Cement expansion moves ahead, South Africa

Cement expansion moves ahead, South Africa
Published: 30 June 2006

The growth in the South African economy and continued high demand in both the residential and non-residential building sectors has boosted cement volumes to record levels.

After two decades of little or no investment, South African cement producers have announced multibillion-rand plans to increase capacity to incorporate the forecasted 8% a year rise in cement production over the next few years. This figure, as indicated by the Cement and Concrete Institute, an industry body, may very well be a conservative estimate given that, according to first-quarter GDP figures, the construction industry exhibited 13% YoY growth. This local climate of expansion, coupled with improved in-house operational efficiencies and tight cost control has augured well for cement producer Pretoria Portland Cement’s (PPC’s) recent announcement of a potential R3bn expansion project.

The group is currently in the pre-feasibility phase of the potential expansion of its current cement facilities in the Western Cape and also of a new state-of-the art cement mill in the inland region.

Batsweledi, a Sotho word mean- ing ‘growing into the future,’ represents the first stage of PPC’s 20-year modernisation and expansion programme. The Batsweledi project plan comprises two components: R1,266bn will be invested in the new kiln line and related infrastructure at PPC’s existing Dwaalboom cement plant on the border of Limpopo and the Northwest provinces, while a further R130m is being spent on recommissioning and upgrading the existing milling facility at PPC’s Jupiter plant, in Germiston, which will be used to grind clinker from the new Dwaalboom kiln line.

Project leader Stephen Scholtz notes that the pre-feasibilty work for this project was initiated late in August 2004, when the PPC executive committee requested that the installation of additional capacity be considered, both in terms of location and size. The new capacity is expected to come on line in the second calendar quarter of 2008 and the capital expenditure programme, financed by a combination of operating cash flow and borrowings, will be spread over three financial years from 2006, with peak expenditure in 2007. The budget for the Dwaalboom project is R1,266bn, of which approximately R470m had been committed by the end of April 2006. Scholtz believes that reaching the stage of detailed ‘scope-fix’ and ‘sign-off’ within 22 months of the project’s inception is a significant achievement.

As commissioning is scheduled for the second quarter of 2008, the programme is extremely tight. “This has been intensified further given the increased commitments of major equipment suppliers, construction and erection contractors. However, we remain on target to meet our original dates,” adds projects director Koos Taljaard. The PPC project teams are based in Sandton and on the Dwaalboom site.fee