Today's edition
Too Much Juice
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Good morning, it’s Thursday the 12th of November. After years of struggling to produce enough electricity, Eskom now has the opposite problem, and it could cost billions.
Also today, a multi-billion takeover is coming back to haunt one of the JSE’s biggest food companies, and South Africans are fighting back against American chickens. Let's get into it.
MARKETS
POWER TRIP
Eskom once burned billions on diesel to keep the lights on, and now pays solar farms to stop
South Africans have probably developed a serious case of Eskom fatigue by now, and we don’t want to add to that. But this latest problem is pretty unusual. For years, Eskom couldn’t produce enough electricity, spending almost R24 billion on diesel in 2024 just to help keep the lights on. Now the problem has flipped: at certain times of the day, South Africa has more electricity than it needs.
So, how did we get here? After years of load shedding and soaring electricity prices, South Africans did what they do best when government couldn’t deliver: they made their own plans. By June, the country’s estimated rooftop solar capacity had reached 9,100MW, almost as much as Medupi and Kusile combined.
Where the surplus leaves Eskom:
- The squeeze: Eskom can’t switch off its coal stations when solar is generating during the day, so the grid operator tells solar and wind farms to cut output, and Eskom still pays them for power it never used.
- The fixes: that could cost R4 billion this financial year, and while batteries and cheaper daytime tariffs could help, major storage projects are at least 2 years away.
- The trend: with more South Africans installing solar every year, this isn’t necessarily a temporary problem.
Unless Eskom finds better ways to manage all that daytime electricity, its R4 billion bill could start moving up and to the right.
BREAD WINNER
The company behind your bread is booming, but its biggest deal could still come undone
Imagine spending R6.5 billion buying another company, watching your profits soar, and then having regulators threaten to undo the entire deal. That’s the rather awkward situation facing Premier, the South African food giant behind Blue Ribbon bread and Snowflake flour. Premier has just reported a 39% jump in revenue to R14.3 billion, with operating profit climbing more than 50%, much of it from its R6.5 billion takeover of RFG, the company behind Rhodes and Bull Brand. Investors are loving it too, with Premier’s shares up almost 20% over the past year, while some of its biggest competitors have gone backward.
But now check this out. When the takeover was approved, the companies assured regulators they weren’t planning to close any factories. Just months later, Premier decided not to reopen a fruit-canning factory in the Western Cape, with 403 workers since accepting separation packages.
The Competition Commission wants the approval revoked, Premier denies withholding anything, and the dispute heads to the Competition Tribunal next year. 2027 is going to be a rollercoaster ride for the group.
BAGEL BITE
Sound travels fastest through which of these?
A. Air
B. Water
C. Steel
DOING THE ROUNDS
Vodacom has delivered one of its strongest half-years yet, but - like Premier - a ruling threatens the deal driving its growth. Revenue jumped 26% to R102.5 billion, largely thanks to Safaricom, Kenya’s biggest mobile network. But in September, a Kenyan court declared Vodacom’s purchase of an additional 15% stake invalid. If the ruling stands, Vodacom’s ownership could fall from 55% to 40%, costing it control of Safaricom. The ruling even triggered loan defaults, which lenders have since waived. Full story →
South Africans are proving to be pretty good business for Stor-Age, the country’s biggest self-storage company. While its UK operations are struggling to grow, rental income back home jumped 9.5% in the 6 months to September, helping the group increase its dividend by 4%. And Stor-Age is now looking to expand further, with plans to buy 10 Xtraspace properties for R387 million. But there’s a catch. The deal still needs competition approval, and according to Business Day, another property group called Inospace is challenging the acquisition. Full story →
Chery has announced a recall of almost 24,000 vehicles in South Africa, affecting certain Tiggo 4, Omoda C5 and Tiggo 8 Pro Max models. The issue? Potential manufacturing defects that could affect the rear suspension on some vehicles, or cause brake fluid to leak on others. Chery stresses that this is precautionary, meaning not every recalled vehicle necessarily has a defect, and all necessary repairs will be free. But there’s another issue brewing. The National Consumer Commission is separately investigating allegations that Chery previously recalled certain vehicles without notifying the regulator. Full story →
South Africa’s chicken farmers are worried they could become a bargaining chip in our trade negotiations with America. About a decade ago, we agreed to let roughly 74,000 tonnes of American chicken into the country each year without certain import duties, in exchange for keeping our Agoa trade benefits. But with Washington now planning to remove South Africa from Agoa in January, the concern is that government could keep the chicken deal alive to secure better trade terms for our car and citrus exporters. Full story →
WEATHER
BAGEL GAMES
Have you got what it takes to win today’s Wordle? Play here →
THE ANSWER
As for the Bagel Bite, the answer is: C. Steel
Sound travels as vibrations through a material. Its speed depends on both the material’s stiffness and its density. Steel is much stiffer than water or air, allowing vibrations to travel through it far faster. Typical speeds are roughly 5,900 metres per second in steel, 1,480 in fresh water and 340 in air, although the exact figures depend on conditions.
That's your Thursday sorted. Enjoyed it? Forward it on — a friend can subscribe in a click. Written by the Business Bagel crew.