Cement investments set for take-off
19 September 2013
Rapid infrastructure development in South Africa and its neighbouring countries will boost the prospects of the cement industry in the southern African region, according to new analysis from market researchers Frost and Sullivan.
Releasing its study, "Southern African Cement Industry Production and Investment Forecasts", on Wednesday, Frost and Sullivan forecast that US$940-million would be invested in the cement industries of three countries - South Africa, Zambia and Zimbabwe - between 2013 and 2018.
Cement production will be instrumental to government expenditure plans, the study finds, especially the Regional Infrastructure Development Master Plan which the Southern African Development Community (SADC) aims to roll out over the next 15 years.
Internally, the South African government is planning to spend in excess of R4-trillion on a massive state-led infrastructure drive over the coming years, with a substantial focus on
rail, road, energy and water infrastructure.
"Higher government spending on public infrastructure, such as the construction of new energy and power facilities, as well as the expansion of transportation infrastructure, will boost the need for cement in southern Africa," Frost and Sullivan research analyst Yeukayi Kadzere said in a statement on Wednesday.
While soaring electricity and fuel prices were driving up production costs, Kadzere said manufacturers in South Africa, Zambia and Zimbabwe could potentially offset this by exporting cement to neighbouring countries with enormous demand but little supply.
Cement production in South Africa, Zambia and Zimbabwe, the three countries studied by Frost and Sullivan, stood at 14.9-million tonnes in 2012 and was expected to be boosted by new cement manufacturing plants to 18.1-million tonnes in 2018.
Sephaku Cement, an associate company of JSE-listed Sephaku Holdings and a 64%-owned subsidiary of Nigeria's Dangote
Cement, is currently nearing completion of a 1.2-million ton per annum cement plant in South Africa's North West province.
The Nigerian-backed company will be the first new entrant to the South African cement production market to open its own new plant since 1934, and will be looking to challenge big local producers PPC, AfriSam, NPC and French multinational Lafarge as the country's infrastructure building programme starts to take off.
In February, PPC announced that its Zimbabwean subsidiary, Portland Holdings Limited, would be building a new cement plant in that country to service its markets in Zimbabwe and Mozambique.