Displaying items by tag: AfriSam
Pakistan dumping investigation moves to International Trade Administration Commission
26 August 2014South Africa: The International Trade Administration Commission (ITAC) is investigating claims by cement producers that cement from Pakistan is being dumped in the Southern African Customs Union (SACU), of which Botswana, Lesotho, Namibia and Swaziland are also members.
Afrisam, Lafarge, NPC Cimpor and PPC allege that bagged cement from Pakistan has been dumped at a 48% lower price than is the normal value in Pakistan. In 2013 imports from Pakistan accounted for just under 99% of all cement imports into SACU. According to statistics released by XA International Trade Advisors, annual imports from Pakistan alone were 1.1Mt in 2013.
Managing Director for PPC's cement activities, Richard Tomes, claimed that the dumping by Pakistan led to a decline in sales volumes, profit, output and the market share of producers in the region. He claimed that the effect of dumping included negative effects on cash flow and reduced levels of staffing in SACU cement producers, with the number of staff employed in the SACU cement industry decreasing by 15% between 2010 and 2013.
Pembani secures controlling stake in AfriSam
03 April 2013South Africa: Pembani Group, an investment holding company, has become the controlling shareholder of South Africa's second-biggest cement producer, AfriSam, by way of a debt restructuring process. Following a debt restructuring process the Government Employees Pension Fund will hold about 57% of the company and Pembani 38%.
"The company's balance sheet was significantly strengthened by an overall debt reduction in excess of US$1.62bn. A consortium of local financial institutions provided the company with a sustainable long-term debt solution," said AfriSam CEO Stephan Olivier.
AfriSam was severely burdened by debt created by a leveraged buyout in 2007. It nearly defaulted on its debts in 2011. In 2012, all the relevant stakeholders agreed to a consensual restructuring of the debt, whereby the government Employees Pension Fund and Pembani Group injected significant equity into the business and Pembani would exercise strategic control over AfriSam's board.
US$8m AfriSam Cement fraud case goes to court
27 March 2013Namibia: The prosecutor general of Namibia has decided to prosecute Esmerelda Majiedt and five co-accused in the High Court for a scam which allegedly cost AfriSam Cement, the forerunner of the Ohorongo Cement factory, US$8m.
Majiedt is charged with corruption, with the state alleging that while she was employed at AfriSam Cement, she received payments in her personal capacity from customers of the company. During the hearing of a bail application by Majiedt in June 2011, it was alleged that suspect deliveries involving cement worth more than US$7.67m had been made to Afrisam customers without payments for such deliveries being reflected on the company's books. Majiedt claimed that other employees of the company knew her computer password and could have been responsible for the manipulation of Afrisam's accounting system.
Lucky strike for imports to South Africa
15 August 2012Pakistan's Lucky Cement received the 'all clear' for its cement imports from the South African regulators last week. The situation exposes the increasingly competitive market in the country after the South African Competition Commission cartel investigations in 2011.
Sales of Lucky Cement were originally shut down in 2011 due to accusations made by its competitors, including Pretoria Portland Cement (PPP) and Natal Portland Cement (NPC). They complained that Lucky was not complying with South African standards. South Africa's National Regulator for Compulsory Specifications (NRCS) then ran its independent investigation and released its results last week.
The regulator's full 28-day test found no evidence that Lucky Cement imports were non-compliant with regards to their quality. A minor infringement concerning underweight bags was found and fixed. However, about a week beforehand, Lafarge South Africa's CEO said that his company was considering approaching another trade body with concerns about 'low-quality cheap cement' imported from Pakistan.
More serious criticism came from the Cement and Concrete Institute when the NRCS admitted that it didn't know how much cement had been imported into South Africa so far in 2012. The NRCS is supposed to inspect and approve the testing bodies each producer and importer uses for every 500t of cement.
Lucky Cement has been a regular importer of cement to South Africa since 2009. It exports around 1.65Mt/yr to over 22 countries in South East Asia, the Middle East and Africa. CCI figures reckon that 140,000t of cement was imported to South Africa in the first quarter of 2012, mostly by Lucky Cement. According to the Global Cement Directory 2012 South Africa's capacity is around 11Mt/yr.
Four domestic producers – Lafarge, PPC, AfriSam and NPC – were accused of cartel activity by the South African Competition Commission, in a case that has been running since 2008. PPC confirmed the existence of the cartel, whilst Lafarge and AfriSam were fined US$19.6m and US$16m respectively.
By letting Lucky Cement resume the sale of its cement in South Africa, the NRCS has arguably done more than the Competition Commission to prevent cartel activity. With reports surfacing that other producers in Pakistan and India are considering exports to South Africa, domestic producers are going to have to become more inventive and more competitive.
Lafarge wants Pakistan exports to South Africa blocked
01 August 2012South Africa: Lafarge is considering approaching the International Trade Administration Commission of South Africa to protect the local market from what it calls 'low-quality cheap cement' imported from Pakistan. The multinational is concerned that substandard products are being used for large infrastructure projects in the country, including the construction of hospitals, government housing and schools. Some importers are labelling cement as flour to dodge quality tests. Yet when the regulators do test imported product, they refuse to disclose the outcome, citing confidentiality.
"Imports are a concern for several reasons; sometimes the prices are very low, which affects us financially. We are looking at approaching the International Trade Administration Commission of SA to intervene in the market, but no decision has been made," said Lafarge South Africa CEO Thierry Legrand. He added that some cement sellers did not comply with the National Regulator for Compulsory Specifications, yet had import licences. Other domestic producers including AfriSam and Pretoria Portland Cement have also expressed concern at the situation.
