South African cement producer Pretoria Portland Cement (PPC) on Tuesday announced details of its Batsweledi cement-capacity expansion project.
PPC will invest R1,36-billion to increase the company’s inland cement capacity in South Africa by just more than one million tonnes a year.
The additional capacity will supply both future demand growth in the South African cement market and the eventual replacement of capacity from older production facilities, which will be retired when market conditions allow, PPC said.
The announcement follows a year of detailed feasibility studies following an initial public statement in August last year that said: “In the light of recent and future anticipated cement demand growth, and the planned future retirement of older PPC production lines, the PPC board has resolved to commence with the planning for and broad approval in principle of, a one-million-tonne per annum cement-capacity expansion project for the inland region of South Africa.”
The final project plan has two components. R1,23-billion will be invested in the installation of a new kiln line and related infrastructure at PPC’s existing Dwaalboom cement factory, which is situated in the Limpopo on the border with the North West. A further R130-million will be spent recommissioning and upgrading the existing cement-milling facility at the Jupiter factory in Johannesburg.
The new capacity is expected to come on line in the second calendar quarter of 2008 and the capital expenditure, which will be financed by a combination of operating cash flow and borrowings, will be spread over the three financial years from 2006, with peak expenditure in 2007.
Commenting on the announcement, John Gomersall, CEO of PPC, said: “We recognised the growth potential of the South African market four years ago and developed a 20-year expansion and modernisation plan.
“Demand has grown faster than anticipated supported by the strong economy, with booming housing construction fuelled by lower real interest rates. Looking forward, we expect the private sector demand to be enhanced by increasing public sector infrastructure investment.
“Even taking into account the higher levels of demand growth, we believe this new capacity will allow us to meet the cement needs of our South African inland customer base.
“In the coastal areas, our major focus is in the Western Cape, where we currently have sufficient capacity at our two factories to supply anticipated growth in demand until about the end of the decade. In the Eastern Cape, we successfully rose to the occasion to supply all the cement to the massive Ngqura harbour, which is now nearing completion,” he added.
This project follows PPC’s announcement in May this year to invest R50-million to recommission the 550 000-tonne-a-year Jupiter factory in Germiston, south of Johannesburg. Work on that project is well advanced and the factory will come back on stream during March/April 2006. It will provide the market with additional security of supply over the two-and-a-half year construction and commissioning period of the Batsweledi project.
“We intend financing the project through a combination of operating cash flow and borrowings. Looking to the longer term, our balance sheet is very strong and will ensure that we are in a position to invest to meet the growing cement requirements of our customers well into the next decade.”
An environmental impact assessment has been completed for the new facilities at Dwaalboom and the necessary approvals to proceed with the project have been obtained from the authorities. By replacing old technology plant with state-of-the-art technology, greenhouse gas emissions will be significantly reduced. There will also be a reduction in fossil-fuel consumption per tonne of cement produced. Work is expected to start on site early in the first calendar quarter of 2006.
Batsweledi is a Sotho word meaning “growing into the future” and was the winning suggestion from a competition among PPC’s employees to name the project.
PPC is the 71,6%-owned cement and lime subsidiary of diversified industrial company Barloworld.
Commenting on the announcement, Tony Phillips, CEO of Barloworld, said: “Organic expansion of our existing businesses is one of the pillars of Barloworld’s growth strategy. Accordingly, this investment has the full support of the Barloworld board.
“It demonstrates our commitment to provide capacity to supply the materials, products and services needed to expand the infrastructure of the region.
“It is also an infrastructure investment in itself and will make its own contribution to economic prosperity through the creation of approximately 100 direct permanent new jobs and employment directly and indirectly during the construction period for several thousand more.” — I-Net Bridge