Cement plants working at full tilt, South Africa
Cement plants are creaking under pressure from rising demand, and some of SA’s largest cement makers have experienced breakdowns at plants that are being run flat out, reports Businesss Day.
One of Lafarge’s biggest kilns was back on line after a two-month breakdown caused by a fire, the company said on Friday. Lafarge’s Frederic de Rougemont said that the firm had two months’ stock in store when the plant went down, so there was little effect on supply in the market.
But the damage had been extensive. "The fire was so big we had to rebuild a temporary substation," he said.
De Rougemont said Holcim and PPC had also experienced problems.
Demand has been at record levels for the past two years. The country’s largest cement maker, PPC, expected demand to grow a further 12% this year on the back of a stronger economy.
"Cement makers are living hand-to-mouth," said an unnamed analyst who follows cement stocks, implying that they sold cement as fast as they could make it.
The analyst said plant capacity utilisation rates were at a record high at most facilities. This means cement makers are churning more cement out of existing plants than ever before.
Cement makers could cope with small technical problems when they had spare capacity, but these could have a debilitating effect when plants were running flat out, the analyst said.
PPC, Lafarge and Natal Portland Cement have unveiled plans to build new kilns, but the bulk of new capacity will only come on line from 2008.
Smaller initiatives were being undertaken in the interim to meet demand. For instance PPC has reopened its old Jupiter plant near Johannesburg.
De Rougemont said on Friday that his company had started importing klinker to its Richards Bay cement-making facility in a move that would expand its output by 250000 tons a year in the meantime.
Natal Portland Cement, the main supplier in KwaZulu-Natal, ran out of capacity some time ago and has started importing cement from Brazil.
PPC, believed widely to be the only cement maker with some spare capacity, said it was now filling some of the gaps by selling cement in KwaZulu-Natal.
The analyst estimated that PPC was using about 80%-85% of its capacity. He said the cement market was still "pretty much" at the beginning of an upturn in the cycle.
He believed demand for cement could continue to grow at double-digit figures for the next two to three years.
[Business Day]
Published under Cement News
