Displaying items by tag: PPC

South Africa: PPC has said that it may issue a rights offer for US$68.7m-worth of shares in order to raise funds to ‘repay and restructure debt locally and in other African markets, and to refinance after the economic effects of the Covid-19 pandemic.’ Pretoria News has reported that PPC has forecasted a 20% year-on-year drop in earnings in the year to 31 March 2020 due to ‘a slump in domestic demand and an influx of cheaper Chinese imports, even prior to lockdown.’

Rwanda: Cimerwa says it has received approval to list its shares on the Rwanda Stock Exchange. The move is part of the strategy by the government to sell its stake in the cement producer, according to the New Times newspaper. The government and its related shareholders own a 49% stake in the subsidiary of South Africa-based PPC.

Company chairman Regis Rugemanshuro said that the company had decided to continue with its plans despite the coronavirus pandemic. The announcement has been made while Cimerwa is supplying cement to a large government tender to build new schools. The cement producer added that, “Supply to this project is progressing smoothly with the company’s production currently being robust at close to design capacity.”

South Africa: PPC says that pent-up cement demand post-coronavirus lockdown has enabled year-on-year sales growth “in double digits” for the company in June 2020. Sales volumes also rose, by a single-digit figure. PPC said, “This recovery is mostly driven by the absence of imports, which has given an opportunity for local producers like PPC South Africa to grow.”

In May 2020 PPC recorded sales between 30% and 35% lower than in May 2019.

Rwanda’s newest cement grinding plant is set to start commissioning at a great time. Last week Milbridge Group subsidiary Prime Cement said that its 0.6Mt/yr grinding plant in Musanze, Northern Province was preparing to start up in August 2020. This week the main local producer, Cimerwa, announced that it was setting standardised cement prices in an attempt to control speculation in the market following a shortage. According to local press, spikes in prices have been caused by an urgent supply tender from the Ministry of Education, which has started a large-scale project to build over 20,000 classrooms. Prime Cement is unlikely to make a difference to this particular shortage but its timing is spot on.

Graph 1: Cement production capacity/population of East African countries. Source: Global Cement Magazine & Global Cement Directory 2020.

Cement price surges in land-locked African countries crying out for construction materials are not new but it’s always illuminating to review how the situation is changing. Rwanda’s sole 0.6Mt/yr integrated plant is run by Cimerwa, a subsidiary of South Africa-based PPC, near Bugarama in the south-west of the country, close to the borders with Democratic Republic of the Congo (DRC) and Burundi. The new grinding plant is located in the north-west near the borders with DRC and Uganda. It will join another grinding plant run by Kenya’s ARM Cement at Kigali.

PPC’s operation in Rwanda has performed well in comparison to a poor market back home in South Africa. For its financial half year to September 2019 Cimerwa reported revenue growth of 28% year-on-year to US$31.2m due to a 20% increase in sales volumes. Earnings rose even more in percentage terms due to higher volumes and an improved cost per tonne performance, likely due to a debottlenecking project. More recently, PPC said that its operations in Rwanda were disrupted in April 2020 due to a coronavirus lockdown that started in late March 2020. It partially resumed operations in the second half of April 2020 with cement sales volumes for the month expected to be 15 - 20% of those in April 2019. The other point of note is that the Rwandan government was trying to sell its minority share in Cimerwa in mid-2019 but nothing has been publicly announced since then. However, Cimerwa was reported as being in the process of listing on the Rwanda Stock Exchange in May 2020.

Rwanda’s other grinding plant at Kigali has had problems with its parent company in Kenya. ARM Cement went into administration in mid-2018 and its assets have gradually been sold off since then amidst legal wrangling. It has also had ongoing operational issues with interrupted production due to clinker and coal shortages caused by import issues with Tanzania. An attempt to sell the 0.1Mt/yr grinding plant in September 2018 failed when an auction didn’t even reach one tenth of the estimated market value of US$1.4m. The plant was still reportedly on sale in May 2020.

The new Prime Cement grinding plant will have a production capacity of 0.6Mt/yr. It has been supplied by Denmark-based FLSmidth. At the time that the order was announced in 2017, the supplier said it was the first OK vertical roller mill to be supplied in East Africa and the first full-scope grinding plant in Rwanda. The project had a cost of US$65m. A second phase was also mentioned at the time of the initial announcement that might include upgrading the grinding plant to a fully-integrated one at a later stage. Time will tell. In the meantime though it will be interesting to see whether the new plant has the same raw material issues that ARM’s Kigali Cement has had. One potential source of clinker is the integrated Hima Cement at Kasese in Uganda. Bamburi Cement reported in May 2020 that its Hima Cement subsidiary in Uganda was unable to ‘access’ the market in Rwanda in 2019 due to ongoing trade problems across the Rwanda-Uganda border.

Rwanda’s cement consumption has been reported to be 0.7Mt/yr so a new combined national production capacity of 1.4Mt/yr seems likely to create significant exports. Other countries in the region have also noticed what’s going on in Rwanda and want to do likewise. In June 2020 DRC’s Industry Minister Julien Paluku talked up plans of reviving the 0.3Mt/yr state-owned National Cement Plant (CINAT) in Kimpese. He noted that DRC has been partly reliant on cement produced by Cimerwa in Rwanda, which has been serving a combined demand of 900,000t/yr in DRC and Burundi.

