PPC determined to expand into Africa

Posted On Thursday, 19 March 2015 08:43 Published by
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PPC seems to be determined in aggressively expanding into fast-growing Africa.

 DarryllCastle

Cement giant Pretoria Portland Cement (PPC) seems to be determined to aggressively expand into fast-growing Africa. In a presentation to investors, PPC points out that it has successfully secured non-recourse project finance of over $400 million for its expansion projects, most of which are located throughout Africa. The cement maker already has strong market positions in several African countries including Zimbabwe, Botswana and Rwanda.

The South African operation continues feeling the pressure and operates under tight margins as a result of a drop in cement sales volumes, aggressive competitor pricing and rising imports into the Eastern and Western Cape provinces. In the high volume trading environment of small builders supplied through retailers Cashbuild, Buildit, PPC has not faired well as price sensitive owners buy the cheaper cement on the day. 

On optimism about the African prostects, PPC said it sought entry points to fast-growing African countries that required significant infrastructure investment. PPC said it was focused on delivering on African expansion projects and continued to efficiently manage businesses across the continent. For one, production of its new 600,000-ton-per-annum plant in Rwanda is expected to commence in the second half of 2015. Pending the finalisation of outstanding documentation, the group is poised to increase its stake in Ethiopian-based Habesha Cement, a 1.4 million-ton-per-annum plant, to 51%.

"Majority shareholding will allow for greater access and influence on this project, which will mitigate potential delays," the JSE-listed cement giant said. At leasy for now, PPC appears to be vindicated about its bet on Africa. For the first five months of its financial year 2015, cement sales volumes have declined in SA, which are being offset by volume growth in Zimbabwe, Botswana and Rwanda. Tough trading conditions are likely to persist for the remainder of the financial year 2015 in South Africa, which partly explains why Africa is so important.

To further diversify into Africa, PPC says the construction of its 700,000-ton-per-annum mill in Zimbabwe is progressing well and commissioning remains set for 2016. In the Democratic Republic of the Congo, the construction of a 1-million-ton-per-annum plant it progressing well. 

Last modified on Friday, 20 March 2015 11:29

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