SOUTH AFRICA, APRIL 9, 2018 – PPC Ltd. is weighing expansion into new markets as South Africa’s biggest cement maker seeks to draw a line under a tumultuous two years that included an emergency rights issue and takeover interest from competitors.
Johannes Claassen
New investment would follow a 12 billion rand ($995 million) outlay on five plants in the past half decade, which took PPC into countries including Ethiopia and the Democratic Republic of Congo from its South African base. All are now in operation and generating cash, said Claassen, 58, allowing the company to consider new facilities.
‘Construction Site’
Looking ahead, the company sees the potential for growth, both at home and internationally, as it seeks to repay shareholders for the faith shown during the rights issue.
“There’s an emergence of African leaders that are really starting to change the continent,” said Ramafoko. New presidents of countries including South Africa, Ghana and Zimbabwe are all in the process of approving new infrastructure projects that benefit cement makers, while the Ethiopian capital of Addis Ababa is “a construction site,” he said.
Ongoing infrastructure projects include a a 1.4 billion euro ($1.7 billion) urban-railway project in Ivory Coast, while Zimbabwe plans to widen the highway that links the capital Harare to South Africa, which heavy duty trucks use to transport everything from power-plant equipment to minerals such as chrome and copper.
Of all the new plants, generating a return from the Democratic Republic of Congo facility has proven the most challenging. PPC has negotiated a “debt holiday” with lenders after the market “didn’t pan out as envisaged,” Claassen said. There’s an over supply of cement in sub-Saharan Africa’s largest country, and PPC is in talks with China National Materials Co., known as Sinoma, about selling a stake in the Congo operation.
Congo Sale
“They are quite amenable in taking a majority stake,” Claassen said, adding that the outcome may depend on merger talks between Sinoma and local rival China National Building Material Co., which would create the world’s largest cement maker. “We are not married to Congo, but we would need a fair price for what we invested.”
The shares were 0.6 percent lower at 7.85 rand as of 10:52 a.m. in Johannesburg Monday. PPC has gained 13 percent this year, valuing the company at 12.5 billion rand.
There’s still scope for consolidation in South Africa, Claassen said, with competitors including Sephaku Cement, part of Lagos, Nigeria-based Dangote’s operations, and Mamba Cement as well as AfriSam. He declined to comment on whether PPC-AfriSam merger talks could be revived.
