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QUEST MEANS BUSINESS
South Africa Mine Shootings Inquiry; What Mine Strike Was About; Lonmin Shares Fall; Finland Backpedals on Euro Comments; Defending the Euro; Europe Critical; Euro, Pound Down
Aired August 17, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: South Africa's president launches an inquiry after 34 people killed at that platinum mind.
Finland's foreign minister says they're preparing for a euro breakup. Tonight, the Europe minister says they're not.
(BEGIN VIDEO CLIP)
ALEXANDER STUBB, FINLAND MINISTER FOR EUROPEAN AFFAIRS AND FOREIGN TRADE: We are 100 percent committed to the euro, we're pro European and shall continue to be so.
(END VIDEO CLIP)
QUEST: And the wrong kind of red. Man U shares fall on the even of the new football season.
It's the end of the week. I'm still Richard Quest and, of course, I still mean business.
Good evening. South Africa's president, Jacob Zuma, has announced an inquiry into the deaths of 34 workers who were shot and killed by police during a strike at the Marikana mine. The president cut short a trip to Mozambique to visit the scene and said answers must be found and then lessons learned.
(BEGIN VIDEO CLIP)
JACOB ZUMA, PRESIDENT OF SOUTH AFRICA: I've decided to institute a commission of inquiry. Inquiry will enable us to get to the real cause of the incident and to derive the necessary lessons, too. However, today is not an occasion for blame, finger-pointing, or recriminations.
(END VIDEO CLIP)
QUEST: Nkepile Mabuse is at the mine in Rustenburg tonight. And I suppose the core question, despite what the president says about recriminations, the core question does remain, Nkepile, is did the police open fire without cause for believing that they were in danger or were being fired upon?
NKEPILE MABUSE, CNN INTERNATIONAL CORRESPONDENT: Exactly, Richard. That's the million-dollar question in the situation. Finally getting very high-profile attention. As you said, President Jacob Zuma cutting short a trip to Mozambique, where he was attending a regional summit, to come to attend to this very urgent domestic matter.
He got a thorough briefing from the police today here at Lonmin Platinum Mine in the northwest province of South Africa. And yes, the question who shot first? I asked witnesses today who witnessed what happened on Thursday afternoon. This is what a reporter who was there had to say to me, Richard.
(BEGIN VIDEO CLIP)
XOLI MNGAMBI, ETV REPORTER: We saw a whole group of them, police officers, carrying massive guns -- R-5s, we understand -- and they just moved in immediately. Now --
MABUSE: Were they provoked?
MNGAMBI: The million-dollar -- that's the question, I think, that I've tried to answer time and again since last night. We cannot say to you that the police were provoked. Yesterday, the police were clear that today we're going to disarm them and remove them from the hill because the gathering is illegal.
(END VIDEO CLIP)
MABUSE: Richard, we also spoke to a miner who took part in this illegal strike, and you've seen some of those pictures. The miners were carrying really serious weapons: machetes, some of them traditional weapons, and police say guns, as well.
This miner says that they were attacked first. But the national police commissioner, addressing the nation for the very first time since this incident happened, says that police used live ammunition as a last resort. Let's take a listen.
(BEGIN VIDEO CLIP)
RIAH PHIYEGA, SOUTH AFRICAN NATIONAL POLICE COMMISSIONER: The police members encircled the area and attempted to force the protesters out of the bushy area by means of water canons, rubber bullets, and stun grenades.
The militant groups stormed two of the police, firing shots and wielding dangerous weapons. Police retreated systematically and were forced to utilize maximum force to defend themselves.
(END VIDEO CLIP)
MABUSE: Richard, the situation here still very tense, still a very heavy police presence, and the miners telling us that they're going to be monitoring the situation throughout the weekend, and they don't expect that miners will return to work until this has been declared a safe area by the police, Richard.
QUEST: Nkepile, who is in Rustenburg tonight following the events. Let's put this into the widest possible context for you tonight. Thursday's killings -- excuse me -- were at the moment when South Africa's economic and political problems, now they collided with the force of violence that we've not seen since the days of Apartheid. And it really is all about this strike, and let's start with the strike.
The workers at the mine are currently paid between $3,500 and $6,000 a year. And that's quite a wide range. But it's -- that is half of South Africa's GDP per capita, so the average GDP per capita, $11,000.
So, what the workers want is a trebling of salaries to $18,000 a year. That's the core of the dispute. South Africa is the world's biggest producer of platinum. You knew that. And the mining sector as a whole accounts for about 18 percent of the total economy. And the jobs, of course, just as significant. A million South African workers' jobs depend on it.
