Displaying items by tag: Sephaku

South 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.

South Africa: The board of directors of Sephaku Holdings have announced that Johannes Wilhelm Wessels died on 23 March 2014. Wessels was an alternate director to Rudolph de Bruin since 2007 on the Sephaku Holdings board.

Wessels originally provided legal counsel on the emerging business structure in 2005 and he later joined Sephaku Holdings as Head of Corporate Affairs holding key responsibility for group legal counsel, transaction structuring advice and contractual negotiations. He led the process of the group's unbundling strategy and worked on the legal and tax aspects of the process. Wessels helped reposition the company from a multiple mineral exploration company to a construction and building materials focused company.

"Wes was pivotal in negotiating the relationship agreement with Dangote Industries PLC to establish Sephaku Holdings' partnership in South Africa's newest cement producer since 1934, Sephaku Cement. At the time of his untimely death Wes was also serving as a director of the Sephaku Cement board. We will always remember him for his astuteness, legal savvy, business acumen and spontaneous sense of humour," said Chief Executive Officer, Lelau Mohuba.

Nigeria: Dangote Cement intends to reach a total cement production capacity of 50Mt/yr by 2016 which will make it Africa's largest cement producer. The company's chief executive, DVG Edwin, summarised production projects by the Nigeria-based cement producer: "Our plant in Senegal will soon be producing cement and our South African venture, Sephaku Cement, is well on track to open in early 2014. These two plants will be our first production ventures outside Nigeria as we aim to become Africa's leading supplier of cement," said Edwin.

Edwin revealed that construction work is underway at Mugher, Ethiopia for a 2.5Mt/yr cement plant. Operation is scheduled to begin in October 2015 at a 3Mt/yr gas-fired plant in Mtwara, Tanzania. Cement production is expected to start in mid-2014 at a 1.5Mt/yr in Ndola, Zambia. In Cameroon a 1.5Mt/yr grinding plant will be completed in the first half of 2014 and an integrated 1.5Mt/yr cement plant is expected to begin production in the second quarter of 2016. A 1.5Mt/yr cement plant in South Sudan and a 1.5Mt/yr integrated cement plant in Kenya are both set to become operational in 2016.

Along the coast of West Africa Dangote nears completion of import facilities to receive and bag bulk cement produced in Nigeria and Senegal. Additional import facilities in Sierra Leone are due to begin by the end of 2013 or early 2014.

In Liberia Edwin said that the order for equipment has been made for an import facility in Freeport Monrovia. Imports into Liberia are expected to commence in early 2015. The company plans to build a 1.5Mt/yr grinding plant in Abidjan, Ivory Coast, with operations projected to begin in early 2015. In Ghana, the company plans to open 1.5Mt/yr grinding plants in Tema and Takoradi by early 2015. Finally, Dangote cement has recently announced its intention to build an integrated 1.5Mt/yr plant in Niger.

South Africa: Sephaku Holdings has reported that it is on schedule to commence production of cement at its associate company, Sephaku Cement, in the first two quarters of 2014. Sephaku Cement is a subsidiary of Nigerian multinational cement producer Dangote Cement. In its nine-month financial report to 31 March 2013 Sephaku reported that construction of the US$320m Delmas grinding plant and the Aganang clinker and cement plant were both at an advanced stage of development at end of 2012.

The Delmas cement milling plant in Mpumalanga will receive approximately 55% of the clinker produced at Aganang for further processing and is on track for completion in the final quarter of 2013, with production due to start in January 2014. The Delmas plant will have annual cement production capacity of 1.4Mt/yr. The Aganang plant in North West Province will commence production in the second quarter of 2014 with the capacity to produce 1.9Mt/yr of clinker and 1.2Mt/yr of cement when fully commissioned.

South Africa: PPC (formerly Pretoria Portland Cement) launched a news and cement services 'online service desk' on 11 June 2013. The digital service follows hot on the heels of a mobile cement calculator app that can help calculate the amount of cement required for a specific job and offers real-time advice on how and when to lay concrete, based on local weather conditions.

