Displaying items by tag: South Africa

South Africa: Lafarge, the world's largest cement maker, is rumoured to be seeking a buyer for its cement operations in South Africa in a deal that may fetch US$700-800m. Potential bidders are rumoured to include the Indian conglomerate Aditya Birla Group, the owner of India's largest cement maker, UltraTech Cement Ltd.

South 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.

South 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."

South 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."