Cement demand still likely to outrun supply, despite plans for new capacity

Cement demand still likely to outrun supply, despite plans for new capacity
Published: 14 October 2008

A new 2.2Mta cement plant being planned by a Nigerian firm and its local partner will likely still find buyers for its product, as additional capacity would be needed in future, an expert said on Monday.

"There is little doubt that the cement market’s fundamentals will tighten in the medium to longer term and that additional capacity will be needed to support heightened demand in infrastructural markets, " commented Absa corporate and business bank construction and infrastructure GM Peter Steyn.

Nigerian cement producer Dangote Cement and South African minerals exploration, development and investment company, Sephaku Holdings, announced last week that they would start construction on a ZAR3bn 2.2Mta energy efficient cement plant in South Africa, in January next year.

The two companies on Friday announced that they had entered into a shareholders agreement for Sephaku Holdings’ subsidiary, Sephaku Cement, for the construction of the cement plant.

The joint venture (JV) would mark the first new entrant into the cement market since 1934, and the first black-owned plant in South Africa, and is expected to start producing cement by the end of 2010.

"The new plant will be the largest single cement production line in South Africa and will be the most efficient in terms of energy and power consumption and will set the benchmark for emissions," commented Sephaku Cement CEO Pieter Fourie.

In May, Cement & Concrete Institute (C&CI) marketing manager John Sheath said that demand for cement was expected to continue growing until at least 2015, owing to the 2010 FIFA World Cup and government’s infrastructure spend.

South Africa’s cement demand has continued to grow over the past few years, with a number of other cement manufacturers expanding and upgrading their manufacturing plants.

Cement producer PPC is spending ZAR4bn on upgrading and expanding its Riebeeck cement factory in the Western Cape. The new plant was expected to have a capacity of about 1.3Mta.

Further, building materials producer Lafarge is investing ZAR1.2bn on expanding its cement manufacturing facilities.