The national unemployment rate is at 25 percent, and wage increases have outpaced the level of productivity over the last three years. Last month, the World Bank downgraded its growth forecast for South Africa, down from 3.1 to 2.5 percent. Those are the numbers.
The owners of the Marikana mine, Lonmin, say work must begin today to rebuild relations with the workers. Lonmin shares fell again on Friday.
One hesitates to talk about, necessarily, share prices when you have 30-odd people dead from shooting, but this is the wider business context that we need to put it into, slipping below the 6 pound a share mark, it settled at 6.39 since the strike began last Friday. So, there we have the way things are looking on the business front.
When we come back, Finland said it is 100 percent committed to the single currency. Well, that commitment came into question in this morning's newspaper. Read the foreign minister's view: Finland prepares for a breakup of the eurozone. So, the foreign minister says one thing, the Europe minister tells me something completely different. Is Finland in a mess?
QUEST: In a moment.
QUEST: "No one wants to rock the boat." Those are the words that tonight signal a furious backpedaling in Finland. It was the foreign minister that veered off course after he said in a newspaper interview, "Finland prepares" -- it's in the in "Daily Telegraph" -- "Finland prepares for breakup of the eurozone. We have to face openly the possibility of a euro breakup."
Erkki Tuomioja's remarks were quickly hosed down by his coalition cabinet colleagues who says he's wrong, and they are 100 percent committed to the single currency. I put the questions and the answers to the Europe minister, Alexander Stubb, and suggested talk of a breakup is now being brushed under the mat.
STUBB: I want to make it 100 percent sure that Finland is 100 percent committed to the euro and what the foreign minister said did not in any which way represent the position of the Finnish government. We are in a crisis management operation. We're doing everything to strengthen and stabilize the euro.
Second point on the specific question of different crisis scenarios. It is absolutely clear, and it's been said over and over again, that different types of countries have different types of scenarios about the euro. Our scenario number one is that the euro shall continue, the euro shall be stabilized, the euro shall be strengthened, and that we shall have in the future regulation which prevents these types of crises.
QUEST: Well, then I would suggest that you're being negligent, Minister. Because the foreign minister was absolutely right. You have to face openly the possibility of a euro breakup. And if you're not facing that, then you're not being realistic.
STUBB: I think we're being very realistic by having different types of scenarios. But of course, you must understand Richard, that our aim is number one to maximize Finnish influence inside the eurozone, and number two, to stabilize the euro.
No one wants to rock the boat. The situation is very sensitive, it's very difficult. And as we can see, it doesn't matter which minister from which country says what, it will be interpreted in different kinds of ways. I just want to convey you the message -- to you the message that we are 100 percent committed to the euro, we are pro European and shall continue to be so.
QUEST: So, was the foreign minister tired and emotional, or had he just had a long day when he said what he did? And is he likely to be foreign minister by the end of the summer?
STUBB: I'm sure he will be. He's a very good guy. Put it this way: perhaps sometimes up here in the north in Finland we are not used to the likes of "Daily Telegraph" and the way in which they happen to interpret various types of things.
I think we must look at what the foreign minister said, and we must also be very clear that the foreign minister had a press conference this afternoon here in Finland, where he clarified, also, what he meant. Different kinds of speculations are not very helpful for what is going on in the eurozone right now.
QUEST: All right. And we can assume that the foreign minister's cell phone was red hot from the prime minister and others. But let's talk about -- as we come out of the summer, we move into September, Minister, there really is no time now to lose. And yet, it seems as if there's just no long-term solution that's satisfactory for the markets.
STUBB: Well, the markets are, of course, very iffy all the time, and we've learned how to live with that, I think, ever since the crisis began in September 2008. Retrospectively, let's look at the facts. The fact is that unemployment rates have stayed fairly stable in Europe despite the crisis. Fact number two: interest rates are very low. So the situation is fairly stable.
This does not mean that we should not put our working gloves on. We have to do a lot of work on Greece, we are doing work on Spain. There are discussions, issues linked to Italy. There have been discussions on Portugal.
We have to do a lot short term. But long term, I think the issue is clear. There, we have to have tougher rules. Tougher rules mean more pooling of national sovereignty. More pooling of national sovereignty basically means more integration. And that is the long-term perspective.
QUEST: I'll beat you to the line before you offer it up. The ECB is independent of national governments, but even so, would you now like to see the ECB get its hands dirty and start playing a bigger role?
STUBB: I am just a humble minister for European affairs and foreign trade, and I would never give advice to such a knowledgeable and intelligent institution as the European Central Bank. I have full confidence in the work that Mario Draghi, the head of the central bank, and his staff does. I think we need to keep a separation between the ECB and us politicians.
