LISTED construction company Group Five has recommissioned its mothballed steel-pipe factory in Meyerton in response to an improvement in the pipe market.

Demand and prices had picked up substantially since last year, when the facility was mothballed, the group's financial director for construction, John Whall, said yesterday. "We have now won some good contracts."

Group Five Pipe had secured seven contracts worth in excess of R33m since the beginning of the year. "There are more contracts that we will be tendering for," Whall said.

This would add to the construction group's revenue, which was at R4bn for the financial year ending June last year.

There were no plans yet, however, to recommission Group Five Pipe's other mothballed facility in Western Cape.

The Meyerton facility, where only one of two production lines had been recommissioned, was easy to mothball, said Whall. "It was also easy to recommission because it required very low startup costs," he said.

The bulk of orders were placed by the pipe division's main client, Rand Water, the largest water supply authority in southern Africa. "There has been an increase in spending by Rand Water, but these are not major contracts," said Whall.

Another large order, worth close to R12m, was placed for 3km of 1520mm-diameter coated and lined pipe for Cape Town.

Group Five Pipe's Meyerton factory was expected to produce 5115 tons of large-diameter steel pipe by August.

The Meyerton factory was established in the mid-1990s, in response to high demand for spirally welded steel pipes by Rand Water. The factory was awarded a contract to produce 35km of 2900mm diameter pipes for the water utility. A year later the factory had to be doubled in size, to cope with increasing demand. Group Five also has a 25% stake in a Saudi Arabian pipe manufacturing facility.

Group Five's share price closed 3c lower at 565c on the JSE Securities Exchange SA yesterday.

Jun 10 2003 07:35:58:000AM  Carli Lourens Business Day 1st Edition