PPC announces R1.36 billion Batsweledi cement capacity expansion project.The board of the company has approved the investment of R1.36bn to increase the company"s inland cement capacity in South Africa by just over one million tons per annum. The additional capacity will supply both future demand growth in the South African cement market and the eventual replacement of capacity from older production facilities which will be retired when market conditions allow.
The announcement follows a year of detailed feasibility studies following an initial public statement in August 2004 which said "In the light of recent and future anticipated cement demand growth, and the planned future retirement of older PPC production lines, the PPC Board has resolved to commence with the planning for and broad approval in principle of a 1Mta cement capacity expansion project for the inland region of South Africa."
Some R1.23bn will be invested in the installation of a new kiln line and related infrastructure at PPC"s existing Dwaalboom cement factory, which is situated in Limpopo Province on the border with the North West Province. A further R130 million will be spent recommissioning and upgrading the existing cement milling facility at the Jupiter factory in Johannesburg.
Commenting on the announcement, John Gomersall, CEO of PPC said: "We recognized the growth potential of the South African market 4 years ago and developed a 20 year expansion and modernization plan. Demand has grown faster than anticipated supported by the strong economy with booming housing construction fuelled by lower real interest rates. Looking forward, we expect the private sector demand to be enhanced by increasing public
Sector infrastructure investment.
Even taking into account the higher levels of demand growth, we believe this new capacity will allow us to meet the cement needs of our South African inland customer base. In the coastal areas, our major focus is in the Western Cape where we currently have sufficient capacity at our two factories to supply anticipated growth in demand until about the end of the decade.
In the Eastern Cape, we successfully rose to the occasion to supply all the cement to the massive Ngqura Harbour which is now nearing completion. This project follows our announcement in May this year to invest R50 million to re-commission the 550 000tpa Jupiter factory in Germiston, south of Johannesburg. Work on that project is well advanced and the factory will come back on stream during March/April 2006. It will provide the market with additional security of supply over the two and a half year construction and commissioning period of the Batsweledi project.
"We intend financing the project through a combination of operating cashflow and borrowings. Looking to the longer term, our balance sheet is very strong and will ensure that we are in a position to invest to meet the growing cement requirements of our customers well into the next decade."