Cement producers in scramble to lift output

Cement producers in scramble to lift output
Published: 20 May 2005

There is no cement shortage in SA, as some have suggested, but there will be one if action is not taken now, Barloworld CEO Tony Phillips said last week.  Two of SA’s four big cement makers have already sprung into action, but the other two have yet to say how they will respond to the need for added volume.  Growth in demand for cement has continued to outpace forecasts this year, leading PPC - a Barloworld subsidiary and SA’s largest cement maker - to revise its forecast for demand growth this year to 8-10 per cent, from 6-8 per cent.  Demand in South Africa jumped 17.4 per cent to more than 10Mt last year over 2003. 

KwaZulu-Natal’s biggest supplier, Natal Portland Cement, was the first to respond to the call for increased capacity. Faster than expected growth forced the cement maker to import last year to augment its supply.  The company is adding 600,000tpa at a cost of about R700m by building a new kiln in KwaZulu-Natal, due to come on stream in 2007. 

MD Piet Strauss says Natal Portland Cement expects the cement market to "grow quite strongly" for the next five years.  PPC has a project in the pipeline to add 1Mta to its capacity. It is still deciding whether or not to proceed with these plans, which will cost a minimum of R750m. 

PPC is widely expected to pursue a large-scale expansion project in the next year or two to help maintain its market share. It says it expects to make a decision in the third quarter of this year. 

PPC says it will recommission its Jupiter factory south of Johannesburg at a cost of R50m, and is bringing a number of mothballed kilns, notably in North West, back into production. 

These projects will put more than 550,000t more into the regional market, which produced about 12Mt last year. 

French company Lafarge’s CE, Frederic de Rougemont, says his company is working on plans to expand capacity. As yet Lafarge has no firm plans, but is bullish about growth in demand. Holcim is also reviewing its capacity.  While there is no shortage of cement, shortages of other building materials may hamper growth in cement sales, PPC says. 

The latest data released by the Cement and Concrete Institute show that sales in the Southern African Customs Union - made up of SA, Botswana, Lesotho, Namibia and Swaziland - continued to soar off last year’s substantially increased base.  Sales in the union were 25 per cent higher last month than the previous April, its figures show.  On the back of favourable economic growth forecasts and lower- than-expected inflation levels, the institute says, SA’s residential building sector is set to enjoy boom conditions this year and next. Government’s infrastructure development plan and Soccer World Cup preparations will also boost demand for cement.