PPC forecasts growth in demand

PPC, SA’s largest cement maker, sees a pick-up in demand in its home market as President Cyril Ramaphosa inspires greater investor confidence and initiates new infrastructure projects.

PPC, SA’s largest cement maker, sees a pick-up in demand in its home market as President Cyril Ramaphosa inspires greater investor confidence and initiates new infrastructure projects.

Demand for the building material would probably be steady for six months before starting to increase, CEO Johan Claassen said in an interview in Johannesburg. This comes after the market stagnated under former president Jacob Zuma, when the economy faltered and large projects were put on hold.

Ramaphosa has pledged to boost the economy and fight the corruption that dogged the nineyear reign of his predecessor. The signing of about R56bn of long-delayed renewable power projects last week was an early sign that his presidency will lead to an industrial revival, according to the CEO.

“Building wind turbine plants uses a lot of cement,” Claassen said. “We have benefited a lot from the building of wind turbines in the Eastern Cape.”

Additional capacity of about 1-million tonnes of cement could be needed in SA by 2023 as a result of growing demand and tougher environmental regulations that would lead to the closure of older plants, Njombo Lekula, PPC’s head of southern Africa, said in the same interview. “If the cement industry grows at around 3% a year, a new plant would be needed every three years.”

Nevertheless, there is still a case to be made for consolidation in the South African cement industry because the location of some of the plants affects their profitability, said Claassen.

PPC spent much of 2017 in merger talks with local rival AfriSam before a three-way deal that included Canadian insurer Fairfax Financial Holdings collapsed over a disagreement on value.