Displaying items by tag: PPC
Zimbabwe/Mozambique: South African cement manufacturer PPC's (Pretoria Portland Cement) Zimbabwean subsidiary, Portland Holdings Limited (PHL), is to build a new cement plant in the country to service its markets in Zimbabwe and Mozambique. The new plant will produce about 1Mt/yr of cement and will work alongside a separate grinding facility being constructed in Tete in Mozambique.
"In recent years our investment in Zimbabwe has show strong growth on the back of a more buoyant and stable economy," said PPC's chief executive officer, Ketso Gordhan. "This, together with the fact that PPC has received an indigenisation certificate, makes us optimistic about the future of the economy and the country as a whole."
"The construction of additional cement capacity will ensure that PPC continues to be a key player in the development of infrastructure in Zimbabwe and neighbouring countries," added Gordhan. "It is totally in line with our stated strategy of growing our non-South African revenue from the current 21% to at least 40% by 2016.
"Not only will this investment address the expected future increase in cement demand in Zimbabwe but create employment opportunities, beneficiation of the country's mineral reserves and a significant growth opportunity for our indigenisation partners," said PHL's managing director, Zak Limbada.
Ethiopia: The Development Bank of Ethiopia has withdrawn from a US$82.8m loan agreement made with Habesha Cement. In September 2011 the bank approved the loan which was expected to cover over 70% of the financing of the proposed cement factory.
The bank withdrew from the arrangement on the basis of its inability to disburse money at this time. In addition, it also pulled out of the loan commitments to five other companies citing similar reasons. According to sources, the bank has pledged to help the companies in their search for foreign financing.
In July 2012 PPC (Pretoria Portland Cement) and South Africa's Industrial Development Corporation (SAIDC) paid US$21m for nearly half of Habesha Cement. PPC acquired 27% of the Ethiopian cement factory by paying US$12m in cash and the state owned SAIDC paid US$9m for an additional 20%.
South Africa: PPC (Pretoria Portland Cement), South Africa's largest cement maker, may increase production in the country by as much as 4% in 2013, according to its new chief executive Ketso Gordhan.
"South Africa is in a very tough environment at the moment," said Gordhan, who added that an oversupply of cement, partly caused by new entrants, would have an impact on the market in the first quarter of 2014. South African cement sales fell by 3.8% in the third quarter of 2012 as widespread strike action and slower economic growth sapped demand. However, PPC's sales rose by 8% in the three months to 30 September 2012.
Competitor Sephaku Holdings is expected to begin construction of a new production plant in 2013. Macquarie First South Securities analyst Peter Steyn said that PPC was, "unlikely to be unscathed" by the new arrival.
Rwanda: Rwandan President Paul Kagame laid the foundation stone for the extension of Rwanda's largest cement-producing factory, CIMERWA, on 17 January 2013. The expansion of the factory follows a deal in December 2012 that saw South Africa's largest cement firm, PPC (Pretoria Portland Cement), acquire a 51% share of CIMERWA's equity with a buyout of US$69.4m. With PPC's investment the production capacity of the factory is expected to increase from 0.1Mt/yr to 0.6Mt/yr.
"As a fast-developing nation, there is need for more and cheaper cement," said President Kagame, speaking after the laying of the foundation stone. "With the new investor in CIMERWA we expect the factory to perform much better than it did before."
Kagame said that residents of Rusizi, where CIMERWA is located, will be among the key beneficiaries of the factory's expansion through the creation of jobs. He also announced that the government will partner with the factory to put tarmac on the road leading to the factory. The government will pay 60% and the company will pay 40% of the cost of the road improvements.
Rwanda/South Africa: The major South African cement producer PPC (Pretoria Portland Cement) has purchased a 51% stake in the Rwandan firm Cimerwa for US$69.4m in cash. The deal is in line with PPC's vision of making 50% of its revenue outside South Africa itself in the coming years. The deal comes after a similar deal between PPC and Ethiopia's Habesha Cement, of which it has bought a 27% stake.
"This transaction is a further step in our commitment to invest in sub-Saharan Africa and we are very confident about Rwanda," said PPC's CEO Paul Stuiver. "The Cimerwa plant is located in a challenging but very strategic region in East Africa, which currently lacks significant cement production capacity."
