JSE-listed cement producer PPC has added Algeria to its $1-billion African project portfolio, with investments also advancing in Rwanda, Ethiopia, Democratic Republic of Congo (DRC) and Zimbabwe. The commissioning of the 600 000 t/y plant in Rwanda should begin later this year.

PPC CEO Ketso Gordhan tells Engineering News Online the feasibility study of the Algerian prospect is well advanced and that the company hopes to make an investment decision before the end of 2014.

The project is being planned for development near the north-eastern Algerian town of Sétif and, should it proceed, will be constructed by Chinese engineering, procurement and construction group Sinoma. Sinoma is also building the other four projects, where PPC has engaged Holtec and/or Ercom, both of India, as project managers.

Algerian cement demand is estimated at 22-million tons a year and PPC has entered the market through the acquisition of a 49% interest in the Hodna Cement Company, which has been investigating the development of a 2-million-ton-a-year facility.

“We are pretty optimistic that we will be on site by the end of the calendar year,” Gordhan reports.

The plant will be funded through a combination of debt and equity and, as with the other African projects, will be pursued with indigenous partners.

PPC aims to retain a majority stake in all the projects and has managed to achieve that goal in all instances barring the Ethiopian plant, where the company is hoping to gain majority control over time.

Development finance institutions PTA Bank and the International Finance Corporation (IFC) are backing some of the projects, where debt typically comprises about 65% of the overall capital costs. The IFC is also taking up an equity position in the DRC project.

The push into Africa comes amid flat demand conditions in PPC’s home market of South Africa, where cement sales for the six months to March 31 were negatively affected by the platinum strike and by heavy rains during the period.

Gordhan reports that sales in the North West province, where many of South Africa’s platinum mines are located, fell by as much as 25% during the period and were not forecast to recover strongly in the near term.

The group’s total cement sales volumes improved by 2% for the period, however, while revenue increased by 9% to R4.2-billion. Headline earnings a share rose 50% to 96c, but operating margins contracted.

“We feel very vindicated in choosing the African expansion strategy based on what is happening in the South African market,” Gordhan says.

However, he believes domestic conditions should improve in the second half and anticipates that South African sales for the year could be similar to those achieved in 2013.