QUEST: Alexander Stubb, who even managed to answer that last question with a straight face. And I'd give a fiver to have heard the conversation between the Finnish prime minister and the Europe minister -- the foreign minister after today's story.
Finland wasn't the only country to raise the future of the euro. You saw Alex in his library. Join me in my library. Austria was having a bash where the chancellor Werner Faymann said the breakup would do more harm than good in response to questions about expelling members who break the rule.
The EC has reaffirmed the commitment, no surprise there. But its spokesman described it as "irrevocable." No, sorry, I beg your pardon. That's what the treaty describes it as. He said it's "irreversible." Maybe he should have said "irrevocable."
Anyway, "irreversible" is the phrase that, of course, Mario Draghi used last month. And Angela Merkel, she's in Canada, "committed to saving the euro." Well, that's all right, then. She said -- she went on to say, the EU leaders are making progress and she knows time is not necessarily on their side.
Stephen Pope is with me. Breakup more harm than good? Euro irreversible? Committed to saving the euro? Finland's not aiming to fall out of the eurozone, or they're not planning for it to fall out?
STEPHEN POPE, MANAGING PARTNER, SPOTLIGHT IDEAS: Remind me, it's August. We haven't done this one before, have we? The euro is irreversible. It's a bad plan that cannot be changed. And how many more times do we actually have to give a bit more money and a bit more time to the Greeks so that they can muddle their way through?
QUEST: Right. Let's start with the Finland story.
QUEST: So, you wrote a note on this today, didn't you?
POPE: Yes. I think that finally somebody stepped forward and spoke the truth. Any sensible government is going to be making all sorts of plans and contingencies.
QUEST: We know companies are making plans for contingencies. They've admitted on this program that they're making plans.
POPE: Absolutely right. And I think shareholders in companies or electorates in any given nation would feel that their people they turn to to be in charge are being derelict in their duty if they don't make those provisions.
QUEST: So, if -- forget contingencies for the moment, and "irreversible" and all the political nonsense that we're hearing at the moment. When we come out of the summer --
QUEST: We first -- we've got the EFSF and the ESM to deal with, and then we've got the banking union, and then we've got to decide whether more money goes for Greece.
POPE: Well, first of all, are we going to put the right sort of money into the EFSF and ESM, or are we going to allow the ESM to become a bank so it can draw money from the ECB? We have to answer those questions quite clearly and quite firmly before we can even dream to move forward.
QUEST: And then we've also got the question of Spain and whether or not Mariano Rajoy is going to ask. And that depends on the conditionality that'd be offered up.
POPE: Yes, indeed. Well, there's Mr. Rajoy, he seems to change his mind from month to month. He didn't want a bailout, didn't need a bailout, and now he does. They can't afford to sort out their own banks, but that's not a bailout. And now he's going to have to go for a state bailout.
But of course, it's bailout easy terms. And that's going to make the Irish and the Portuguese want a renegotiation of their terms as well.
QUEST: But what's the risk? Because everything seems stable at the moment, Stephen, so why are you getting excited? And why am I getting my blood pressure up?
POPE: Ah, it's because we go through these phases where the ECB president, Mr. Draghi, says that we'll do everything that is possible and is needed, and then he comes out in that press conference with a great statement. But it's going to take two weeks to design the plan.
Well, please, go away. Come back to the market when the plan is ready to roll rather than "We've got an idea, but we've got two weeks before we design it properly."
And Merkel, there she is in Canada. Notice the semantics she used. "We will do all we can." Not "We will do absolutely everything that is required."
QUEST: Well, it's the same thing. That's the same thing. She meant one thing. I turn that to translation --
POPE: Well, maybe so. Maybe so, but the devil's in the detail on these things.
QUEST: OK. Your fear is fundamentally what as we go into September?
POPE: My fear is that we just carry on doing the same thing we have been for the last two years, agreeing that Greece can have a bit more time and a bit more money. Now, this plan was agreed in February. I said in six month's time they'd want more money, and here they are looking for it.
We have the Spanish, Spain is bust. It cannot afford to finance itself much more. It cannot afford to sort out its banks. And then we start turning our attention to Italy, where there is a politician, Mr. Monti, who was positioned by the Germans, supported by the Italian politicians, but now because there's an election next April, he's being hung out to dry.
QUEST: Calm yourself. It's the weekend.
POPE: How can we be calm when it's like this? It's crazy.
QUEST: Thank you very much. Currency Conundrum for you. Friday's Conundrum. The one million Australian dollar coin is the heaviest coin in the world. So, how heavy was it -- or is it? Ten kilograms, 508 kilograms, 1,012 kilograms? We'll answer that for you later in the program.
