Jul 25, 2012
PPC, IDC buy $21m stake in Ethiopian cement companyBack
Addis Ababa|Construction|Engineering|Expertise|Africa|Cement|Habesha Cement Share Company|Industrial|Industrial Development Corporation|Africa|Democratic Republic Of Congo|Ethiopia|Kenya|South Africa|Tanzania|Zambia|USD|HCSCo Plant|Building|Cement|Cement Plant|Development Finance Institution|Product|Paul Stuiver|Operations
© Reuse this
PPC, which is aiming to earn as much as half of its revenue from outside South Africa in the next few years, would spend $12-million cash to secure 27% of Habesha Cement Share Company (HCSCo).
The IDC, South Africa’s State-owned development finance institution, would simultaneously invest $9-million for a 20% stake in HCSCo, which is building a 1.4-million-ton cement plant at a cost of $130-million near Addis Ababa.
“We are on record that our strategy is to grow our revenue earned outside South Africa to between 40% and 50% during the next few years and that we have been working on various opportunities on the African continent. This is one of those opportunities,” commented CEO Paul Stuiver.
PPC currently generates about 20% of its revenue outside South Africa, and the Ethiopian investment – its first foray into the East African cement market – is estimated to take that to 25%.
Speaking to Engineering News Online, PPC corporate strategy and communications executive Kevin Odendaal noted that Ethiopia’s gross domestic product growth was forecast at about 8%, which boded well for cement demand.
He said PPC would continue to focus on its strategy of growing its presence in other African countries, “going up the spine of the continent”.
“We are looking at Zambia, the Democratic Republic of Congo, Kenya, Tanzania, as well as Uganda and Rwanda.”
Construction companies are increasingly looking at opportunities in the rest of Africa, as growth slowed in South Africa.
Citing industry statistics, which showed that the first quarter was up just over 6%, Odendaal said that there was still positive momentum in South Africa. “We saw this carried through to the end of June and would have to see how the market does going forward.”
Meanwhile, PPC reported that the HCSCo plant was in the early stages of construction with first cement production planned for the first half of 2014. The plant’s future development plan includes an option to double the capacity to 2.8-million tons a year.
During the initial construction phases, PPC would assist HCSCo by providing operational and technical expertise and with the training of plant personnel at its operations and in the PPC Academy in South Africa.
In addition to the equity investments by local shareholders, PPC and the IDC, HCSCo has secured $86-million debt financing from the Development Bank of Ethiopia.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Updated 2 hours 15 minutes ago China appears to have been routinely underestimating output from its sprawling steel sector, with official figures for last year alone 40-million tonnes below a key industry estimate - an amount equivalent to Germany's entire annual production. Beijing has vowed to...
Recent Research Reports
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
This Week's Magazine
South Africa remains an important manufacturing and export platform for Ford Motor Company, says executive chairperson Bill Ford. However, he adds that other countries on the continent are “becoming interesting”, and that the US carmaker is casting its net wider for...
Germany’s Max-Planck-Society (MPG) and the Max-Planck-Institute for Radio Astronomy (MPlfR) are investing €11-million (about R150-million) into South Africa’s MeerKAT radio telescope array programme. The money will be used to design, build and install S-band radio...
Infrastructure spend in sub-Saharan Africa will grow from $70-billion in 2013 to $180-billion by 2025, says PwC capital projects and infrastructure Africa leader Jonathan Cawood. This is one of the findings of PwC’s Capital Projects & Infrastructure report on East...
Private-owned defence and aerospace manufacturer Paramount Group and the Ichikowitz Family Foundation unveiled its Anti-Poaching Skills and K9 Training Academy in Magaliesburg last month.
The inclusion of Bluetooth to provide sub-three meter accuracy and heightened functionality for users is one of the ways to change existing wireless networks into engagement networks. An engagement network differs from common wireless networks in that it enables the...