Displaying items by tag: South Africa

South Africa: PPC says that pent-up cement demand post-coronavirus lockdown has enabled year-on-year sales growth “in double digits” for the company in June 2020. Sales volumes also rose, by a single-digit figure. PPC said, “This recovery is mostly driven by the absence of imports, which has given an opportunity for local producers like PPC South Africa to grow.”

In May 2020 PPC recorded sales between 30% and 35% lower than in May 2019.

South Africa: Cement plants were working at roughly 50% of the capacity utilisation level in June 2020 compared to that in June 2019 following the restart of production due to the relaxing of the coronavirus lockdown to Level 3 from Level 4 on 1 June 2020. The Sunday Tribune newspaper has reported that a construction slowdown is behind the decision to scale down production.

PPC head of inland business Bheki Mthembu said, “Demand is less than the supply. Most of our cement goes to retailers and then local builders, but we still cater to larger companies when bulk deals are required. The lack of large-scale construction projects has left the industry heavily dependent on residential construction. Government needs to support us through infrastructure maintenance and other projects. We were already in survival mode; Covid-19 has almost been the final nail in the coffin.”

Nigeria: Denmark-based FLSmidth has secured a contract with Dangote Cement for the supply of hot kiln alignment services for 16 kiln lines across Africa. 10 of the lines are installed across three plants in Nigeria, with the remaining six situated in Republic of the Congo, Ethiopia, South Africa, Tanzania and Zambia. The contract will endure until 2026.

Dangote Cement said that it chose FLSmidth to help it achieve ‘uninterrupted cement production and dispatch around the clock. Dangote Group deputy managing director Arvind Pathak said, “The equipment health audits, services, and support extended by FLSmidth have helped us maintain our pyro process equipment with good reliability. Hot kiln alignment is an excellent preventative maintenance strategy.”

FLSmidth says that it conducts 250 hot kiln alignments worldwide annually.

Nigeria: Dangote Cement has recorded earnings before interest, taxation, depreciation and amortisation of US$293m in the first quarter of 2020, up by 2.2% year-on-year from US$287m in the first quarter of 2019. Sales rose by 3.8% to US$639m from US$616m. Cement sales volumes fell by 0.6% amid a total suspension of South African operations from late March 2020 due to the coronavirus lockdown.

Dangote Cement chief executive officer (CEO) Michael Puchercos said, “2020 started strongly, with growth across the board despite the early effects of the COVID-19 pandemic. We are closely monitoring all markets according to the guidance provided by the authorities in each country. We continue to provide superior services and deliver high quality products to our customers.”

Argentina: South Africa-based Pro-Op Industries has announced the shipment of a set of ceramic rotary valves produced by Germany-based Kreisel to Argentina. The product is to be installed at Loma Negra’s 1.5Mt/yr integrated Catamarca plant in Catamarca province. The rotary valves will replace two screw pumps with the aim of ‘substantially reducing energy consumption and maintenance costs’ at the plant. Pro-Op Industries said, ‘We are excited and honoured to be working with the Loma Negra team and to be introducing Kreisel technology to the South American region.’

South Africa: PPC has reported a predicted 95% year-on-year decline in its sales of cement in South Africa in April 2020 due to the impacts of the coronavirus. Sales in Rwanda and Zimbabwe, where production resumed in mid-late April 2020, are expected to decrease in the month by 80-85% year-on-year.

PPC says that PPC South Africa is preparing to resume production in line with the government’s risk-based regulations announced on 25 April 2020. The group said, “The uncertainty around the further development of the containment of the coronavirus makes it necessary for PPC to work with various scenarios.”

South Africa: PPC has reported that it has invested US$548,000 in the construction and installation of a pneumatic offloading facility including a 250t silo at its George Depot cement terminal in the Western Cape. The company said that this ‘allows the business to receive cement by rail, improving its turnaround to customers without compromising quality.’

There have been rumours in the press this week that LafargeHolcim is weighing up its options in South Africa. Reports in the local press allege that the building materials company has tasked Credit Suisse Group with finding a buyer for its business. This may or may not be true, only time will tell, but South Africa certainly feels like a market where LafargeHolcim should be considering its future.

