South African cement sector is operating in survival mode

Bheki Mthembu, head of the inland business unit of PPC, says the lack of large-scale construction projects in South Africa has left cement producers heavily dependent on residential construction.

"The sector has had issues for a while and government needs to support us through infrastructure maintenance and other projects. We were in survival mode and COVID-19 almost served as the final nail in the coffin," said Bheki Mthembu.

"There is a very small piece of cake that everyone is fighting for, the demand is less than the supply. Most of our cement goes to retailers and then local builders, but we still cater to larger companies when bulk deals are required," he said.

South Africa has seen its cement and construction sectors reduced by more than half since the 2010 FIFA World Cup when it supported 250,000 jobs. While the Level 5 government lockdown restrictions brought industry to a standstill in March, cement production restarted in May under Level 4.

However, construction was still prohibited and local stores had shortages of cement when they were allowed to open with restrictions being reduced to level 3 in June. The price of cement also rose sharply from ZAR80 (US$4.77) to ZAR120-150 (US$7.16-8.96) in June as cement producers had difficulties sourcing raw materials to produce sufficient cement.