29 August 2017
PPC highlights import risk to Colleen Bawn plant 29 August 2017
Zimbabwe: PPC Zimbabwe has hinted that it may be looking to shut down its Colleen Bawn Cement plant in Gwanda, citing pressure from cheaper imported clinker as well as smuggled cement coming over the border. If it decides to close the plant, the move would represent a significant blow for PPC Zimbabwe and PPC’s wider activities outside of its native South Africa.
The management has appealed to the government for protection, stating that, unless measures are put in place to curb cheap imports, the firm risks losing its investment at Colleen Bawn. It estimates that a wider community of around 4000 rely indirectly on the plant for their livelihoods. The plant has been in operation for more than 70 years.
Country managing director Mr Kelibone Masiyane said, “The cost of production is very high in Zimbabwe when compared to the rest of the region. Our competitors are importing clinker at cheaper cost and they are jumping the production process. The biggest challenge here at Colleen Bawn is that we incur huge costs producing clinker and because of this there is a risk of closure of the plant and opting to import clinker as well.”
However, Masiyane expressed confidence that the engagements PPC Zimbabwe was having with the government would result in ‘fruitful’ interventions that would protect the firm and avert negative effects. He said that the company’s major cost driver was electricity costs, which are much higher than in neighbouring countries.
In response Deputy Minister Mabuwa said that the government appreciated the strategic economic role of the cement manufacturing sector and would address the plight of PPC. She concurred that, while cement was removed from the open general import license, continued clinker imports were having a negative effect on the value chain.
Egypt/Saudi Arabia: The Saudi Arabian Al Sharbatly Group is reported to be looking to invest up to US$3bn in Egyptian interests, including setting up a second clinker line at its South Valley Cement plant. Egypt’s Minister of Investment and International Cooperation Sahar Nasr said that he welcomed all investors in Egypt after meeting with Sheikh Abdel Rahman al Sharbatly and Sheikh Fahd Al Shobokshy to discuss ways to increase their investments in Egypt.
PPC / AfriSam merger talks in the balance 29 August 2017
South Africa: Negotiations between PPC and AfriSam, two of South Africa's biggest cement producers, about a potential merger have reached a make-or-break stage, according to local press, after AfriSam cancelled the heads of terms it had entered into with PPC back in February 2017.
Despite the cancellation of the heads of terms, AfriSam acting chief executive Rob Wessels said the company remained committed to pursuing a transaction and intended to submit a new proposal regarding a possible merger to PPC.
"AfriSam remains firm that a transaction between AfriSam and PPC will greatly benefit the stakeholders of both companies. For this reason, we continue discussions with PPC and will explore other alternatives available to us,” said Wessels. "It remains our belief that a transaction between the two companies offers the local cement industry an opportunity to develop a champion with the required scale, operational efficiency and balance sheet to enable further investment opportunities in South Africa and the rest of the continent."
However, PPC chairperson Peter Nelson said they had been involved in the negotiations for six months and there came a time when it was necessary to halt them. Nelson added that the negotiations would only continue beyond 1 September 2017 if the new proposal tabled by AfriSam was ‘of sufficient interest and attraction and fair to shareholders and warranted extending’ the negotiations. "We can't carry on forever,” said Nelson. “A lot of shareholders are frightened about the prospect.”
Cahya Mata Sarawak profit jumps up by factor of eight 29 August 2017
Malaysia: Cahya Mata Sarawak's (CMS) net profit jumped more than eight times to US$15.2m in the second quarter of 2017, from US$1.8m in the same quarter of 2016. The positive result was mainly due to lower handling costs, cheaper imported clinker and lower clinker production costs brought about by stable production and lower coal prices. The net profit for the six-month period was also higher by more than nine times at US$20.5m from US$2.1m in the first half of 2016. Total first half revenue decreased by 10% year-on-year to US$157.1m from US$174.7m.
Cement producers ‘waive’ inspection exemption 29 August 2017
Philippines: Three of the Philippines' largest cement manufacturers have offered to waive their exemption from inspection procedures for cement imports, which are currently required only from companies that just import cement. They sent a joint letter to the Trade and Industry Secretary Ramon Lopez via Ernesto Ordonez, president of the Cement Manufacturers Association of the Philippines on 24 August 2017. In the letter, Taiheiyo Cement, Cemex and Republic Cement state that they are willing to undergo the same shipment inspection procedures as the traders. Ordonez said the offer was aimed at fostering industry harmony and ensuring adequate supply for the Duterte government's infrastructure push.
However, Atty Vic Dimagiba, president of consumer group Laban Konsyumer, said it was misleading for Ordonez to say that the cement firms have offered to waive their import shipment privilege because the Bureau of Product Standards of the DTI has already come up with a draft Department Administrative Order that will require all cement importers to undergo inspection procedures regardless of the company’s status. Existing legislation had come under fire as it allowed double standards.