Displaying items by tag: PPC
Chamber of mines chief executive replaces Gordhan
24 September 2014South Africa: Chamber of Mines chief executive Bheki Sibiya had been appointed interim executive chairman of PPC. "This interim appointment has been approved by the office-bearers of the Chamber of Mines and is with immediate effect and until 31 December 2014," said a Chamber of Mines statement. The chamber's chief operating officer, Roger Baxter, will serve as acting chief executive until the end of December 2014.
PPC chief executive Ketso Gordhan resigned on 22 September 2014 with immediate effect, Business Day reported. He was appointed in January 2013.
PPC buys other half of fly ash producer Pronto
16 September 2014South Africa: PPC has acquired the remaining 50% stake in Gauteng Province's ready-mix concrete and fly ash-supplier, Pronto Holdings, which it did not already own. Bheki Sibiya, PPC's chairman, said that it had paid a total of US$41.9m for 100% of Pronto.
Economic slowdown hurting cement production
15 September 2014South Africa: PPC has warned that slower economic growth and falling infrastructure spending has led to a 'particularly tough' domestic market. Low single-digit volume declines across Africa's second-biggest economy were partly offset by higher sales prices in the 10 months to July 2014. South Africa's economy is forecast to grow at the slowest pace since the 2009 recession in 2014 after strikes in the platinum mining and metalworkers industries hurt output.
Meanwhile, a new plant in Rwanda is expected to be commissioned early 2015 as PPC seeks growth opportunities in other markets. Indeed, PPC is expanding in several other African countries, including Rwanda, Zimbabwe and Ethiopia, as demand for cement grows in sub-Saharan Africa. It is targeting 40% of sales outside South Africa by 2017, compared with 26% in the six months to March 2014.
Pakistan cement export wars return to South Africa
27 August 2014South African authorities have started a new investigation into imports of cement from Pakistan. This time the inquiry will examine trade dumping allegations made by local producers including Afrisam, Lafarge, NPC Cimpor and PPC.
The application made by the cement producers provided evidence that the difference between the price of cement (the dumping margin) in Pakistan and for imports from Pakistan in 2013 was 48%. Or, in other words, the price of Pakistan cement imported to South Africa was nearly half that of what is was being sold for in the country that it was actually produced in.
The data submitted to the International Trade Administration Commission of South Africa comes from a report by Genesis Analytics on Pakistan cement prices in 2013 and tax information from the South African Revenue Service. Neither source is readily available for more detailed analysis here but data released by XA International Trade Advisors suggests that cement imports from Pakistan rose to 1.1Mt/yr in 2013 and at a value of US$59m. Roughly, this gives a price of US$55/t. This compares to an average price of US$90/t, from the All Pakistan Manufacturers' Association for the first nine months of the 2012 – 2013 Pakistani fiscal year, giving a dumping margin similar to the allegation by the South African cement producers.
Separate industry sources quoted by the Pakistan media on the story reported that the country supplies 1.5 - 1.6Mt/yr of cement to South Africa, its biggest export market, receiving a revenue of US$125m. Although this suggests a dumping margin lower than the one presented to the authorities it is still high.
Other information of note in the investigation notification is that the Pakistan cement imports are only competing heavily with the local bagged cement market in the Southern African Customs Union, which also includes neighbouring Botswana, Lesotho, Namibia and Swaziland. The notification discounts bulk cement imports from Pakistan as being 'prohibitively' expensive suggesting that the Pakistan cement producers have no import infrastructure in southern Africa or that something else is stopping them. For example, the country's market leader for production, Lucky Cement, has export facilities in Karachi with silos and automatic ship loaders. Yet it's only 'brick-and-mortar' presence overseas are projects building an integrated plant in the Democratic Republic of the Congo and a grinding plant in Iraq.
It may also be worth considering that South African industry newcomer Sephaku Cement hasn't joined the dumping allegation. The Dangote subsidiary was set to start producing clinker in late August 2014. This is out of character considering how prominent the Nigerian-based cement producer has been in campaigning against imports to its home nation. However, the Aganang plant in Lichtenburg, North West Province is over 700km from the coast and presumably safe from foreign imports at present.
One final question occurs. How are Pakistan cement producers able to dump bagged cement on the South African market at prices lower than what they are selling it for at home? If individual producers sold their excess at home at a lower price they could potentially undercut their competitors and make a profit. There are many barriers, from input costs to industry structural issues and other reasons that may be preventing this. However, if the South African cement producers succeed in their latest attempt to block imports from Pakistan it may add more impetus to remove such barriers.
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.
Democratic Republic of Congo: PPC Barnet DRC has awarded an EPC contract to Sinoma International Engineering Company for the construction of a new cement plant in the Democratic Republic of Congo. The signing took place in Kinshasa marking the inaugural phase of the construction. The main sponsors of the US$300m project include PPC, Barnet Group and the International Finance Corporation. The investment forms part of PPC's expansion plans in Africa, which aim to increase the company's revenue from outside South Africa from the current 26% to 40% by 2017.
"The plant is located near Zamba in the Cataracts district, approximately 230km from Kinshasa. The fully-integrated plant will consist of a five-stage preheater kiln with an inline calciner and will produce 1Mt/yr of cement to serve both the rapidly growing market in the Democratic Republic of Congo and neighbouring export markets," said PPC's Business Development Executive Trevor Barnard.
The plant is expected to take around 26 months to complete and commissioning is scheduled for the last quarter of 2016. The new plant will generate approximately 300 direct jobs once fully operational.
