PPC poised for $200m Zimbabwe expansion

Published: 21 November 2013

PRETORIA Portland Cement says it will start constructing a $200 million cement plant in the north- eastern part of the country next year, as the group's African expansion gathers momentum.

"We intend to start construction during the second or third quarter of 2014 and complete at the end of 2016," said Mr Gavin Stephens, PPC Zimbabwe's director of business development, in an e-mailed statement.

"We are at the final bankable feasibility stage for the project. The construction of the plant will bring considerable benefits to the community in which it will be located."

The company also intends to construct a clinker production facility with a grinding plant near Harare and near Tete in Mozambique. The main market area targeted is Harare region and the milling plant in Mozambique will target Tete region.

The combined cement output would be 1,2 million tonnes per annum, Mr Garvin said, adding about 250 direct jobs would be created with additional 100 supporting jobs plus many more downstream.

"Infrastructure currently under investigation includes bulk electrical power supply as well as the required road network," said Mr Garvin. PPC will finance supporting infrastructure, and this is not included in the $200 million. Funds would be sourced externally with the aid of the parent, PPC Ltd.

Local demand for cement is likely to surge, supported by strong recovery of the construction industry.

There is huge potential to rebuild the country and address the significant infrastructure bottlenecks, analysts say. According to the African Development Bank, Zimbabwe requires $14 billion for infrastructure.

Under Zimbabwe's new economic blueprint, Zim Asset, Government has come up with an infrastructure cluster focused on the rehabilitation of infrastructural assets and the recovery of utility services in Zimbabwe. These services relate to water and sanitation infrastructure, public amenities, information communication technology, energy and power supply, transport (road, rail, marine and air).

Cement companies are also poised to benefit from the growing demand in residential and non-residential construction.

While analysts have pointed out that the primary risk to the construction sector was the shortage of international finance and foreign direct investments, PPC Zimbabwe chairman Mr Bhekokuhle Sibiya said prospects in Zimbabwe were bright after the July 31 harmonised elections.

"With elections in Zimbabwe concluded, we expect continued growth in cement demand.

"The market has been dominated by retail clients and we look forward to increased infrastructure investment," said Mr Sibiya.

PPC Zimbabwe profit for the year to September was 10 percent up to $92,03 compared to same period last year.

Elsewhere in Africa, PPC chief executive Ketso Gordhan announced it will have three more plants under construction by the end of the first quarter next year in the Democratic Republic of Congo and Ethiopia.

In Rwanda, the plant construction would come on stream in September next year. The country earmarked for the fifth project was not disclosed. Mr Gordhan said the company's capital expenditure budget for the current financial year was about R2,7 billion.

Mr Gordhan said PPC's new plants in the DRC, Rwanda, Ethiopia and Zimbabwe would enable the company to achieve its target of generating 40 percent of its revenue from outside South Africa by in the next four years.

"Our expansion strategy into the rest of the African continent has gained significant momentum, with identified projects progressing well in a number of countries," Mr Gordhan is quoted in as saying in South African media.
- herald