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Support among businesses rises for UK staying in EU

By - May 09,2016 - Last updated at May 09,2016

LONDON –– The number of company bosses in Britain who want the country to stay in the European Union has risen slightly, but just over half think Britain would eventually prosper on its own, according to a survey published on Monday.

The Institute of Directors lobby group said 63 per cent of executives who took part in its survey wanted to stay in the EU, up from 60 per cent in a previous poll in February.

Twenty-nine per cent wanted Britain to leave the bloc, down from 31 per cent, while 8 per cent answered "don't know".

IoD director general Simon Walker said the importance of the EU's single market and the ability to hire skilled workers from across the bloc were making business leaders increasingly supportive of staying in the EU.

"However, more members than not think the UK could ultimately make an economic success of leaving the EU, in particular believing that it would have a positive effect on employment red tape," Walker said in a statement.

Previous polls of business leaders by various employers groups have shown strong support for remaining in the EU. But polls of the public show voters are narrowly divided ahead of the June 23 referendum.

 

The survey of 1,224 IoD members was conducted between April 13 and 28.

UK homeowners face significant hit from Brexit — Osborne

By - May 08,2016 - Last updated at May 08,2016

The skyline of the City of London and the Canary Wharf financial district is seen in London, Britain, on Friday (Reuters photo)

LONDON –– British finance minister George Osborne said on Sunday that homeowners would face a "significant hit" from lower house prices and higher mortgage costs if voters decided to leave the European Union in a referendum in June.

"This isn't just a big question about who we are as a country. This goes to the heart of people's financial security," Osborne said in an interview on ITV television.

"I am pretty clear that there will be a significant hit to the value of people's homes and to the cost of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU."

Osborne and Prime Minister David Cameron have put the economic risks of a so-called Brexit at the heart of their campaign to keep Britain in the EU before the referendum on June 23.

Opinion polls have shown that voters believe that staying in the EU would be best for Britain's economy but they are narrowly divided on how they intend to vote next month.

The Treasury, headed by Osborne, has already said the long-term impact of a Brexit could cost households 4,300 pounds ($6,200) a year by 2030 in terms of lost growth in the economy and earnings.

A new finance ministry report on the short-term effects of a so-called Brexit on Britain's economy will look at the implications of an "Out" vote on the country's housing market, Osborne said.

The report will be published in the next few weeks, he said.

 

The "Out" campaign says Britain's economy would flourish over the long term outside the EU as the country would be able to strike its own trade deals, spend its EU budget contributions at home and scale back on rules and regulations.

Each firm should hire one jobless person — Erdogan

By - May 08,2016 - Last updated at May 08,2016

ISTANBUL — Turkish President Recep Tayyip Erdogan on Sunday came up with a novel scheme to rein in the country's high unemployment levels, saying that every company should take on one unemployed person.

Turkey's main private sector organisation, the Union of Chambers and Commodity Exchanges of Turkey (TOBB), has around one-and-a-half million members, Erdogan said in a speech to business leaders.

"If each member takes on one person... that would mean work for 1.5 million unemployed people" said Erdogan.

"Unfortunately, we cannot take our money to the grave. It remains here. In that case, let's give work to those who don't have any," he told a conference on health and work security in Istanbul.

"What would a company lose?" he asked rhetorically.

"Will it collapse if it hires one person? No, on the contrary, it will benefit. It's as simple as that, " he concluded, to measured applause from the assembled business leaders.

Regularly accused of populism, it is not the first time the business community the Turkish president's interventionist approach on economic issues has worried the business community.

He has already made repeated calls on Turkey's central bank to lower interest rates, at the risk of boosting inflation.

After a prosperous decade, the Turkish economy has dropped off since 2012, with economic growth slowing to 4 per cent last year, a high public spending deficit and unemployment at over 10 per cent.

The country has also been shaken by a series of bombings, attributed to Kurdish nationalists or the Daesh group, which have left its tourism sector in crisis.

Nonetheless Standard and Poor's on Friday upgraded its outlook for Turkey's credit rating, judging the prospects for the nation's economy to be stable despite political instability that may dampen growth and reform plans.

 

Erdogan's prime minister Ahmet Davutoglu announced on Thursday that he was quitting.

Saudi to maintain 'stable' oil policies — energy minister

By - May 08,2016 - Last updated at May 08,2016

RIYADH – The new energy minister of Saudi Arabia, the world's biggest oil exporter, on Sunday pledged continuity in the kingdom's oil policy, after being named in a major government overhaul.

