted groceries for qualifying cardholders. 'Amid rising household pressures, this strategic partnership helps us deliver even more value to South Africans while attracting new customers,' Pick n Pay said. FNB was also announced as the new front-of-jersey sponsor for the Springboks, replacing MTN after an eight-year stint. That sponsorship has been reported to be about R150-million by EWN and News24, although FNB declined to confirm the amount. Together the two companies, already deeply intertwined through their retail partnership, are now investing a reported estimate of R220-million into South African rugby. Separate deals, same team sheet Despite the overlap, FNB said the Bok sponsorship was independently negotiated. Pick n Pay also confirmed that the overlap was 'unplanned'. 'The strategic partnership between FNB and Pick n Pay was a standalone business decision and was not influenced by either party's involvement with SA Rugby,' Faye Mfikwe, chief marketing officer of FNB, said. Pieter Woodhatch, CEO of FNB's eBucks, echoed this, saying the bank had confidence in Pick n Pay's recovery strategy. 'Our partners are chosen strategically to drive mutually beneficial behaviours,' he said. 'We are proud to partner with an iconic brand like Pick n Pay.' The numbers suggest early success. Burger Friday specials (R50 for four burger patties, a lettuce mix, two tomatoes, four buns and cheese slices) and 99c bread loaves have attracted foot traffic. FNB told Daily Maverick that they've seen a 'positive uptake' in Pick n Pay's environment since the launch of the rewards programme. Exit stage left for MTN MTN attributed its departure from the Springbok sponsorship to a 'refreshed brand positioning' and a shift in strategy. 'This evolution is not a reflection of financial or economic pressures, but rather a considered, forward-looking approach,' the company said. MTN declined to confirm the total cost of its previous Springbok sponsorship, which spanned a number of World Cup wins and brand visibility at an all-time high. The bleeding balance sheet Pick n Pay's 2024 audited results painted a grim financial picture. The company reported a R3.2-billion after-tax loss, R6.1-billion in net debt and a R2.8-billion impairment on store assets. The retailer started pursuing a two-phase capital raise of up to R12-billion. This strategy hinges on shareholder support, Boxer's performance and stabilising operations in a constrained economy. While the company says its recapitalisation has 'significantly strengthened' its balance sheet, the outlook remains cautious. How does this affect you? For consumers, the Pick n Pay-FNB alliance appears to be paying off. Essentials like bread and burger kits are cheaper, while cashback benefits soften the blow of rising prices. But for Pick n Pay shareholders and employees, the financial risks are harder to overlook. The company is still in recovery mode and the Springboks sponsorship, though high profile, adds pressure to prove value. 'Sentiment is being impacted by the current trading environment,' said Shireen Darmalingam, an economist at Standard Bank. 'While inflation remains largely contained and is expected to hover around the midpoint of the target range, uncertainty has risen. Tariffs, especially those imposed by the Trump administration, have pushed up break-even inflation and weakened brand confidence.' Darmalingam added that retail sales volumes for February 2025 undershot expectations, growing by just 3.9% year-on-year, down from 7% in January, while food and beverage sales declined. This adds complexity to Pick n Pay's equation. While sponsorship may increase brand visibility, the retailer still faces the hard task of executing a turnaround amid economic challenges. DM