PPC's said that it felt 'an obligation' to provide its customers (and those of the South African cement industry in general) with the information after it pulled its financial support from the Cement and Concrete Institute in April 2013. The CCI has since been dissolved. PPC had accused the CCI of being outdated and no longer able to supply the services that it, as a producer, required from an association. PPC's exit was quickly followed by AfriSam and Lafarge.

Aside from its digital services, PPC will also provide financial and technical support to universities to help develop SA's building materials and civil engineering industries. It will also expand its cement and concrete testing services, as the institute closed its testing laboratory years ago.

The CCI has since been re-established as the not-for-profit organisation the Concrete Institute (CI). It is headed by former CCI managing director Bryan Perrie, who stated that the CI is no longer representative of the whole South African industry. It is strongly linked to Sephaku Cement, which itself is majority-owned by Nigeria's dominant producer Dangote Cement.

South Africa: Sephaku Holdings, the listed company with a 36% shareholding in Sephaku Cement, has nearly doubled its headline loss to US$1.11m in the six months to 31 December 2012 compared to US$0.63m in the same period of 2011. However, the company is in a strong cash position according to CEO Lelau Mohuba.

Sephaku Cement plans to commission a clinker plant towards the end of the 2013, which will produce 2.5Mt/yr of cement. It is 64%-owned by Nigeria's Dangote Cement. Mohuba said the commissioning was on schedule and that Sephaku would become a major player in the South African cement market, which currently produces 14Mt/yr.

Meanwhile shareholders have approved the acquisition of Metier Mixed Concrete on 11 January 2013. The company concluded a 10 year funding agreement deal valued at US$220m with Standard Bank and Nedbank in October 2012. Sephaku's directors said this agreement would close the gap in terms of the capital they would require for Sephaku Cement to be fully prepared for market entry and for it to become a significant competitor in the wholesale and retail cement trade.

Dangote has, according to reports, invested more than US$124m in the cement venture at Aganang, near Lichtenburg in North West Province, making it the largest foreign direct investment in South Africa by a company from elsewhere in Africa.

South Africa: Sephaku Cement, a subsidiary of Nigeria's Dangote Cement, has secured US$223m of domestic debt funding for a US$389m cement plant and grinding facility project in Mpumalanga and North West provinces.

Two of the country's big four banks, Standard Bank and Nedbank, advised by Sasfin Capital, have jointly funded the 10-year deal. Sephaku said this was a 'strong' vote of confidence in South Africa's market and that the agreement would enable it to become a significant competitor in the wholesale and retail cement trade in the region.

Sephaku Cement, established in 2006, is an associate of JSE-listed Sephaku Holdings, a 64%-owned subsidiary of Nigerian-based Dangote Cement. Dangote had invested more than US$126m in the venture, the largest ever foreign direct investment in South Africa by an African company. The new project includes a production facility, which would produce about 1.2Mt/yr, at Aganang near Lichtenburg in North West.

South Africa: An order by South African competition authorities to delay cement industry statistics by three months will negatively affect perceptions of economic activity in the country, according to industry newcomer Sephaku Cement.

The CEO of Sephaku Pieter Fourie said that the directive by the South African Competition Commission to the Cement and Concrete Institute that it delay the publication of its quarterly national cement sales figures by three months made 'no sense'. The institute represents the four major cement producers in South Africa: Pretoria Portland Cement, AfriSam, Lafarge and NPC-Cimpor.

Sephaku, a Nigerian-backed newcomer, is building an integrated cement production facility in the Limpopo province, where it intends to produce cement from the fourth quarter of 2013. It says that cement sales form a large component of construction activity in South Africa and are a leading economic indicator. Sephaku believe that the change in reporting will affect related economic predictions.

Stephan Olivier, CEO of AfriSam, commented that the change in industry reporting was a bid to make it difficult to use the data for anti-competitive behaviour. Simon Roberts, chief economist and manager of the commission's policy and research division, said that companies had previously used the data provided by the institute to 'monitor' their cartel agreement.

Projects by Nigerian-backed Sephaku and a new Chinese-backed empowerment entity, Conticem, will boost South Africa's capacity by nearly 5Mt/yr. Both Sephaku and AfriSam anticipate a better industry outlook in 2012 but uncertainty remains over the government's ability to accelerate its infrastructure plans.