"Saudi Arabia will maintain its stable petroleum policies," Khalid Al Falih said in a statement a day after King Salman appointed him to replace longtime former oil minister Ali Al Naimi.

"We remain committed to maintaining our role in international energy markets and strengthening our position as the world's most reliable supplier of energy," Falih added.

King Salman placed Falih, the chairman of state oil giant Saudi Aramco, to head an expanded energy, industry and mineral resources portfolio.

His predecessor Naimi had led the now-defunct Ministry of Petroleum and Mineral Resources for about two decades.

Naimi oversaw a major change in policy towards the end of his tenure when the Organisation of the Petroleum Exporting Countries refused to cut production despite a price plunge.

Instead, OPEC kingpin Saudi Arabia focused on protecting its market share and driving out less-competitive players, including the developers of US shale oil.

Major oil producers failed to reach an agreement on freezing output in Doha last month as Saudi Arabia insisted any deal must include all OPEC members, including rival Iran which boycotted the talks.

The price collapse, from above $100 in early 2014 to less than $45 on Friday, has intensified Saudi efforts to diversify the economy away from oil which makes up the majority of its revenue.

 

Falih was appointed as part of a government shakeup that saw several ministries merged in what analysts said reflected the government's determination to diversify the economy.

Digging deep in South Africa as diamond hunt gets tougher

By - May 08,2016 - Last updated at May 08,2016

De Beers spent 25 years digging a 450-metre deep by one-kilometre wide hole to access diamond-rich rock from the surface at the Venetia mine (AFP photo)

VENETIA MINE, South Africa –– Proof that diamonds are getting harder to find can be seen in the South African bush, where one of the world's largest mining companies is spending $2 billion tunnelling beneath a vast open-pit mine.

De Beers spent 25 years digging a 450-metre deep by one-kilometre wide hole to access diamond-rich rock from the surface at the Venetia mine, close to the border with Zimbabwe and Botswana.

Now a whole new underground mine is being constructed underneath the hole to reach diamonds more than 1,000 metres below ground — a big bet by De Beers that their investment will reap decades of profit.

"We are in very challenging times," Ludwig Von Maltitz, the mine's general manager, told AFP on the edge of the cavernous open-pit as trucks rumbled up to the processing plant.

"Worldwide, the easier diamond sources have probably been found but, with this resource here, we hope we have something that can extend well into the future."

As the hunt for diamonds becomes tougher, mining companies must go to greater lengths — and absorb higher costs — to secure the ultimate precious stone and symbol of love.

"Across the globe, the big diamond deposits have been exploited, and I don't see any big new mines coming online," Peter Major, mining specialist at Johannesburg-based Cadiz Solutions, told AFP.

"We are often told that the growing world population, combined with the increasing difficulty of finding diamonds, will mean prices always rise, but we will see. Many producers are losing money.

"The project at Venetia is stupendous — especially as very few other firms are investing in mining in South Africa."

In recent years, diamond prices have fluctuated sharply.

After the global economic crisis in 2008, prices recovered quickly to hit a peak in 2011 before falling about 20 per cent to slightly below their current rate.

Amid such swings, mining companies must judge whether it is profitable to prospect for diamonds in increasingly difficult geological conditions, or in unstable countries such as Angola and the Democratic Republic of Congo.

Are diamonds forever? 

Reflecting widespread uncertainty in the industry, De Beers — the world's largest supplier of diamonds by value — shut diamond mines in Canada and Botswana last year.

It also sold its last mine in the South African town of Kimberley, where the diamond industry was born and where De Beers was founded in 1888 by British colonialist Cecil Rhodes.

But the Venetia mine is set to become one of the world's five biggest diamond mines after its conversion from open-pit to underground operations is finally completed in 2022.

Current predictions suggest the mine will then operate until at least 2043.

"The troughs and the peaks [of diamond prices] happen more frequently now but I am optimistic," said Von Maltitz.

"If we can do it well enough, I can't see why mining should not be a lucrative business going forward."

Demand for diamonds over the last decade has been driven by a new generation of buyers in China and India that have adopted the tradition of giving diamond engagement rings.

Latest figures suggest that such new markets are fragile.

De Beers last month reported that global demand for diamond jewellery grew 2 per cent in 2015 with growth strongest in the United States and China.

