South African cement shortage and FIFA
Having stadiums ready for the 2010 soccer World Cup will be held hostage by cement imports, as local producers struggle to keep up with demand.
Cement producers Natal Portland Cement, Pretoria Portland Cement (PPC) and Lafarge had been caught napping by unexpected economic growth and a surge in housing and commercial property developments.
They were now spending billions of rand to boost plant capacity.
But these expansion plans were only due to be completed in 2008. Until then, manufacturers were having to import cement products to meet local demand. Because of high transport costs and the weakening rand, these imports were often sold at a loss it was claimed.
In the first nine months of the year, cement sales in South Africa, Lesotho, Botswana, Namibia and Swaziland increased by 9.5 percent to 10.4Mt, said the Cement and Concrete Institute.
Members of the institute include Lafarge and Holcim, the world’s biggest cement companies. The other producer members are Barloworld-controlled PPC and Natal Portland Cement.
Dirk Kotze, a portfolio manager at Coronation Fund Managers, said cement producers had in effect run out of supply.
"Imported cement is being sold at break-even or at a small loss but definitely not at a profit because of transportation costs."
Natal Portland Cement managing director Pieter Strauss said the company had been importing 10 per cent of its total cement volumes from Brazil.
Holcim spokesperson Wandile Zote said: "Although we have finished all our refurbishment of our plants to improve efficiencies, we continue to import cement to meet local demand."