PPC Zimbabwe secures US$18m for new Harare plant
29 July 2014Zimbabwe: PPC Zimbabwe has secured US$18m for the construction of a new cement plant in Harare Province. The company said that construction of the new plant is currently its main priority.
"Preliminary work at the site is underway and fully-fledged construction is scheduled for August 2014," said PPC's managing director, Njombo Lekula. A road access network to the plant has already been completed and a temporary office is already set up at the site. Public hearings for the Environment Impact Assessment have been concluded, providing the green light for the project to commence.
PPC, which has 1.2Mt/yr of cement production capacity, intends to double its capacity by building a clinker plant in Mount Darwin District in Zimbabwe, as well as cement grinding plants in Harare Province, Zimbabwe and Tete Province, Mozambique. Lekula said that PPC is also looking at investing more in new technology to increase production capacity. According to Lekula, a feasibility study for the construction of a clinker plant and a cement grinding plant in Mashonaland Central Province, Zimbabwe is almost complete.
"We are conducting a feasibility study for the clinker plant in Mashonaland Central, but the plant in Harare is our main priority at the moment," said Lekula. He added that the construction of another clinker plant in Mashonaland Central would go in tandem with the limestone geological studies currently being carried out.
PPC, however, is worried by the performance of its export business. "Currently our plants in Zimbabwe are running at about 70% capacity utilisation and for us to get to decent levels of capacity utilisation, we have to find other markets," said Lekula. "We export to Zambia, Malawi and Mozambique and we continuously look for opportunities in the region." PPC's export business contributes about 20% to its total turnover, but the figure fluctuates. "Our export market margins are impacted by logistics. Sometimes the exports are not very stable hence the need to look at both the local and export markets to ensure sustainability," he added.
The creation of Lafarge Africa, the clearance of the Cemex West acquisition by Holcim in Germany and the sale of Lafarge's assets in Ecuador all hint at the scale of business that LafargeHolcim will command when it comes into existence. Despite the media saturation of coverage on the merger the implications in developing markets are still worthwhile exploring, especially in Latin American and Africa.
In sub-Saharan Africa, Lafarge is merging its cement companies in Nigeria and South Africa to create Lafarge Africa. Analysts Exotix have described the move as, 'the birth of a leading player on a continental scale'. Indeed, if Lafarge wanted to grow Lafarge Africa to encompass its many other African cement producing subsidiaries it could hold at least 17 integrated cement plants (including plants in north Africa) with a cement production capacity of at least 40Mt/yr in 10 countries and infrastructure in others. That puts it head-to-head with Dangote's plans to meet 40Mt/yr by the end of 2014 through its many expansion projects. Following these two market leaders would come South African-based cement producer PPC with its expansion plans around the continent.
Meanwhile across the Atlantic in Latin America the Lafarge-Holcim merger threatens Cemex. Unlike in Africa where Lafarge has a ubiquitous but disparate presence, Lafarge and Holcim's cement assets are more evenly scattered around the Caribbean, Central and South America. In terms of cement production capacity Cemex and Lafarge-Holcim will both have around 30Mt/yr, with Cemex just in front. The next biggest cement producers in Latin America will be Votorantim (present mainly in Brazil) with just over 20Mt/yr and Cementos Argos (Columbia) with about the same. This includes some new acquisitions in the United States for the growing Columbian producer. In Ecuador Lafarge and Holcim held over 50% of the market share, hence the sale by Lafarge of its assets to Union Andina de Cementos for US$553m.
Depending on how well the merger integrates the two companies, corals the various subsidiaries and implements strategic thinking the merger could just create business as usual with little disruption to the existing order. Yet in both continents the merger has the opportunity to shake up and reinvigorate the cement markets as existing players suddenly discover serious new competition and react accordingly.
Africa has a population of 1.1bn and it had a Gross Domestic Product (GDP) of US$2320/capita in 2013. South America had a population of 359m in 2010 and a GDP of US$8929/capita. This compares to US$27,250/capita in Europe and US$54,152/capita in the US. The economic development potential for each continent is humongous. Post-merger, LafargeHolcim will be first or second in line for some of this potential in Latin America and Africa.
PPC Zimbabwe domestic sales drop 5%
06 June 2014Zimbabwe: PPC Zimbabwe reports that its domestic sales for the first five months of 2014 have fallen by 5% compared to the same period in 2013. Managing director Njombo Lekula blamed the drop on a decrease in housing projects.
"For the past few years there has been significant growth in housing, which boosted cement demand, however, the current economic situation is beginning to have an impact on home building activities," said Lekula in comments reported by The Herald.
PPC Zimbabwe now intends to sell its excess production in neighbouring countries. However, Lekula pointed out that Mozambique has a 'very competitive' market due to imports from the Far East via the port of Beira. In addition the cost of logistics to reach this market is an issue for the cement producer. PPC Zimbabwe are also considering targeting Zambia but logistics and the fluctuating price of the Kwacha have posed challenges.
PPC Zimbabwe intends to start building a US$200m cement plant in the north-east of Zimbabwe in 2014. The company has also started constructing clinker grinding plants near Harare and Tete, Mozambique. Currently, PPC Zimbabwe has a cement production capacity of 0.76Mt/yr. The new projects are expected to increase capacity to 1.2Mt/yr.
Rwanda: South Africa's PPC has said that it will begin the commissioning of its 0.60Mt/yr cement plant in Rwanda by the end of 2014, while construction of new plants in the Democratic Republic of Congo (DCCR), Zimbabwe and Ethiopia continues.