Forget the big one. This is all the rates to the US dollar. Euro's down a third of one percent, the yen's up, the pound is down by a quarter of one percent. Those are the rates --
QUEST: And this is the break.
QUEST: On the eve of the new football season, Manchester United have completed one of the biggest transfers of the summer. They've signed Robin van Persie from Arsenal, and the price tag -- I have to read it to make sure we've got it right -- $37.5 million.
QUEST: That's worthy of that. Investors have other concerns, though. Man U shares are down for the third straight day. I was going to say on the London, but of course it's not, it's the New York Stock Exchange. Since going last week public, they've dropped in total about 4 percent because other European clubs are still outspending them.
Let's get some more on the spending mechanisms of the new season. Pedro Pinto is explaining.
PEDRO PINTO, CNN SPORTS CORRESPONDENT: Well, you'd have to be living in a cave not to have realized that Paris Saint-Germain have been dishing out cash like it's going out of style.
This man has a lot to do with it, Zlatan Ibrahimovic, but take a look at the amount of players they brought in this summer. $193.5 million, that's how much Qatar Sports Investment and Qatar Investment Authority, the owners, there, have spent in the off season.
Second on the list: Chelsea. We've been used to them spending quite a lot of cash, haven't we? $110 million. But nearly half o PSG. It's really staggering how much the French side has spent.
After the signing of Robin van Persie, Manchester United have climbed to third in the list of the clubs that have spent the most this summer, $70 million. That also includes Shinji Kagawa and Nick Powell, a youngster they got, not for a lot of money.
As much as the clubs who are spending, it's also a story the ones that aren't. We've been used to seeing the likes of Manchester City spend in the hundreds of millions, and they really haven't. About 15 million pounds, that's all that they've spend this summer.
AC Milan, it used to have Silvio Berlusconi bankrolling the club. Not so much anymore. They haven't spent much.
Last but not least, the club that is identified as probably the best over the last three or four years. They just signed Jordi Alba. So, that's the discrepancy that we've seen this summer.
QUEST: All right. So, as we look at all these various players, and particularly the really big spenders, is this sort of money greater than usual, and is it distorting the game?
PINTO: To answer your second question first, it is distorting the game. It is not greater than usual. However, what's interesting, Richard, is if we compare the top five leagues in Europe at the moment. The premier league, the net spending of the 20 clubs, about $300 million. That means they have spent $300 million more than they have recouped from the sale of their players.
Big debts, as well, in Ligue 1, because of Paris Saint-Germain, and in the Bundesliga. Look what happens in Italy and Spain.
QUEST: Well, obviously, economic problems taken their woes there. Why is the Premier League so out of proportion to the rest?
PINTO: I believe it's because they're not taking the new financial fair play rules seriously enough. And these clubs -- mind you, UEFA are introducing new rules where clubs can't lose more than 20 million euros a season.
The clubs in the Premier League are trying to find new commercial deals to increase revenue, and they believe they'll still be able to play by the rules. But right now, they're not.
QUEST: And if this lot managed to bring in the punters and the viewers, then it's worth every penny.
PINTO: It is worth every penny, but every penny has to be recouped by points and qualification for the Champions League. That's a must. That's where the dollars, the euros, the pounds are.
QUEST: Pedro Pinto, there. And all next week on this program, we'll be exploring the fortunes and finances of the Premier League in depth as the new season gets underway. It's our series, Goal and the Beautiful Business. And we'll be back --
QUEST: -- in just a moment.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, the news always comes first.
South African president Jacob Zuma has announced a national inquiry into the killing 34 platinum miners. The police opened fire on a group of armed miners at a strike at the Marikana platinum mine on Thursday. The national police chief says the miners fired first.
A Russian judge has sentenced three members of the punk band Pussy Riot to two years in prison. The band members were found guilty of hooliganism aimed at inciting religious hatred for singing a song critical of Vladimir Putin inside a Moscow Cathedral.
Julian Assange is expected to make a public statement this weekend from the Ecuadorian embassy in London where he's taken refuge for nearly two months. He's been granted political asylum by Ecuador's government on Thursday. British officials say they'll arrest him and extradite him to Sweden if he tries to leave the building.
In Syria, activists are reporting another soaring death toll from fighting around the country. At least 50 -- 157 people I beg your pardon, they say -- have been killed on Friday. The UN and the Arab League have named the Algerian diplomat Lakhdar Brahimi to replace Kofi Annan as the group's special envoy to Syria.
QUEST: Mexico's economy is slowing down and consumers in the United States apparently are to blame. While the domestic economy is holding up well across the border, American shoppers are cutting back, and that's putting a dent in Mexico's exports. Annual growth slowed to 4.1 percent in the second quarter.