But a dip in India and across the Gulf region pointed to weakening growth in many emerging markets.

"China and India drove diamond prices up, along with speculation that the growth rate would continue indefinitely," industry analyst Paul Zimnisky said, speaking from New York.

"People got overly optimistic and greedy," he said.

Zimnisky believes "it is misleading to say we are running out of diamonds" as "when prices rise, mines that were uneconomic become profitable".

However the industry cannot react that quickly to a rise in demand and prices.

Zimnisky said, "it takes time to get a new diamond mine started — perhaps 10 years. That is what makes the $2 billion expenditure at the Venetia mine so significant."

A fresh challenge that the industry faces is the emergence of synthetic diamonds, which are predicted to rapidly fall in price over the next 10 years as the manufacturing technology and quality improves.

But mining companies hope a real diamond dug out of the deep ground will still be the last word in luxury long into the future.

"The Venetia project is definitely worthwhile to pursue," said Richard Grieg, a senior site manager at the mine, which employs 4,500 people.

 

"We are already re-training the miners to enable them to work in the very different conditions underground."

Shift in Saudi oil thinking deepens OPEC split

By - May 07,2016 - Last updated at May 07,2016

Saudi Arabia's Oil Minister Ali Al Naimi arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17 (Reuters photo)

LONDON/DUBAI — As officials from the Organisation of the Petroleum Exporting Countries (OPEC) gathered last week to formulate a long-term strategy, few in the room expected the discussions would end without a clash. But even the most jaded delegates got more than they had bargained with.

"OPEC is dead," declared one frustrated official, according to two sources who were present or briefed about the Vienna meeting.

This was far from the first time that OPEC's demise has been proclaimed in its 56-year history, and the oil exporters' group itself may yet enjoy a long life in the era of cheap crude.

Saudi Arabia, OPEC's most powerful member, still maintains that collective action by all producers is the best solution for an oil market that has dived since mid-2014.

But events at Monday's meeting of OPEC governors suggest that if Saudi Arabia gets its way, then one of the group's central strategies –– of managing global oil prices by regulating supply –– will indeed go to the grave.

In a major shift in thinking, Riyadh now believes that targetting prices has become pointless as the weak global market reflects structural changes rather than any temporary trend, according to sources familiar with its views.

OPEC is already split over how to respond to cheap oil. 

Last month tensions between Saudi Arabia and its arch-rival Iran ruined the first deal in 15 years to freeze crude output and help to lift global prices.

These resurfaced at the long-term strategy meeting of the OPEC governors, officials who report to their countries' oil ministers.

According to the sources, it was a delegate from a non-Gulf Arab country who pronounced OPEC dead in remarks directed at the Saudi representative as they argued over whether the group should keep targeting prices.

Iran, represented by its governor Hossein Kazempour Ardebili, has been arguing that this is precisely what OPEC was created for and hence "effective production management" should be one of its top long-term goals.

But Saudi governor Mohammed Al Madi said he believed the world has changed so much in the past few years that it has become a futile exercise to try to do so, sources say.

"OPEC should recognise the fact that the market has gone through a structural change, as is evident by the market becoming more competitive rather than monopolistic," Al Madi told his counterparts inside the meeting, according to sources familiar with the discussions.

"The market has evolved since the 2010-2014 period of high prices and the challenge for OPEC now, as well as for non-OPEC [producers], is to come to grips with recent market developments," Al Madi said, according to the sources.

Orchestration

For decades Saudi Arabia had a preferred oil price target and if it didn't like the prevailing market level, it would try to orchestrate a production cut or increase in OPEC. 

It would contribute the lion's share of the adjustment and forgive smaller and poorer members if they failed to comply with the group's agreement.

Back in 2008, the late King Abdullah named $75 a barrel as the kingdom's "fair" oil price, most likely after consultations with the long-serving oil minister Ali Al Naimi.

When the Saudis orchestrated the last output cut in 2008 — to support prices during the global economic crisis — oil jumped fairly quickly back above $100 from below $40. 

Later Riyadh again made known its price preference on a few occasions but in recent years it has effectively stopped sending any signals.

This follows the fundamental changes on oil markets. In the past five years, the development of unconventional oil production from US shale deposits and other sources such as Canadian oil sands has made redundant the idea that crude is a scarce and finite resource. Russia, which is not an OPEC member, has also contributed to the ample global supply.

