Europe wants minerals, SA wants oil. Deal on

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SIMON BROWN: I’m chatting now with Harry Scherzer. He is CEO at Future Forex. Harry, appreciate the early morning time again. Looking towards Europe, obviously we get the upsets coming out of the tariffs, the White House conflicts around trading partners.

Europe is I think trying to stand up and take some of the slack. Are we seeing deepening engagement? I’m thinking green hydrogen, critical minerals. Is there really a sort of strategic pivot or is this Europe more just sort of, I don’t know, shopping for cheap?

HARRY SCHERZER: Morning, Simon. great to chat to you again. Look, I think I think it’s a bit of both. I think it’s a matter of sensing desperation in South Africa with the Trump regime not inviting South Africa to the G20 Summit, and very openly showing hostility towards our government. So Europe is kind of picking up on, ‘Well, that gives us a good opportunity to get in a little cheaper.’

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I think on the flip side it’s definitely a good thing for us because it allows us to diversify away from our second-biggest trading partner being America, which at the moment, as I said, is very openly hostile towards us.

And so it’s good news that other countries in the West, in this case Germany, are happy to work with us, despite our geopolitical agenda very often being against theirs, and despite America openly saying they are not keen to have us at the G20 and they’re not comfortable with the way we’re acting.

So ultimately I think this is a good thing for South Africa. It shows that it’s less about the actual deal – it’s not a massive deal – and more about the signal. It shows that Europe is willing to work with us in a time where we are not making that many friends.

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SIMON BROWN: I take your point. And to be clear, as much as we’ve seen Trump in the White House sort of sabre-rattling towards us, he’s doing it towards Europe.

We have all forgotten Greenland; that was only about three months ago back at Davos. There is a realignment happening, and it would be clever and strategic for both parties to accept that and embrace it.

HARRY SCHERZER: Absolutely. Trump has pretty much isolated America, saying ‘America first’, and by doing so he has shown that it’s tough to work with America. Well, it’s becoming tougher to work with America. They have always been a very, very easy nation to work with.

And so you are right, this has other advantages for Europe, which basically realises it also needs to diversify. If we look at the idea of how oil currently, just to give an anecdotal point, oil has currently skyrocketed because of the Strait of Hormuz closing, opening, closing, and now closing again.

As a result, Europe needs to find alternative sources for oil and this deal with South Africa provides these minerals, which can provide an alternative power to, for example, petrol – which requires oil.

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They are  effectively diversifying away from oil. Also, in terms of what we own, being the minerals, those are also hugely in demand right now with oil doing what it’s doing. So you have a situation where Europe needs to diversify and they need our resources. This makes a whole lot of sense for them as well.

SIMON BROWN: This is perhaps more about those resources, those minerals. We have all of them, and we have the critical ones, the green hydrogen – we have all of them. Europe does – more around the minerals. I’m thinking back to all those negotiations around whether we could call it port or champagne and the like. This is minerals more than anything.

HARRY SCHERZER0: Absolutely. And the way the deal is structured is €200 million is coming in as a loan in order for us to improve our infrastructure and be able to mine these minerals effectively. And then there’s scope for another €270 million deal to actually have the minerals be used.

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So in South Africa we have everything we need. What we don’t have is a good utilisation ratio of funds. The reason for that is that our infrastructure just isn’t in the place that needs to be. So I’m happy to see this – but I really, really hope that we can use it to improve our ports, improve our railroads and improve our electricity, because these are the large infrastructure products that have for ages stalled us in our growth.

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SIMON BROWN: And we need to get this working because, to be clear, Europe is not just talking to us. They are having this conversation with many other countries – I was going to say around the continent – but truthfully across the world. We need to grab it. We have the door open. We need to deliver to make sure it’s us and not somebody else.

HARRY SCHERZER: Look, the good news is there has been a lot of renewed growth in South Africa. We’re off the grey list. We have the GNU, which has provided some stability.

We’ve had the rand strengthening. So I think the signs are positive in South Africa that we can actually grab this opportunity. But you are 100% right. If we let it falter, they are not going to sit around and wait for us. They are ultimately going to go elsewhere.

Read: SA removed from another ‘naughty list’, this time by the EU

SIMON BROWN: Yes. They want those minerals. They will find them. We have them. Let’s hope that we can do it right. And certainly we have the opportunity. This is very possible, very real.

We’ll leave it there. Harry Sherzer, CEO Future Forex, appreciate the early morning time.

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