South African cement producer PPC said on Thursday it plans to import "several million bags" of cement to meet local demand until its own additional capacity comes on-stream.
PPC did not specify the exact level of imports in quantity or cost. The first shipments are due in the coming weeks.
PPC said it did not expect to make a profit from the imports, saying its action was meant to support a government-backed drive to expand South Africa’s economy.
The company, which is majority-owned by diversified industrial group Barloworld , said last week cement sales volume growth over the next two years would be muted as the group would be operating at full capacity.
PPC, which stands for Pretoria Portland Cement, said it had concluded a contract with a large and reputable international cement company with which it has had a long relationship, to import the cement. It did not disclose the name of the company.
PPC said growth in the construction industry will continue until at least 2014, when a government-backed economic growth drive is expected to achieve its target to halve poverty and unemployment.
The growth drive, dubbed the Accelerated and Shared Growth Initiative (ASGISA), is a wide-ranging plan by South Africa’s government to boost economic growth.
"Our costing indicates that we will make no profit on this imported cement and we see it as a contribution to ASGISA and meeting the needs of our customers over the next year or two," continued John Gomersall, PPC’s chief executive officer said.
"Our imports might run to several million bags over this period. One realises therefore, that this is a large and complex undertaking with long lead-times and supply lines, and foreign exchange and shipping risks," he added.
PPC has said it plans to spend in excess of SARbn on improvements and new production facilities, but is now operating at full capacity pending the new capacity. One of its main new projects is to come on stream in 2008.