Cimerwa, in south-west Rwanda, has been the only cement producer in the country for 28 years. It has the capacity to make 0.1Mt/yr of cement but is currently undergoing a 0.6Mt/yr expansion project that is due to be commissioned in 2014.
Cement demand in Rwanda is estimated at 0.35Mt/yr but, based on the region's positive economic outlook, regional cement demand is projected to increase to 1Mt/yr in the next decade. "Combined with our recent investment in Ethiopia, the Cimerwa transaction will increase PPC's revenue outside of South Africa to more than 30% by 2015-16," added Stuiver.
"Rwanda looks like an attractive market to build capacity, with robust gross domestic product growth expectations, a large supply deficit in the cement market and challenging logistics for importing cement," said Ross Heyns, an equity analyst at Kagiso Asset Management. However, Heyns said that it appeared that PPC had paid a fairly hefty price for the asset. "After raising the additional US$104m of debt and expanding the plant's capacity to 0.7Mt/yr, the US$69.4m that they are paying for 51% of Cimerwa implies a total valuation for the business (including debt) of US$400/t of cement capacity," he said.
PPC's desire to expand to more locations outside of South Africa is in part due to the current overcapacity in that market. The country has a capacity of 16Mt/yr but is only likely to produce 11Mt in 2012. This overcapacity will not be helped when the 2.6Mt/yr Sephaku Cement plant, backed by Nigeria's Dangote Group, comes online in 2013.
The outgoing chief executive of PPC (Portland Pretoria Cement) officer, Paul Stuiver, summed up the dilemma facing cement producers on the east coast of Africa. Building near the coast leaves you vulnerable to imports.
In a recent interview with the South African business weekly, 'Financial Mail', Stuiver said that imports are not a threat to African expansion, provided that a facility is not built within 200km of a port. Exactly the same issue was raised by Yves De Moor in his column in the November 2012 issue of Global Cement Magazine.
Countries along Africa's east coast receive imports, but Stuiver said that Africa's high logistics costs mean the prices increase steeply as the cement is transported inland. He commented that the markets in Mozambique and KwaZulu Natal in South Africa were especially vulnerable and that most imports to South Africa come through Durban. Unsurprisingly both of PPC's big recent investments have been in landlocked countries, Zimbabwe and Ethiopia respectively. In July 2012 it also tried to invest in CINAT, the Democratic Republic of Congo's state-owned cement producer.
The import issue to South Africa reignited last week when the South African National Regulator for Compulsory Specifications (NRCS) confirmed that it had confiscated 'sub-standard' cement imported from Vietnam. As we covered in August 2012 in this column this follows a row in July 2012 about whether cement from Pakistan's Lucky Cement was complying with South African standards.
Although standards still lead the argument, more honesty has emerged with the use of the word 'dumping' in the complaints. Stuiver explained that "...the price of cement from Pakistan, India and Vietnam is low because electricity, fuel and transport rates are subsidised." Whilst PPC can report that its revenue has risen by 9% to US$837m for the first nine months of 2012, complaints against foreign imports seem overly protective. In 2009 PPC confirmed the existence of a cartel in the country. PPC has even gone to the Advertising Standards Authority to stop imports with elephants on their bags!
With reports that Nigerian producer Dangote is building a new US$389m plant in South Africa, thoughts turn to what will happen once South Africa becomes 'self-sufficient' in cement, like Nigeria which has proudly announced this recently. Giant infrastructure projects are one way to use all that excess cement and this is what Lafarge WAPCO has been asking the Nigerian government to do recently, in a road building drive. Better transport links in South Africa would wreck Stuiver's maxim about not building near a port.
Two solutions from this week's news might appeal to the industry on the south and east coasts of Africa. The first is to use inventive export barriers just like the Bureau of Indian Standards have imposed to slow down exports from Pakistan. The second is to persuade importers to do what a North Korean ship reportedly did with its consignment of cement this week off the coast of Somalia: dump it in the sea.