Nick Parker asked Mexico's economy minister if he's concerned now about the state of the U.S. economy.
(BEGIN VIDEO CLIP)
BRUNO FERRARI, MEXICO'S ECONOMY MINISTER: Fortunately they're having better results of what they were expecting. And actually the forecast is 2.2, which is more than they were forecasting at the beginning. So this is also good news for us.
But at the same time, we're trying to be more and more competitive. So we need to be more competitive as a region and we are very complimentary economies. We're intensive in labor; they're intensive in capital. What you are seeing is that more and more we are having, especially in the manufacturing areas, much better prices, a much better cost.
NICK PARKER, CNN CORRESPONDENT: Let's look at Europe for a second, which is still grappling with a debt crisis. What kind of impact does that have on Mexico and the Mexican economy?
FERRARI: Well, being the (inaudible) exporter in the world, always when a crisis in any place happens, it does have an impact. Maybe that's also related with when you are seeing this low down in many of the exports that we are having.
But at the same time, what we need to do and what we have been doing and (inaudible) also something that has been working very good for us is to grow in the places in which are going to demand more of your exports. And those places are the ones that are growing faster, as I was saying, that in America and Asia.
PARKER: Obviously China is the biggest player in Asia, and you're seeing an economy that's slowing down there as well. I mean, how does that factor into your decision-making, do you think?
FERRARI: Let me tell you, what we're trying to do and what we have been trying to do always is to convert the trends or even the crisis into opportunities. And this has been working very well especially in the macroeconomics of Mexico.
What you are seeing is that there are many companies that were searching for opportunities into China, that migrated from Mexico and the (inaudible) that are already coming back. And this is because many of the costs in China are being increasing. So we're doing a lot in logistics.
We're doing a lot -- we have free trade agreements with 44 countries. So this is what we are trying to do, trying to make Mexico some logistic (inaudible) for (inaudible) transforming those imports, making into exports. And this is what is really working on that relation.
(END VIDEO CLIP)
QUEST: Mexico's economy minister.
Well, the miners in Marikana went on strike. They wanted their employers to feel some element of the economic pain they were experiencing. Now one week later it's a very different story. Of course, Thursday's bloodshed leaves South Africa to contend with an extremely high human cost.
Well, the mining industry there will be economic implications and whilst that might seem distasteful to be talking of that when we have so many dead, that's a reality of life in South Africa. Now that Lonmin, the world's third platinum miner has halted production we're seeing the impact.
I'm going to -- join me at the superscreen and you'll see just what I mean. Now platinum prices, which had until this week been on a general downward trend, but if you take a look at the way they have moved and the way -- they're fairly -- not a huge range. They have -- that we have seen over the last -- and they've been bouncing around quite a bit.
But as you can see on this particular one, it has risen some 4 percent since Thursday. Now that's platinum. So we're definitely seeing a reaction there.
However, if you take a look at gold, which of course, is -- we frequently talk about on this program, we know that gold's had that huge run up and then holding its own, no reaction to gold. So two very different reactions in the market at the moment between platinum and in gold.
And as I bring this to you, of course, I suppose nothing -- one has to be careful. And you want us to have the priorities right as to what's important in this matter.
We will look at the weather forecast in just a moment. This is CNN, QUEST MEANS BUSINESS continues.
QUEST: Now let's discuss the outlook for these commodities, bearing in mind what we've just been seeing on those numbers.
Alan Knuckman is at onestopoption.com. He joins me now from the Chicago Mercantile Exchange.
Our discussion on commodity, particularly the golds and the platinum, you know, let's get our priorities right. A lot of people died in this -- in these events in South Africa. And the violence may not be over yet.
So but it is the importance to some extent not only for South Africa's economy, but also for the market, for the production that is now what was starting to seed (ph).
ALAN KNUCKMAN, CHIEF TRADING ADVISER, ONESTOPOPTION.COM: Right. The tragedy is, in itself, the bigger story. But if we want to talk about prices, that's what we do here and that's what we trade.
If you want to talk about the price action, this is an illustration of the efficiency of the global market, that these price shocks happen when there's any sort of disruption. Everything runs efficiently but when you see some sort of disruption, that really shakes up the market. And platinum had been trading largely between $1,500 and $1,400 an ounce since May.
So you know, this was not to be expected regardless -- or irregardless (sic) of the events happening, that this market could put in a bottom.
QUEST: OK. Now what is it about platinum -- I mean, I'm trying -- my mind is dragging up the remnants of catalytic converters and the chips and all the things that platinum goes into, and that is the significance when we see it's not just somebody's engagement or diamond or wedding ring.