In 2011 three companies importing from Lucky Cement, Pakistan's biggest cement exporter, were shut down. Cement and Concrete Institute (CCI) managing director Bryan Perrie said that 140,000t of cement were imported into South Africa in the first quarter of 2012 and that a substantial portion of it probably came from Lucky Cement. "People have struggled to keep accurate import statistics of cement but we know that Lucky is a major importer. People bring cement in as flour, so the statistics of how much comes in is often incorrect," he said.
Importers in South Africa are supposed to test samples for every 500t of imported cement. Yet when the CCI asked third-party regulators about the results of these checks, they were told this was confidential. The CCI had asked the regulator to publish a list of cement importers online, recording which products had letters of authority, but this has not happened.
PIC to convert AfriSam debt
06 December 2011South Africa: A South African court ruled on 2 December 2011 that the Public Investment Corporation (PIC) can convert AfriSam's debt of US$580m into equity. PIC, which manages US$120bn in South African state pensions, will now gain control of the South African producer. This will enable it to restructure the company's debt which threatens to bankrupt the company.
AfriSam's two largest shareholders, empowerment venture Bunker Hills Investments and Holcim, previously applied to block the conversion of preference shares into ordinary shares, but this was dismissed by Judge Eberhard Bertelsmann in the North Gauteng High Court.
AfriSam CEO Stephan Olivier said, "Our focus... remains on the day-to-day operations of the company and ensuring maximum operational and financial efficiency." AfriSam had earlier said Bunker Hills and Holcim had a contractual obligation in respect of the conversion.
Holcim created AfriSam in 2006 by selling 37% of its South African business to investors led by Bunker Hills, and retaining a 15% stake. Bunker Hills had earlier said these shareholdings would be diluted to 'almost nothing' after the PIC preference share conversion.
In his ruling Judge Bertelsmann said, "There can be no suggestion that there is any illegal threat to the applicant's rights." He also said AfriSam's board must approve the conversion of the PIC's preference shares into equity within 20 days.
"Owing to the limits of confidentiality we are not in a position to provide all details. This is purely to avoid jeopardising the current stakeholder's engagements," the PIC CEO Elias Masilela said after the judgement.
AfriSam settles over cartel claims
02 November 2011South Africa: The South African Competition Commission has reached a settlement agreement with AfriSam, which has admitted that it took part in a cement cartel.
AfriSam has agreed to pay a penalty of USD16m representing 3% of its 2010 cement annual turnover in the Southern African Customs Union (comprising South Africa, Botswana, Lesotho, Swaziland and Namibia). This settlement is a reflection of AfriSam's material cooperation with the Commission in uncovering and providing further information on its conduct.
"This settlement is a reflection of AfriSam's material co-operation with the commission in uncovering and providing further information on the conduct," the commission commented on 1 November 2011.
This agreement follows the Commission's investigation of price fixing and market allocation against four main domestic producers Pretoria Portland Cement Company Limited (PPC), Lafarge Industries South Africa (Lafarge), AfriSam Consortium Ltd and Natal Portland Cement Cimpor (NPC-Cimpor). Previously, PPC applied for leniency and confirmed the existence of a cartel among the four cement producers. In terms of the settlement, AfriSam admits that it entered into agreements and arrangements with PPC, Lafarge and NPC to divide markets and indirectly fix the price of cement. The case against Lafarge and NPC continues.
"To facilitate this process we conducted a systematic and comprehensive review of some of the company's business practices from a competition law perspective," Stephan Olivier, AfriSam CEO stated. "We are, of course, saddened and embarrassed by what has happened. I say categorically that the AfriSam of today is an honourable and ethical company, fully committed to rigorous compliance with competition law."
AfriSam plant planned for Western Cape
23 June 2011South Africa: AfriSam has announced that, notwithstanding the weak state of South Africa's construction industry, it is resuming its plans for a USD 320.4m integrated cement plant in the Saldanha Bay area to meet future demand.
The country's cement industry is reeling from four years of consecutive declines and has been hit hard by the lull that has followed the completion of large projects related to the 2010 Football World Cup. A seriously depressed housing market started its slide in late 2007 and was further battered by the effects of the global economic downturn.
Despite all of these problems, AfriSam said that it wanted to take advantage of its large limestone deposit near Saldanha and improve market penetration in the Western Cape. With continued population growth and the need for housing and infrastructure, there are indications that the local market will benefit from the presence of an additional cement supplier, according to company CEO Stephan Olivier.
AfriSam says that the proposed Saldanha project will commence with the expansion of its nearby limestone quarry and construction of a cement grinding and packing plant at a cost of about USD 87.4m. Ultimately, an integrated plant will be built alongside at a further cost of about USD 233m.
AfriSam also says the proximity of Saldanha's deep water port will facilitate exports, which will enable the plant to be scaled-up to achieve improved environmental and production efficiency. "We are seeking approval (to build the plant) by means of an environmental impact assessment," said Olivier.
Other cement producers are reportedly bemused by the news, especially because AfriSam intends to construct its new plant in a province that has seen building and construction demand fall by 50% since mid-2007. Anton Weavind, CEO of Conticem said "I know that AfriSam needs to expand but the worst place they could possible do this is in the Western Cape. There is not much money in exporting cement."