South Africa’s cement giants now have to face up to competition from the biggest new entrant to the sector since 1934.
This follows as JSE-listed Sephaku Holdings reported this week that its associate company, Sephaku Cement, had begun commercial production at its Delmas milling plant last week following a successful commissioning phase.
Production at the Delmas milling plant is expected to be ramped up to full capacity of 1.4 million tons a year by the middle of this year.
The Delmas plant is one of two major Sephaku Cement projects strategically located east of Gauteng.
Lelau Mohuba, the chief executive of Sephaku Holdings, said this had been a nine-year journey and the group was pleased to finally have its cement brand in the market.
“We are proud of Sephaku Cement’s highly experienced operational team for attaining this key milestone in being the latest entrant into the South African cement industry,” Mohuba said. “This is a demonstration of not only the extensive skills and experience of our management to bring the projects to account but the determination in establishing Sephaku Cement as a key player in the industry.”
Mohuba added that the commissioning phase had started at Sephaku Cement’s other major project, Aganang, an integrated plant located in Lichtenburg in the North West, and was on target for production by the second quarter of this year.
About R3.3 billion has been invested in establishing these new cement plants, which will have a total annual capacity of 2.2 million tons once they are fully operational.
Sephaku Cement previously indicated 200 permanent direct jobs would be created at the plants, while a further 600 indirect jobs would be created by outsourcing of its transport.
It believed its plants would be between 15 percent and 20 percent more efficient than existing plants in South Africa.
Sephaku Holdings owns 36 percent of Sephaku Cement, which is the core investment of the group. It recently acquired 100 percent of Metier Mixed Concrete. The remaining 64 percent of Sephaku Cement is owned by Dangote Cement, Africa’s largest producer.
The stated strategy of Sephaku Holdings is to generate growth and realise value for shareholders by developing building and construction assets in southern Africa.
The entry of a new player has resulted in PPC and Lafarge South Africa revising their strategies.
PPC is expanding into the rest of Africa with the target of generating 40 percent of its revenue from outside South Africa by 2017. It aims to have plants under construction by the end of the first quarter in the Democratic Republic of Congo, Ethiopia and Zimbabwe. A plant in Rwanda is due to come on stream in September.
Lafarge SA’s response has been to focus on providing more value-added products and solutions. To achieve this, it has been adapting its international products for the domestic market.