Demand expected to remain ’reasonably’ resilient - PPC

Demand expected to remain ’reasonably’ resilient - PPC
Published: 27 January 2009

Regional demand for cement would remain “reasonably resilient”, despite the economic slowdown, Pretoria Portland Cement (PPC) chairperson Bheki Sibiya said on Monday, adding that the company’s new production capacity and established footprint would allow it to take advantage of any tight supply situations.

In a speech delivered its annual general meeting, Sibiya stated that this was in line with some economists’ expectations that gross fixed capital formation, as a percentage of gross domestic product, would increase during the year.

South Africa’s fixed capital formation has reached the 23% mark last year, up from a low of 14,7% in the early 1990s. The country is targeting a ratio of 25% by 2014.

“South Africa will inevitably feel some of the effects of the international economic slow down and it is therefore difficult to give a definitive outlook for the year,” he said, adding that the company expected current and future infrastructure projects to boost the demand for cement.

Sibiya stated that the company would continue to review any potential opportunities in South Africa, as well as export opportunities, while it would continue to increase its production and supply networks.

Regional industry cement volumes for the first quarter of the 2009 year had declined by 8,2%, while cement volumes for the 2008 calendar year had been down 3,9%, reported PPC.

The producer noted that inland cement sales were constrained in November and December owing to production problems experienced by competitors, which led to a cement shortage.

Subsequently, PPC had benefited from additional sales, but experienced some periods of stock-outs.

Sales volumes in Mpumalanga had increased by 8% and in Botswana by 14%, boosting the company’s overall sales, while volumes in the Western Cape were “disappointing”.

Meanwhile, Sibiya noted that production at the 1.25m Dwaalboom kiln was progressing, with 90 000t of cement having been produced in December.

The expansion project was started in 2006 and had been completed within the R1,4-billion budget in September last year.

The Hercules mill project was also on schedule, while the environmental impact assessment process for the Riebeeck plant was under way.

PPC has been upgrading a number of its cement plants over the past few years to ensure improvements in production and environmental conditions.