A major South African manufacturers’ association came out swinging this week, raising what it sees as the alarm over decline on the horizon for the nation’s cement plants. Philippa Rodseth, the Executive Director of Manufacturing Circle, said that West China Cement’s (WCC) acquisition of AfriSam risked creating a pan-southern African cement giant that would likely cause South African capacity to close in favour of imports from cheaper markets abroad. A quick look at Manufacturing Circle’s website reveals its three main aims: to advocate for a competitive manufacturing environment; to attain a proactive international trade position, and; to advance the reputation of South African manufactured products.1 The association, which represents many South African manufacturers across a range of industries, clearly feels that the ongoing acquisition is against all three of these.
Rodseth’s point of contention seems to be that WCC, having attained AfriSam’s South African assets, will systematically import cement from its plants across South Africa’s borders, particularly those in Mozambique. As part of the Southern African Customs Union (SACU) and Southern African Development Community (SADC), Mozambique enjoys zero tariffs for cement exports to other members, including South Africa. With lower production costs in Mozambique, one does not need too much of an imagination to see what might unfold. If WCC can use its combined assets effectively, it will gain a price advantage over producers that operate in South Africa. With South African capacity utilisation floating at around 60% so far in the 2020s,2 something will have to give, most likely smaller producers that have already fended off cheap imports from Asia, particularly Pakistan, Vietnam and China, for much of the 2020s. Some periodic relief has been provided by anti-dumping duties on cement from these markets – as has been covered in depth in this column over the years - but this is simply not possible in the case of SACU members.
Speaking in unison with Philippa Rodseth was Matias Cardarelli, CEO of South Africa-based cement producer PPC. He said this week that WCC was already operating an import business into South Africa from its Mozambique operations. "The proposed acquisition (of AfriSam by WCC) raises serious concerns for South African local production, with AfriSam downsizing its production in South Africa and moving production to Mozambique, where WCC has significant spare capacity. It will become a distribution platform for Mozambique-produced cement,” he said. Cardarelli seems to suggest that WCC’s long-term play is to mothball its own capacity in South Africa, stating “This transaction creates strong incentives to abandon local manufacturing. Clearly it is cheaper to produce cement in Mozambique and sell it in South Africa with no tariffs." Perhaps he is concerned that, after a few years - and after a few of its competitors’ plants have closed - WCC will re-start its own South African cement plants, effectively cornering the market.
Given Cardarelli’s concerns, it is interesting to see that PPC itself has signed an agreement this week with Sinoma Overseas Development to collaborate on efficiency improvements and possible expansion of its capacity in Zimbabwe. The two companies will enhance operational efficiencies at PPC Zimbabwe, while also assessing the feasibility of constructing a new integrated cement plant in the country. In a statement, Cardarelli said that this is about enhancing PPC’s role in Zimbabwe.
Back to South Africa, it is important to note that, despite its current low capacity utilisation rates, South Africa will need a lot more cement in the future. A 2025 report from iMarc forecasts a 5.2% compound annual growth rate between 2025 and 2034, taking the value of the market from US$3.0bn to US$4.9bn.3 This will be driven by rapid population growth and an increasing demand for meaningful infrastructure development. What this means for volume is unclear but, given that production is currently around 12Mt/yr, the country could be looking for an extra 4-6Mt/yr of cement within the next eight years. Coincidentally this figure takes us close to 20Mt/yr, its current capacity according to the Global Cement Directory 2026.
By pretending that South Africa is an island, Manufacturing Circle appears to be shouting into the void to some extent. It was possible for manufacturers to cry foul when cement is being dumped en-masse from Asia and the government did eventually step in. However, the emerging dynamics within the SACU present an entirely new risk for cement producers that consider South Africa to be a core market. In the face of this, local producers would do well to reposition themselves: Diversify energy sources, particularly with captive renewables and alternative fuels; Increase efficiency through digital transformation and AI and; Contain costs to try and manage increasing pressure on margins.
A new front is opening in the battle for the South African cement market, one that will be considerably more lucrative in the coming decade or so. We watch with continued interest.
1. https://www.manufacturingcircle.co.za
2. https://www.globalcement.com/news/17795-cheap-imports-threaten-local-cement-industry
3. https://www.imarcgroup.com/south-africa-cement-market
