ANTICIPATED IMPROVEMENT The recovery of the construction industry is expected to have a positive effect on the aggregate and sand industry
The construction industry is showing signs of recovery, with expected government infrastructure expenditure, retail developments and residential building projects set to lift the industry considerably above last year’s level, says the Aggregate and Sand Producers Association of Southern Africa (Aspasa).
Aspasa notes that the number of building plans passed is rising steadily, with banks’ high availability of mortgages indicating that 2015 will be a good year for construction.
The recovery of the construction industry is expected to have a positive effect on the aggregates and sand industry, which accounts for more than 11% of all building materials sold by value in South Africa, says Aspasa.
“After cement, our products make up the largest value of building products sold in the country. By volume, we are the largest, moving well over 100-million tons of material to the building industry each year. Our members supply products for use in the manufacture of concrete, the building of road foundations and running surfaces, as well as providing stones for railway line ballast,” notes Aspasa director Nico Pienaar.
“[Following a volatile period, 2015] looks better, with good growth being indicated in the residential market, especially [in terms of] affordable housing. We are also expecting to see more confidence returning to the construction sector, which will have a positive effect on our industry.
“When government releases the funding for its R800-billion infrastructure projects, we will see further growth and this should sustain the expansion of the aggregates industry, fuelled by large-scale construction which requires large [quantities of] sand and aggregates,” says Pienaar.
A report compiled by BMI Building Research Strategy Consulting Unit indicates that South Africa’s inflation rate is to remain stable and that large construction firms are not committing to certain market segments that are deemed less feasible or critical to their future sustainability.
Growth is being sought outside the country’s borders and it is reported that some of the largest construction firms are generating up to 60% of their revenue offshore.
As a result of lower demand for building material, suppliers are currently being underused and there is spare capacity in these operations. Expansion plans have also largely been put on hold.
However, the National Deve-lopment Plan includes plans to build 1.5-million houses in the next six years, and a yearly investment of between R30-billion and R35-billion has already been allocated for this purpose.
Other well-documented plans to upgrade and expand road, rail, power generation and other infrastructure will further unlock the construction industry and will result in the full use of resources and expansions being undertaken once again wherever these are required.
The labour-intensive nature of quarries and the further processing and transport of materials are a major contributor to employment in the country and, therefore, growth of the industry can have an overwhelmingly positive effect on overall employment figures in South Africa, he adds.
“[A construction recovery] is considered a welcome boost for the [quarrying] industry and will have positive spin-offs for its large workforce and related industries.
“Overall, we are satisfied that the sand and aggregates industry in South Africa is in good shape, considering the challenges that it has been faced with in recent years. We believe it is a good time to invest in the industry, just in time to benefit from expected faster growth in the industry,” Pienaar concludes.