A statistic that received a fresh airing this week was one from the World Bank in 2016 that worked out that the price of cement in Africa was on average 183% higher than the global average. It popped up in a news article about the expanding Nigerian cement industry but it applies to the whole continent. While it continues to hold true, exports will boom and plants will keep being built in the places that exports can’t reach.

South Africa: Cement plants were working at roughly 50% of the capacity utilisation level in June 2020 compared to that in June 2019 following the restart of production due to the relaxing of the coronavirus lockdown to Level 3 from Level 4 on 1 June 2020. The Sunday Tribune newspaper has reported that a construction slowdown is behind the decision to scale down production.

PPC head of inland business Bheki Mthembu said, “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. The lack of large-scale construction projects has left the industry heavily dependent on residential construction. Government needs to support us through infrastructure maintenance and other projects. We were already in survival mode; Covid-19 has almost been the final nail in the coffin.”

Zimbabwe: PPC Zimbabwe has announced that it has entered into a preliminary agreement with a Zimbabwe-based energy investor “with technical partners in South Africa” that will build and operate the company’s planned 32MW solar power plant in Matabeleland South. 16MW will power PPC Zimbabwe’s cement production and the rest will be fed in the national electricity grid, according to the Herald newspaper. The unit will be located adjacent to PPC Zimbabwe’s 0.5Mt/yr integrated Colleen Bawn plant.

Botswana: PPC Botswana has taken up a slogan of the Botswana government in encouraging Botswanans to “Buy Botswana” in order to reduce their import bills and utilise local suppliers post-coronavirus lockdown. The Sunday Standard newspaper has reported that, after the economy shrank by 13% since the start of the coronavirus lockdown, PPC announced that it would “continue engaging with more stakeholders on the road to economic recovery.” Regarding the possibility of layoffs in the company, PPC Botswana managing director Tuelo Bolthole said, “The situation is still very fluid, therefore it is difficult to tell whether it will reach that point. We however believe that our workforce is an important asset.” The company is currently producing cement at 100% of its capacity in anticipation of pent-up demand.

South Africa: PPC has reported a predicted 95% year-on-year decline in its sales of cement in South Africa in April 2020 due to the impacts of the coronavirus. Sales in Rwanda and Zimbabwe, where production resumed in mid-late April 2020, are expected to decrease in the month by 80-85% year-on-year.

PPC says that PPC South Africa is preparing to resume production in line with the government’s risk-based regulations announced on 25 April 2020. The group said, “The uncertainty around the further development of the containment of the coronavirus makes it necessary for PPC to work with various scenarios.”

With events moving fast in Europe with regard to the on-going health crisis, here are a few threads to consider from the cement industry news this week.

Firstly, there have been two solar power stories over the last week in North America. Grupo Argos said that it had installed a 10.6MW solar power plant at Cementos Argos’ Piedras Azules cement plant in Comayagua. Then US-based Alamo Cement Company was reported to have signed a contract with Renergetica to build a solar power plant at its integrated plant in San Antonio, Texas. Global Cement has looked at this topic on and off over the years from the steady addition of photovoltaic (PV) solar plants around the world to supply electricity to cement plants to more ambitious plans such as research into using concentrated solar power to start powering creating clinker directly. These two latest PV stories follow projects in El Salvador and Cyprus so far this year. We’re not going to comment now on the overall progress the cement industry is making towards moving away from fossil fuels but the general trend is encouraging.

Next, there are on-going investments and upgrade projects being announced. Germany’s KHD revealed on 17 March 2020 that is building a new raw mill and pyroprocessing line for an ACC plant in India. FCT combustion recently announced that it has won a deal to supply Titan Cement in the US with an upgrade to a kiln line to natural gas. Buzzi Unicem’s SLK Cement in Russia has agreed to co-process solid municipal waste at its Sukholozhskcement plant. South Africa’s PPC has invested in a pneumatic offloading facility and a silo for its George Depot cement terminal in the Western Cape. These will have likely been agreed before the global coronavirus outbreak but they are reminders that some level of capital expenditure by cement companies is happening.

In China the Ministry of Industry and Information Technology (MIIT) said this week that the domestic cement sector’s net profit grew by 20% year-on-year to US$26.6bn in 2019. With this in mind the first quarter results for 2020 from cement producers in China will make essential reading for producers from elsewhere around the world wondering what to expect. However, a recent interview with the president of Huaxin Cement, a company based in Hubei province at the epicentre of the outbreak, revealed that despite the short term economic disruption from the quarantine the company was expecting a rapid economic rebound after April 2020 provided that there is a suitable government stewardship. He also mentioned the key role the company was playing in disposing of clinical waste. As such it was hoping for tax breaks to support continuing incineration and the advancement of co-processing in general.

Finally, also on the health crisis, many cement industry events have been cancelled or postponed as work practices change including those organised by Global Cement. We’re taking our events online in the short term as virtual conferences with opportunities for information exchange and networking. We encourage as many of you as possible to register.

South Africa: PPC has reported that it has invested US$548,000 in the construction and installation of a pneumatic offloading facility including a 250t silo at its George Depot cement terminal in the Western Cape. The company said that this ‘allows the business to receive cement by rail, improving its turnaround to customers without compromising quality.’