As a prominent but smaller producer in the country, Lafarge South Africa is behind PPC and AfriSam in terms of clinker production capacity. InterCement’s subsidiary Natal Portland Cement and Dangote’s subsidiary Sephaku Cement have a similar production base with an integrated plant each and one or two grinding plants. Halfway through 2019 LafargeHolcim was describing market conditions as ‘difficult’ in the country with it being the sole Sub-Saharan market holding back regional growth for the group. By the third quarter the situation had reportedly improved but net sales and cement sales volumes were flat for the year to date. A clearer picture should emerge when LafargeHolcim publishes its fourth quarter results at the end of February 2020.

PPC provided its view of the market in its half-year results to 30 September 2019. Its estimate was that the South African cement industry declined by 10 - 15% for the period, creating a competitive environment. It added that the situation had been, ‘exacerbated by imports and blender activity.’ Both its revenue and earnings fell year-on-year, although a 30% rise in fuel costs didn’t help either. Sephaku Cement suffered a similar time of it, with a 19% fall in cement sales volumes during the first half, although it reported improvement in the subsequent quarter. Overall, it blamed falling infrastructure investment for pressurising the market and allowing blending activity to mount. Sephaku Cement was also wary of the local carbon tax that started in June 2019 warning of a potential US$2.8m/yr bill.

PPC noted that cement imports had risen by 5% to 0.85Mt in the year to August 2019. This followed a lobbying effort by The Concrete Institute (TCI) in mid-2019 to implore the International Trade Administration Commission (ITAC) to look into rising imports levels. At the time the TCI’s managing director Brian Perrie expressed incomprehension that a country with six different cement production companies with an over-capacity rate of 30% could be facing this problem. This latest broadside tails South Africa’s previous attempt to fend off imports when it instituted anti-dumping duties of 17 – 70% against importers from Pakistan in 2015. Imports duly fell in 2016 but rose again in 2017 and 2018, mainly from Vietnam and China.

All of this sounds familiar following LafargeHolcim’s departure from the ‘hyper-competitive’ South-East Asian countries in 2019. Those countries also suffered from competition and raging imports. Bloomberg pointed out in a report on the local industry in 2016 that PPC’s, AfriSam’s and LafargeHolcim’s kilns had an average age of 32 years, suggesting that efficiency and maintenance were going to be concerns in the future. Also of note is LargeHolcim’s decision to move its South African operations from one subsidiary, Lafarge Africa, to another, Caricement, in mid-2019.

Some level of market consolidation would certainly help local overcapacity. Plus, surely, LafargeHolcim’s mix of inland integrated capacity and a grinding plant near the coast could prove enticing to some of the Asian companies pumping out all of those imports. The thought on the minds of potential buyers everywhere must be, if LafargeHolcim chief Jan Jenisch was bold enough to sell up in South-East Asia, how can he not in South Africa?!”

South Africa: LafargeHolcim is planning to sell its South African operations as the world's largest building material maker continues to streamline its portfolio, according to sources close to a deal who spoke to Bloomberg. The Swiss company is working with adviser Credit Suisse Group to seek a buyer for the business. It has apparently already reached out to local competitors, Chinese cement producers and buyout firms, but may struggle to attract interest for the unit due to challenging dynamics in the country's cement industry. South Africa is Africa’s most mature cement market but it is hampered by decreasing demand, old production facilities, tight domestic competition and cheap imports from the Middle East. A representative for LafargeHolcim declined to comment.

South Africa: Morag Evans, the chief executive officer (CEO) of Databuild, says that local cement manufacturers are being ‘severely’ undermined by cheap imports from countries such as China, Vietnam and Pakistan. She adds that the government’s failure to stem the influx of these products could have a severe detrimental impact on an already struggling industry.

“In an industry already in the grips of a severe downturn owing to the decline in infrastructure development, not only are these imports negatively impacting the competitiveness of our local manufacturers, but independent studies have shown the quality of these international products to be inferior,” said Evans.

She also cited quality concerns with imported cement mentioning a study conducted by local manufacturer PPC. It found that, from 14 products tested from 10 different producers, most were either over or underweight and were also of inconsistent quality.

Evans has supported the Concrete Institute’s lobbying for a 45% import tariff on cement imports. However, she acknowledges that such a move could raise the price of cement and increase inflation in the general economy.

Databuild provides information about the construction industry in South Africa.