Afrisam not expecting a major fall-off in cement demand

Afrisam not expecting a major fall-off in cement demand
Published: 13 March 2009

South African cement producer Afrisam does not expect cement demand to fall sharply in 2009, given the fact that strong demand from the infrastructure market is helping to offset the decline being experienced in other sectors, such as the residential building market.

In fact, CEO Charles Naude tells Engineering News that the company, which is South Africa’s largest black-controlled construction materials group, could even produce more than it did in 2008, owing to the fact that it was nearing the completion of two capital projects.

“The market is definitely somewhat quieter,  but we do not envisage a major falloff in demand for the year,” Naude said, adding that there had been a definite shift towards bulk purchases in line with the swing in the market towards infrastructure projects.

Following an announcement that the company had secured a debt-refinancing package that would shave some R1-billion off its debt profile, Naude indicated that the group was expecting to operate at its annualised nameplate capacity of 4.2Mt during 2009.

He noted that its R580-million investment in a new 900 000tpa mill at Roodepoort, on Gauteng’s West Rand, was nearing completion, while its R400-million investment in its Tanga operation in Tanzania should be completed by year-end.

The key focus at present was on costs, particularly on reducing energy and fuel costs. A target had been set for reducing the group’s historic electricity consumption by 10% and Naude was confident of achieving that aim in the not-too-distant future.

Given this attention to costs, Afrisam would seek to sustain margins in 2009, despite the expectation of a flat market and the fact that prices might come under pressure.