‘No free riders’

Dispensing with price targets represents a massive change in Saudi thinking. This is now being driven largely by 31-year-old Deputy Crown Prince Mohammed bin Salman, who took over as the ultimate decision maker of the country's energy and economic policies last year.

When oil was viewed as scarce, the kingdom thought it had to maximise its long-term revenues even if that meant pumping fewer barrels and yielding market share to rival producers, according to several sources familiar with the Saudi thinking.

With the importance of oil declining, Riyadh has decided it is wiser to prioritise market share, the sources say. It believes it will be better off producing more at today's low prices than reducing output, only to sell the oil for even less in the future as global demand ebbs.

On top of this, Riyadh has pressing short-term needs including tackling a budget deficit which hit 367 billion riyals ($97.9 billion) or 15 per cent of gross domestic product in 2015.

"The oil industry is, relatively speaking, not a growth industry anymore," said one of the sources familiar with the Saudi views inside the OPEC governors' meeting.

In the past, low oil prices used to push global demand much higher but today's rising efficiency of motor vehicles, new technology and environmental policies have put a lid on growth.

Despite record low prices in the past year, demand is not expected to grow by more than 1 million barrels per day in 2016, just one per cent of global demand.

One thing is guaranteed: the kingdom will not go back to the old pattern of cutting output any time soon to support prices for the benefit of all producers, Saudi sources say.

"The bottom line is that there will be no free riders any more," Al Madi said at Monday's meeting. "Some OPEC members should 'walk the talk' first," he told his colleagues.

 

Even Riyadh's rivals doubt it will perform any U-turn. "Saudi Arabia doesn't give a damn about OPEC any more. They are after US shale, Canadian oil sands and Russia," a non-Gulf OPEC source said.

Ali urges EU to ease trade rules for Jordan

By - May 07,2016 - Last updated at May 07,2016

AMMAN — Joint action is important to enhance economic cooperation between Jordan and Germany in the fields of trade, investment and technical assistance, Minister of Industry, Trade and Supply Maha Ali said Saturday.

At a meeting with Bavarian Minister for European Affairs and International Relations Beate Merk and an accompanying delegation, Ali highlighted the importance for the EU to simplify rules of origin procedures to allow Jordanian products to enter the EU market, a ministry statement said. Simplifying these rules would support the Kingdom's economic development through attracting more investments and creating more jobs, she added.

Ali also briefed the delegates on the challenges facing the Kingdom due to unrest in neighbouring countries, adding that border closures with Syria and Iraq led to a sharp drop in exports to the most important traditional markets for Jordanian products.

Merk praised Jordan's role in hosting refugees and expressed Bavaria's keenness to enhance economic cooperation with Jordan, the statement added.

Jordan-Greece business forum commences Tuesday

By - May 07,2016 - Last updated at May 07,2016

AMMAN – The Amman Chamber of Industry (ACI) will host on Tuesday the Jordanian-Greek Business Forum that seeks to increase bilateral of goods. According to a statement issued by ACI, a delegation from companies in Greece will take part in the event, which will also see the participation of a large number of Jordanian manufacturers.

On Saturday JCI Chairman Ziad Homsi met with Greek Ambassador in Jordan Maria Louisa Marinakis to discuss preparations for the forum, which is organised in cooperation with the Amman Chamber of Commerce. Homsi stressed the importance of the Greek market to Jordanian products as the European country can be a gateway to the Balkan region markets.

Homsi described the current economic relations between the two countries as still less than expectations, indicating that Jordanian exports to Greece stood at $5 million only in 2015, while imports reached $41 million.  

Jordan's industrial production down in Q1 — official data

By - May 07,2016 - Last updated at May 07,2016

AMMAN – Jordan's industrial production saw a decline in the first quarter of this year, except for phosphate production, which increased slightly by 1.6 per cent, the Finance Ministry announced Saturday. Ministry data said potash production fell by 14.5 per cent and fertilisers by 31.5 per cent. 

The Kingdom's electricity generation also dropped by 39.1 per cent, the ministry said in a statement carried by the Jordan News Agency, Petra. 

Majali re-elected chairman of phosphate company

By - May 07,2016 - Last updated at May 07,2016

AMMAN — The Jordan Phosphate Mines Company's board of directors re-elected Amer Majali as chairman for the next term, the Jordan News Agency, Petra, reported Saturday. 

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