Pretoria Portland Cement Co Ltd (PPC), one of South Africa’s largest cement producers, plans to begin a 1Mta four-year capacity expansion project valued at an estimated R750m, due to the combination of rising recent and future expected cement demand growth and the planned retirement of older PPC production lines.
PPC said its board had approved the expansion project for the inland region of South Africa, with the first phase of planning set to begin during the financial year to end-September 2005.
This phase would involve capital spending of R6 million, including the scoping of the project and the updating of equipment prices to ascertain the total project cost.
The project would most likely be a "brownfields" project - involving an expansion of an existing facility - with an estimated present-day value of R750m, the company said.
The expansion project and its cash flow would most likely span the 2006, 2007 and 2008 financial years.
Commenting on the announcement, PPC CEO John Gomersall said: "The recent rise in fixed investment in the South African economy, together with our government’s commitment to raising the future level of fixed investment to 25 per cent of GDP, is very encouraging and essential for the higher economic growth that the country requires to create much needed jobs.
“Since 2000, through our global competitiveness programme and better utilization of existing capacity, we have been able to improve returns to acceptable levels. This was an important factor in this decision given the capital intensity and demand volatility of the industry.
“It has given our board the confidence to invest in the modernisation and expansion of capacity and will ensure that we continue to play our part in South Africa’s economic development," Gomersall concluded.