KNUCKMAN: Right. The popularity of platinum has greatly increased as, you know, like you had said, for jewelry as in a -- as a difference from gold, a step up. But if you track the two metals, they move very similarly. Until recently, you know, you saw that it was up above $2,000 and very, very high peaks.
And then until it fell off, just like all the other metals. So I think it's found a base, and we're looking for all of these metals, especially gold, to make another move above $1,700 and see these metals participate in the asset rally.
QUEST: Ah, now, now let me take issue with you on this, because there's a strong view out there -- and it's -- as usual, it's the oldest view in the market, is gold going to rally? If you listen to the miners and you listen to the companies and the manufacturers, they say the fact it's off said 12, 30 percent from 1,900 is a mere bagatelle and not relevant. There are others who say the gold day is over.
KNUCKMAN: Well, I think that's a positive sign that a lot of people have been shaken out of the gold and gold stocks. And now I think it's built a base, and it looks like it's trying to recalibrate and move to the upside once again. The key is the value of the dollar. The dollar recently has got the highest level it's been since 2010.
And when the dollar was at the same -- at the same price, gold was at $1,300 an ounce. So that's bullish diversion, showing real inner strength. And I think as soon as the dollar turns over a little bit, we'll see gold, which usually tracks like other asset markets, like crude oil and like stocks, I'll think it's -- I'll look for that to start participate and move up to the $1,800 level once again.
QUEST: All right. We thank you very much. Alan joining us there from the Chicago Mercantile Exchange, the CME, I should say, tonight.
Let's take a look at the market in New York. We haven't updated you with them so far. The main markets are all broadly flat at the moment. It's a light trading day, obviously, to be expected. The consumer Michigan sentiment survey's the highest since May.
I want to show you this: Apple has hit a -- well, look at this. Apple has hit an all-time high. It's up 59 percent this year. So Apple is at $644.83, whereas Facebook is hitting an all-time low, down almost 50 percent since the beginning of its IPO. So there you have the Apple and you have the Facebook.
Now we have been hearing in the last few hours for the first time from the executive management team at the Marikana mine, the owners, Lonmin. Simon Scott is Lonmin's chief financial officer.
(BEGIN VIDEO CLIP)
SIMON SCOTT, CFO, LONMIN: Yes, I mean, it's really been a tragic situation. It's a situation that has escalated from one of an industrial relations incident to one where public order and public violence has transpired. It's a tragedy.
Clearly we send our condolences to all of those that lost their lives, be they our employees or members of the (inaudible) police services and those that are injured. You know, we are concerned about it. It's not something that, you know, that we thought and it's not something that, you know, that we're -- that has left us with anything other than feelings of sadness.
What happened was that an illegal strike took place. Employees chose to not to come to work. And then that very quickly escalated into an issue of public violence, which was beyond our control, and one that needed the intervention of the (inaudible) police services.
(END VIDEO CLIP)
QUEST: The chief financial officer of Lonmin and his take on the events of the last 24-36 hours in the mine.
The weekend is just about upon us in some parts of the world. Of course, it already has arrived. The -- Jennifer Delgado's at the World Weather Center for us this evening.
JENNIFER DELGADO, AMS METEOROLOGIST: Hi, Richard. You've been dealing with some heavy rainfall moving through parts of England. And we're going to continue to see that through the overnight hour, but it's also a very warm and humid over there. We'll talk more about that in just a moment.
But looking at the radar, you can see where the heavy rain's been coming down, for areas including Wales, up towards northern parts of England, including Northern Ireland, Ireland, wet conditions out there. And off and on, as we go through the morning hours, we will continue to see storms out there.
But we also want to add into the picture we're talking about the chance for severe storms. As we go through Saturday morning, some of these storms could possibly produce some hail as well as the possibility of tornadoes. And that includes central parts of England.
Now temperatures are well above average for this time of the year, and some of those locations are running almost 10 degrees -- it's been a long time since you'd seen that warmth through parts of England, but down towards the southeast, the temperatures are going to be running about 7 degrees above average.
Look at your high temperature, for Saturday, for London, 29 degrees there and in the humidity for Madrid you're going to see 40, 33 in Paris and then some 20s over towards eastern Europe.
But I know, Richard, I think you kind of have a short weekend in London. I think you're kind of curious of what we're going to be dealing in parts of the U.S. I think the northeast particular, we're talking about New York City.
A chance for a few showers to arrive very early in the morning and then Sunday it looks like it's going to be nice and really Saturday's going to be nice, a little bit cooler there, high temperatures in the mid-20s and Monday, about a 10 percent chance of some rain. You didn't say how long you were going to be in New York, so I --
QUEST: Well, well I give you grief on Monday and Tuesday when the program comes from New York, if you are wrong --
DELGADO: All right. Perfect. I won't get it.
