PPC, Sephaku shares soar as imported cement is prohibited from use in state projects
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CAPE TOWN: The share prices of the listed cement makers, PPC and Sephaku, long struggling against low priced imported cement, increased sharply yesterday morning after foreign-made cement was prohibited from being used in government projects.
PPC, Africa’s biggest cement producer, rose 9.4 percent, to R5.84, yesterday morning, while Sephaku’s share price shot up 41.5 percent, to R2.25.
The cement producers stand to benefit from the 50 strategic infrastructure projects and 12 special projects that the government announced last year as the initial phase of a wide-ranging infrastructure spending programme to aid post-pandemic recovery efforts.
Cement and Concrete SA chief executive Bryan Perrie said: “This is an important ruling to protect a sector vitally important for the national economy. Furthermore, it has come at the right time in view of the multibillion rand infrastructure projects planned by the government over the next three years.”
Yesterday, the National Treasury said it had designated cement, which means that, from November 4 this year, the use of imported cement will be prohibited on all government-funded projects.
The Treasury had issued a circular on the new ruling, under the Preferential Procurement Regulations, to all relevant state departments.
Perrie said the cement industry, which had lobbied for state protection against cheaper imported cement for several years, was delighted about the designation of cement.
Cement and Concrete SA, which represents the local cement industry, said it had also applied for a Sunset Review of the anti-dumping tariffs imposed on Pakistani cement in 2015. An investigation in this regard had been initiated by the SA International Trade Administration Commission.
“The designation of cement will assist in protecting the local cement industry from unfair competition. In countries such as Kenya, for one, rampant imports have all but destroyed local cement production,” Perrie said.
“Although cheaper, imported cements reaching South Africa may conform to regulatory standards, South African cement producers have to comply with a Mining Charter, transformation targets, and social and labour plans, all of which importers do not have to comply with. In addition, local producers are subject to Carbon Tax which the importers are also exempt from.”
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