JSE-listed SepHold has commented on its recent share price rally and given an update on Dangote Cement SA’s (SepCem) kiln outage.
In an October 12 statement, SepHold noted that the National Treasury had issued a circular effectively banning imported cement in government-funded projects from November 4.
Importers of cement have increased their market share owing to the marginally higher pricing from local manufacturers, which incur additional, non-negotiable costs for legislative compliance such as the carbon tax, SepHold said.
The circular prescribes that all government institutions at all legislative levels and State-owned enterprises must stipulate in tender invitations that only South African produced cement will be permitted on all public sector construction projects from November 4.
The cement has to be produced with locally sourced raw materials, which is a condition that eliminates competitors that import clinker, SepHold said.
It said the National Treasury’s decision has resulted in a significant rally in its share price owing to the government-led 50 planned infrastructure strategic integrated projects (Sips) and 12 special projects as part of a drive to stimulate the economy.
Last week, the Infrastructure Fund reported that it had submitted four projects, collectively valued at R21-billion for National Treasury approval and will contribute R5.4-billion through finance from both public and private resources.
It claims that the projects have been approved by Infrastructure South Africa,
SepHold pointed out that it subsidiary, Métier Mixed Concrete, has a plant footprint well-positioned in three key geographic markets of Gauteng, Mpumalanga and Western Cape to compete for the supply of concrete into the Sips.
Moreover, it noted that SepCem produces bagged and bulk cement at its integrated Aganang plant, in the North West, and the Delmas grinding plant, in Mpumalanga, enabling access to all major inland markets.
Fellow cement producer PPC’s share price has also rallied this week on the back of the National Treasury’s announcement.
SEPCEM KILN MAINTENANCE
Meanwhile, SepCem on October 6 resumed production at its kiln, which was shut down for unplanned maintenance on September 30.
The cause of the plant outage was identified and remedied.
SepCem management has implemented several procedures to improve plant reliability and mitigate a reoccurrence. The kiln is running at operational capacity.