On-The-Air (29/04/2016)

29th April 2016

By: Martin Creamer

Creamer Media Editor

  

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Every Friday morning, SAfm’s AMLive’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly.  Reported here is this Friday’s At the Coalface transcript:

Kamwendo: South Africa’s oldest cement company is looking to Africa to double in size every ten years.

Creamer: Yes, that is PPC, established in 1892, a pioneer in South Africa. Now it wants to pioneer in Africa and it sees itself as being more than just cement in Africa. It has just opened a new cement plant in Rwanda and by the end of this year it should have opened a cement plant in the Democratic Republic of Congo. Also, by the end of the year its Zimbabwe mill will be moving and shaking. Then it will go into Ethiopia and by mid-2017 it will have a cement plant there.

It means business in Africa, it has moved in there and it is already in Botswana. Now it is saying that when you go into Africa you can’t just be cement, as it is here. It feels a bit cement-heavy here, although it is in aggregates, when you go into Africa they are already seeing other opportunities, even to the extent of retail.

We know how well the retailers of building products are doing at the moment. Cement companies in South Africa are saying that it is not their best moment at the moment; they find that the building material retailers are doing well. That is an interesting aspect that has been raised by PPC.

They say, traditionally, the big cement companies have looked at big infrastructure. All of a sudden you find a lot of demand has been driven by very small people. People are going in and buying a couple of bags of cement wanting to build a new room for granny who is coming over or the baby that is on the way. Amazingly, that all adds up to something substantial.

PPC is waiting for the big infrastructure push in South Africa as well. Between those two drivers it will be doing well in South Africa. In the meantime, it is looking earnestly into Africa to expand where it is not even averse to mining, because it has got to be on the limestone deposits. So it is looking where big cities will be and exploring for limestone around there, so that it can be close to these big urban developments.

It will even mine coal if necessary and gypsum, because it finds that, in Rwanda for instance, gypsum is far more expensive, because it has to import it, whereas in South Africa that is really negligible. It is going to be an interesting spread of activities by PPC Cement.

Kamwendo: A black-led mining junior has stepped up to the plate to buy Highveld Steel’s vanadium assets.

Creamer: That is Bushveld Minerals and it is led by Fortune Mojapelo. He is down the road in Illovo, here in Fricker Road, Johannesburg. Of course, Bushveld Minerals is listed in London on the Alternative Investment Market and Mojapelo has now got an exclusive arrangement with the business rescuers of Evraz Highveld Steel. As you know, Evraz was the Russian side of Highveld Steel. The Russians came in under Roman Abramovich – the same person who owns Chelsea Football Club, in England. They came in and took over Highveld Steel and became known as Evraz Highveld Steel, but it hasn’t been successful and has gone into business rescue.

The initial idea was that the business rescuers will sell it holus bolus to a new buyer that was thought to come from China. That fell through. Now the business rescuers are parcelling it off in various pieces and one of the pieces is the vanadium piece that Bushveld Minerals says can be transformational for its company. They are already in vanadium and also in titanium, iron-ore and coal. They have been quite intense around vanadium and they have got an operation already in Brits. They have also done deals on the vanadium battery side so they are really looking to create a good vanadium platform. That is why they are so keen to take over this 473-employee vanadium mine and plant, which will be synergistic with the business they have been building up and have got an exclusive time now to do a due diligence and put down a big deposit of $500 000 while they look around.

They are hoping that this will end up in an acquisition by Bushveld Minerals of the vanadium side of Evraz Highveld Steel, known as Vemetco.

Kamwendo: The export of vehicles from South Africa has become a crucial contributor to this country’s balance of trade.

Creamer: The export of vehicles from South Africa has been an amazing success story. In the last two decades the growth of exported vehicles has been in compound terms 19%, nearly 20% a year. We assemble those vehicles under various big names, Mercedes, BMW and Ford, but it is not like a one-way ticket. They also export out of here and it also not only the right-hand drive it is also the left-hand drive.

It is not just the weak rand that earned it in the latest statistics that have come out for 2015 – R152-billion we pulled in and it is 30% higher than in 2014, which is a remarkable story. It is not just the weak rand, because if you look at the statistical period, during that period the rand actually strengthened against the Euro. Most of these vehicles have gone to Germany, in fact, a lot of them to 27 European countries, 140 countries in all, 30 of those countries doubled their imports. That is something we can really expand on.

The biggest exporter of all individually was Mercedes from East London with the C-Class Mercedes. But, when you think that we only have 0.68% of the world market, this should give us an opportunity to at least get 1% and get our foot in the door.

Interestingly, this model, which we have got in South Africa, the model of assembling cars and also exporting and importing, gives us that broad base and allows us to export duty-free to Europe. The big car manufacturers like Ford, GM, Nissan, BMW, Volkswagen and Toyota have got together and formed an African Association of Automotive Manufacturers, because they say, besides South Africa, there are a few assemblers like Morocco and Egypt. There is nothing on the east and west.

What about Kenya, which imports so many second-hand cars? What about Nigeria, where the smuggling of second-hand cars from Benin into Nigeria is huge? I think Nigeria is the only population with 100-million people without a car assembly plant. They are looking at going into the countries, first persuading the governments to create a legislative environment, because that is important. They say without the development incentives that they get in South Africa it will be a non-starter. They are looking at getting that legislative framework done in perhaps a place like Kenya and Nigeria and then repeating what has happened in South Africa in those areas, obviously for different markets.

This way, South Africa can be industrialised. An important way which has benefited South Africa now at a time where we need that foreign exchange. Last year R152-billion, 30% more then the previous year.

Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.

Edited by Creamer Media Reporter

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