QUEST: We are ruthless here.
A quick answer to the Conundrum today, we asked you how heavy is the heaviest gold coin in the world, 1012 kg. And that for you is QUEST MEANS BUSINESS. Thank you for making time to be with us this week. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
ROBYN CURNOW, CNN HOST: This is MARKETPLACE EUROPE. We're in Maputo, Mozambique, and I'm Robyn Curnow. Now Mozambique used to be a Portuguese colony, and it wasn't too long ago that Mozambicans saw Portugal as a land of opportunity. But that's all now being reversed. As many Portuguese are coming here, fleeing the Eurozone crisis, looking for jobs and a brighter future.
CURNOW (voice-over): In his new apartment, Bruno Gabriel unpacks his suitcase full of his girlfriend's fancy handbags, reminders of their more sophisticated city life back in Portugal. The couple moved to Maputo, Mozambique, four months ago.
Gabriel, a marketing director, said he was headhunted and made a deliberate career move to Africa.
BRUNO GABRIEL, MARKETING DIRECTOR: In Europe, everybody are a little bit afraid with their own future because the crisis, worldwide crisis in terms of economics and once we start to enter the labor business, once we start to work, we understand that to plan the future is a little bit more difficult than what you expected.
CURNOW (voice-over): In the Portuguese consulate, the consul-general says she's seen an increase in experienced university-educated Portuguese coming to their country's former colony.
GRACA PEREIRA, OUTGOING PORTUGUESE CONSUL-GENERAL: You know, the last two or three years, people began to come increasingly. Lots of people for small investments, some others working with the companies, some others, you know, work in contract by other people. So a variety of people.
CURNOW (voice-over): Walking into Maputo's Portuguese-style pavement restaurants, locals tell us that the new arrivals from Portugal fly in to Mozambique nearly every day. This group of business men arrived from Porto (ph) the night before.
He told me, "None of us is facing financial difficulties or is unemployed. What we envisage is to find places for the future, because for the next 5-10 years, Portugal will slow down and stagnate. We want to find places like Mozambique where there is the reverse, where we have sustainable growth for the next 5-10 years.
CURNOW: Thank you.
This new wave of Portuguese immigrant are not only lured by familiar food and music. Mozambique's economy is forecast to grow at more than 7 percent this year, no doubt a huge incentive for those wanting to escape lack of opportunity back home and the Eurozone crisis.
VANESSA SOUZA, AVI INTERNATIONAL: (Speaking foreign language).
UNIDENTIFIED MALE: (Speaking foreign language).
SOUZA: (Speaking foreign language).
CURNOW (voice-over): One of the many new immigrants is 32-year-old Vanessa Souza. She left Lisbon in January. She's now working for AVI, a successful South African consumer goods company, helping to promote and sell tea, biscuits and coffee to Mozambique's growing middle class.
She says she's now earning four times the salary she earned back home, works shorter hours, can afford a car, cell phone and insurance.
Nearby under the palm trees that line the Maputo shoreline, she says she can now build her future, something she didn't dare to do back home in Portugal, where they're struggling under the weight of the Eurozone crisis, and where unemployment is around 15 percent.
SOUZA: There's no job over there in Portugal.
CURNOW: No options?
SOUZA: No. New life, new life, new country.
CURNOW: Why Mozambique?
SOUZA: There's -- first of all, we have jobs here and the language is the same and we have opportunities here.
CURNOW (voice-over): In the dusty northern provinces of Mozambique, there are vast reserves of coal and gas discoveries off the coast. They've sparked a huge swell of investments and growing secondary industries in the towns around the mines.
Many Portuguese, says the consul-general, are setting up restaurants, joining small companies or offering skills in these frontier towns and bypassing the capital of Maputo.
PEREIRA: Now things are changing a little bit because, of course, the big project here in Mozambique, they attack a lot of small business around. And so even Maputo has lots of things already in Maputo.
So people are moving outside Maputo. And they are beginning even the -- beginning their businesses outside of Maputo. So it is very interesting. It could be very useful also.
CURNOW (voice-over): As for the Mozambicans, locals say there's been little backlash to the Portuguese returning in very different circumstances.
HIPOLITO HAMELA, ECONOMIST: Yes, they're coming. But I see it really positive.
CURNOW (voice-over): Positive, he says, because new businesses, restaurants like this one, create jobs for local Mozambicans. More skills help development, too. Also government quotas on the number of foreigners that a company can hire ensure that local jobs are protected.
And even though scenes like this are becoming more common, Mozambique is still one of the poorest countries in the world, facing serious challenges.
