Consolidation in SA cement industry is still desirable

CONSOLIDATION in the cement industry in South Africa was still a strong possibility despite the failure of several merger talks between PPC and AfriSam.

Richard Tomes, the sales and marketing executive at AfriSam, said on Friday that they had been pushing for consolidation, because the economic growth projects were “just too low”.

“Even if you take the best case of 2.5 percent GDP growth, we need much more than that to start matching demand and supply in the cement industry,” he said.

Tomes added that the industry had a capacity of just above 20 million tons a year, but demand was sitting at about 13 million tons.

Rob Wessels, the chief executive of AfriSam, added that contrary to the government, AfriSam’s board, its shareholders and senior management, still held the view that the industry needed some consolidation.

Wessels stressed that consolidation was not only needed of construction material suppliers, but also in the construction industry.

“It’s been too broken up. Unfortunately, there are too many small and medium players and they are suffering and finding it very difficult to stay in business.

“We will continue to look at it carefully, but we are not feeling the time pressures that we felt last year, so we will assess it and see what is best,” he said.

Wessels said there was also a need for consolidation in the cement markets in Africa.

He said AfriSam had been in Tanzania in different guises for more than 30 years, was listed in Tanzania and its cement supplies spilled into Rwanda, Burundi and Uganda, with a little bit also into Kenya.

Wessels said AfriSam also exported cement from South Africa into Botswana, Swaziland and Lesotho and a little into Namibia.

Wessels said between 25 percent and 27 percent of AfriSam’s capacity and sales were non South African.

But he said the same things that had happened in South Africa had happened in these African markets.