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Apr 02, 2010

Development of Sephaku Cement plant expected to start before June

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South African cement producer Sephaku Cement is preparing to begin construction on a new cement plant near Lichtenburg, in North West province, which is said to be underpinned by expectations that demand for cement from the local construction industry will begin to grow again.

Sephaku Cement commercial manager Duncan Leith says that construction of the plant is expected to begin in the first half of this year.

The construction of the Aganang project, in the North West province, as well as construction of a new cement grinding facility, in Delmas, Mpumalanga, has been contracted out to Chinese cement plant supplier Sinoma International Engineering on a fixed-price turnkey basis.

Sephaku Cement reported earlier this year that it had appointed Nedbank Capital as the lead arranger of the project finance facilities for the new developments. Leith says that the company has ensured that all other project components are in place so that, once funding has been finalised, construction can begin. The company is in the final stages of securing the required equity.

Supporting infrastructure for the plants, such as roads, water supply and electricity supply, has been developed. Most notably, a power supply agreement for the plant in the North West province has been reached with State-owned power utility Eskom, which will start installing a power line for the plant in the very near future. The plant will require 35 MW of the 45 MW of electricity supplied through the line and, Leith says, the excess capacity can be used to supply power to surrounding communities.

He adds that all the required regulatory approvals are in place for the projects, including the environmental-impact assessments, new-order mining rights and the corporate work permits for Chinese workers being brought in by Sinoma for the project.

Both projects will have the capacity to produce 2,2-million tons a year of cement, with roughly half the cement grinding taking place at the Delmas plant. Leith says that, although industry cement volumes are not currently being made public, it is likely that demand for cement will exceed supply capacity in the next few years.

He adds that the company calculates its capacity based on clinker production combined with extender volumes, which is a more accurate appraisal of actual cement capacity than basing total capacity on milling only, which tends to be the figure quoted in the public domain. This said, the 2,2-million-ton-a-year capacity at the Sephaku plants will have considerable “overtaking” milling capacity.

Engineering News reported earlier this year that Sephaku Cement forecast that cement demand would grow by between 3,5% and 4% a year from 2011 onwards, resulting in a total local demand of between 16-million and 17-million tons a year by 2015.

“Our entry into the market is going to contribute positively to the industry, and it is going to add value to the economy because demand will be there, which would otherwise have to be satisfied through uneconomical imports,” concludes Leith.

Edited by: Martin Zhuwakinyu
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