CURNOW: How difficult is it, though, setting up in Mozambique? Is it easy here?
SOUZA: For me, the biggest thing is the security thing.
CURNOW: (Inaudible) crime?
CURNOW: -- just last week?
SOUZA: Last week and the police, they don't just -- they just don't care.
CURNOW (voice-over): Bruno Gabriel says he's frustrated with the slow pace of life and how that contrasts with Europe.
GABRIEL: It's a little bit more difficult to make things happen than it is in Europe. And Mozambique is a challenge every day.
UNIDENTIFIED MALE: (Speaking foreign language).
CURNOW (voice-over): But still, it's here he's chosen to develop his career, overseeing a local TV program for one of his clients. Portuguese in Africa, as much a story of a European crisis as it is a story of African opportunity.
(END VIDEO CLIP)
CURNOW: Now it's not just the Portuguese who are operating here in Mozambique. The Brazilians, the Italians, the Chinese, the Indians have all invested into this economy. No doubt many of them have a Visa card. Well, after the break, we speak to the group president in charge of Africa (inaudible).
CURNOW: Nearly half of the world's unbanked population resides here in Africa. Now that's according to Visa. Well, this might be a gold mine of opportunity. There are also challenges. How do you adequately service this largely informal market? Well, to answer those questions, here's Elizabeth Buse from Visa.
(BEGIN VIDEO CLIP)
ELIZABETH BUSE, GROUP PRESIDENT, VISA INC.: We are a payment company and we move money and transactions among businesses and consumers and governments on credit card, on debit cards, on prepaid cards and on all of those accounts. But we don't set consumer fees or merchant fees or extend credit.
And the important part of that for reaching the unbanked is that it doesn't have to be done on a piece of plastic. Mobile is what makes the difference in our ability to reach the unbanked, because there are a billion people who are unbanked. They have no relationship with a financial institution. But they have a mobile device, and we can use that to reach them with a Visa account.
CURNOW: And, obviously, that's been one of the big stories in Africa in recent years, is this sort of unleashing of the potential of mobile phones to move money around. But there have been a number of limits with that. How do you come in now at this stage and do something different?
BUSE: You're exactly right. There are many examples of successful mobile money schemes in Africa. But they all have limitations. And those limitations are in general. They are specific to a certain mobile network operator.
If I want to send funds to you, you and I have to be on the same mobile network. By Visa coming in, we enable what we call interoperability. It doesn't matter who's on what mobile network as long as there's a Visa account in each of those phones we can transact, pay bills, transfer funds, make purchases, seamlessly.
In addition, we are border blind. Many mobile network operators can't move from one currency to another, from one border to another, but that's what Visa has done for 50 years, enabling global commerce. And we can do that with a mobile phone.
CURNOW: Has this taken companies like Visa by surprise, in a way?
BUSE: I think it would be a pleasant surprise, but certainly the ubiquity of the technology creates an opportunity that just wasn't there before. So everyone was looking at the unbanked in Africa, 80 percent of sub-Saharan Africans don't have access to traditional financial services.
That number is 8 percent in developed economies. And so we were all looking at how do we serve these people. Mobile is the critical technology enabler. By itself, it's not enough, but it is critical.
CURNOW: And we talk about the unbanked. These are the poorest of the poor in many ways, often in rural areas. But there is still disposable income, and I love that sense that even if you have a dollar extra, it is disposable income. And that's where this critical issue of sending money around, even if it in the smallest kind of denominations, it's so important.
BUSE: You're exactly right.
CURNOW: It's the critical mass of people who are doing this.
BUSE: That's right. In Africa, 325 million people live on under $5 a day. But those people are trying to save and make payments and transfer funds. And that's what the mobile device enables. Now what's really important is that people understand what it means to have a financial account and what it means to save and budget and make payments.
And that's why even though the mobile technology is important, it's not sufficient. There has to be financial literacy, financial education to enable all of those people to take full advantage of access to financial services.
CURNOW: And the key is credit, though, isn't it? I mean, would you be offering someone credit on their phone? I mean, that's essentially what Visa does as well.
BUSE: Well, as a matter of fact, globally, 60 percent of Visa accounts are debit or prepaid. And the fastest-growing account in emerging economies are prepaid accounts, meaning the account can only spend what has been funded, because there aren't credit bureaus.
Many people would not traditionally be seen as creditworthy. So it's critical that we enable a different kind of account, and that's something that we have done globally.
(END VIDEO CLIP)
CURNOW: Elizabeth Buse there from Visa on the need to attract more innovation and investments into Africa.
Well, that's it for this week's show. I'm Robyn Curnow here in Maputo, Mozambique. See you again next week.