Zimbabwe: PPC (Pretoria Portland Cement) plans to spend at least US$200m on a new cement plant in Mashonaland Central Province in Zimbabwe, according to Zak Limbada, the managing director of its Zimbabwe subsidiary Portland Holdings Limited (PHL). The proposed plant will have a capacity of 1Mt/yr.
"We are busy drilling to identify the raw materials in the Rushinga area and some north eastern parts of the country," said Limbada.
PPC currently has a capacity of 1Mt/yr in Zimbabwe. Larfage and Sino Cement produce 400,000t/yr and 250,000t/yr respectively in the country. In November 2012 PPC announced that PHL has been awarded an indigenisation certificate by the government of Zimbabwe.
South Africa: The South African National Regulator for Compulsory Specifications (NRCS) has confiscated 'sub-standard' cement imported from Vietnam and is investigating complaints lodged about the quality of two other imported brands.
Daniel Ramarumo, a NRCS spokesman, confirmed that it had received complaints from NPC-Cimpor about Vietnamese cement, which was 'later confiscated by the regulator' in August 2012. The NRCS received a second complaint in September 2012 about Lucky Cement and had instituted an investigation. A third complaint from NPC-Cimpor was lodged on 5 November 2012 about Lucky Cement and Falcon Cement. He said that these complaints were currently under investigation.
PPC (Portland Pretoria Cement) chief executive Paul Stuiver commented that his company had tried to engage with the NRCS about allegedly inferior quality and underweight imports but was 'getting nowhere' because the NRCS had indicated it had tested the cement and it had complied with the standard. Stuiver now plans to raise the issue with the Economic Development Minister Ebrahim Patel.
Stuiver also added that one of the imported cement brands had an elephant on its bags, which resulted in PPC taking them to the Advertising Standards Authority and 'getting them stopped', as PPC also has an elephant on its bags.
Zimbabwe: South African cement producer PPC (Pretoria Portland Cement) has announced that its Zimbabwe subsidiary Portland Holdings Limited (PHL) has been awarded an indigenisation certificate by the government of Zimbabwe.
Zimbabwe's Indigenisation and Economic Empowerment Act requires that non-indigenous manufacturing companies operating in Zimbabwe must submit an empowerment plan, to satisfy a 51% indigenous Zimbabwean ownership requirement by October 2015. PHL had a pre-existing indigenous shareholding of 21.4%. It will sell an additional 29.6% to four indigenous parties in the country.
"We see the Zimbabwe market as an exciting growth opportunity and expect our operations to approach full capacity over the next two-three years. This opens up further investment opportunities for PPC in Zimbabwe," said PPC chief executive officer, Paul Stuiver.
PHL is the largest cement producer in Zimbabwe. Together the clinker manufacturing plant in Colleen Bawn and the milling depot in Bulawayo can produce over 1Mt/yr of cement. Zimbabwe has experienced a rapid increase in cement demand since 2009. National cement demand is currently estimated at more than 1Mt/yr.
South Africa: PPC (Pretoria Portland Cement) has reported that its revenue increased by 9% to US$837m for its financial year ending on 30 September 2012 compared to US$777m in 2011.
The leading South African cement producer reported that its gross profit rose by 9% to US$289m in 2012 compared to US$265m. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 8% to US$265m from US$249m. However, net profit decreased by 2% to US$96.1m from US$98.5m. The group attributed this to an increase in taxes in the year.
"Despite another year in a tough economic environment, characterised by overcapacity in the industry, competitive cement pricing, rising energy costs and strike action in adjacent industries, Team PPC delivered good results by improving efficiencies and increasing normalised earnings by 11%," said outgoing PPC chief executive officer Paul Stuiver.
PPC's overall cement sales volumes fell by 3% following lower sales in Botswana and reduced exports, which were partly offset by growing demand in Gauteng, Port Elizabeth and Zimbabwe. PPC's South African cement sales volumes declined by 1%, mainly due to a subdued final quarter of the 2012 financial year. In its financial report PPC warned against cement imports, which it estimated represent 6% of South Africa's national demand.
In its outlook PPC predicted that labour unrest in the mining industry and a transport strike will reduce growth for the remainder of 2012. For 2013 the company is hoping for South African infrastructure programmes to push demand. Markets in Zimbabwe and Botswana should continue growing.