AFRICA: South African Cement Company To Boost Local Production With $222m Deal

Sephaku Cement, the first indigenous player in South Africa’s cement industry of over 70 years, has signed up 1.95 billion rand ($222 million) of domestic debt funding for its 3.4 billion rand ($390 million) cement plant and clinker plant project spanning two provinces.

Sephaku said the agreement would enable it to become a significant competitor in the South African wholesale and retail cement market, considering the volume of investment of the 10-year deal funded by two of South Africa’s biggest lenders – Standard Bank and Nedbank.

Sola David-Borha, CEO of Stanbic IBTC in Nigeria, commenting on the deal said on Monday: “As a result of the transaction, we will see Sephaku become a leading cement producer in the region, enabling significant job creation with wider economic benefits.”

According to bdlive, the development comes as South Africa is set to embark on a 4 trillion rand ($456 billion) 15 year-infrastructure programme.

The massive infrastructure investment is intended to reverse a plunge in Africa’s largest economy’s building and construction sector, an aftermath of the global financial crisis.

Sephaku Cement CEO Pieter Fourie while commenting on the deal, said on Monday: “The significance of this deal goes beyond cement. It indicates a strong new commitment to industrial development in South Africa.”

According to reports, Sephaku Cement, was an associate of JSE-listed Sephaku Holdings, a 64 percent-owned subsidiary of Nigeria’s Dangote Cement.

Dangote who happens to be Africa’s highest Forbes-rated business man made a record investment of over 1.1 billion rand ($125 million) in the company, the largest-ever foreign direct investment in South Africa by an African company.

A third of the investment would be spent on infrastructural capacity such as access roads, water reticulation, and a power installation for national electricity utility Eskom.

Also, two plants were constructed which are now in advanced stages, which are scheduled to be in full production by the end of 2013. The first is a 1.2 million production capacity cement plant in North West Province while the other would produce about 1.4-million tons of cement products annually.