PPC highlights impact of cement imports on itself and the economy

Building materials producer PPC Cement has lamented the lack of any meaningful uplift in cement sales volumes from the government’s infrastructure programme, other than limited road construction and rehabilitation activity.

The group has again highlighted the impact of cement imports on the company and the South African economy. PPC Cement South Africa and Botswana managing director Njombo Lekula confirmed the group would have expected the benefits of the government’s infrastructure programme to have come through but things have been “very slow”.

Lekula referred to the impact of the SA National Roads Agency cancelling adjudicated tenders worth R17.4 billion in May this year, adding that a lot of projects are in progress in KwaZulu-Natal and the Eastern Cape but nothing has been coming through in Gauteng and Mpumalanga.

PPC estimates that imports account for about 10% of SA cement sales volumes and the industry is actively engaging the relevant authorities for relief against unfair competition from imports.

Lekula said this totals 1.2 million tons of clinker, which is the equivalent of a full cement factory that employs almost 400 people and indirectly a couple of thousand.

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“That is the impact of imports into our space and the country. Imports threaten the financial sustainability of a vital component of the manufacturing and construction sector and erode the industry’s ability to maintain employment,” he said.

Lekula said global logistic problems had resulted in cement imports declining by 14% in the first four months of this year. He said this shows the unreliability of imports into a country.

Peregrine Capital executive chair David Fraser said PPC’s financials are “a bit noisy” but the group produced a solid result. He said PPC was the only cement producer that could respond to the almost surprising demand for volume when SA came out of the hard lockdown, but that the market share of the other producers is normalising.

He said the government needed to start its infrastructure programme properly and start awarding contracts.

PPC Group chief executive Roland van Wijnen declined to comment on Sephaku Holdings’ statement that Trade, Industry and Competition Minister Ebrahim Patel had requested SA’s cement producers to commit to “no price increases” in return for government approval of “safeguard action” against cheap cement imports, particularly from China and Vietnam.

He said PPC considers the contents of that meeting confidential but stressed the “real point” is not about price control but the ability of SA to protect employment.

This article was republished from Moneyweb with permission