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    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2022

    Gary Phillips | South Africa | 20 April 2022

    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2020

    Carole Veitch | South Africa | 24 January 2020

    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2018

    Duncan Bekker | South Africa | 11 October 2018

    The Manufacture of Cement, Lime and Related Materials Industry in South Africa 2017

    Duncan Bekker | South Africa | 08 March 2017

    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2015

    Duncan Bekker | South Africa | 26 October 2015

    The Manufacture of Cement, Lime and Plaster Industry in South Africa 2014

    Brenda Young | South Africa | 30 July 2014

    Report Info

    Report Summary Table of Contents
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    Report Coverage

    This report focuses on the manufacture of cement, lime and related products and includes information on the size of the industry in terms of production capacity, consumption and sales and state of the industry, including the competitive environment, corporate actions and financial and operational performance of listed companies. There are profiles of 13 companies including major players such as PPC, AfriSam, Lafarge, Sephaku and NPC, relatively new players including Mamba Cement and Cemza and lime producers such as SA Lime and Gypsum and Bontebok Limeworks.

    Introduction

    The South African cement manufacture industry is oversupplied and under threat from low-cost imports and the proliferation of low-cost blended cements. Protracted economic stagnation has hampered the recovery of the industry as important drivers, such as the poorly-performing construction industry and government infrastructure spending have provided little growth opportunity over the past five years. In the meantime, three new entrants since 2014 have put further pressure on capacity utilisation and producer prices. As one of the identified serious contributors to greenhouse gases, the impetus to mitigate the industry’s emissions rates has intensified with the introduction of carbon tax since 2019. Despite the difficult trading conditions, the industry’s recent prospects have been buoyed by government measures to develop the industry. The most significant of these has been the introduction of targeted anti-dumping measures that have protected the industry against low-priced product from Pakistan since 2015. This was followed by the prohibition on procurement of imported cement by state entities in 2021 under new localisation policies. The anti-dumping protection is currently under review with the hope of the measures being extended and protection being expanded to introduce non-targeted import tariffs. Debt restructuring to improve liquidity and operating profits by major players is positioning the industry afresh for growth, while hopes of future state protection may create an environment of improved returns to accelerate domestic investment and supply into the Southern African region.

    Strengths

    • Competition in the industry has been restored and the market has shown capacity to receive new domestic entrants.
    • Initiatives to lessen the industry’s carbon footprint continue to be implemented.
    • Manufacturers have spent a number of years degearing and improving their debt-to-equity ratios.
    • Producers continue to improve operational efficiencies.
    • South Africa has sufficient limestone to meet domestic demand.
    • There is a high level of vertical integration across the value chain.
    • There is substantial underutilised capacity in place to sustain production expansion.

    Weaknesses

    • Barriers to entry are high.
    • Cement and lime are relatively low value, high weight products that are expensive to transport.
    • High operating and logistical costs.
    • Significant production capacity is underutilised.
    • The cement industry is energy-intensive and has a high carbon footprint.
    • The geographic distribution of quarries and markets present barriers to entry.
    • The industry has a high level of exposure to construction industry economic performance.

    Opportunities

    • Development of environmentally-friendly cements and other building materials.
    • Expansion into high-growth markets in sub-Saharan Africa, where cement is one of the fastest-growing sectors.
    • Government’s infrastructure development plans, with a potential increase in the number of public-private partnerships and a possible uptick in construction activity over the medium-term.
    • Small-scale quarrying and artisanal lime-making offer small business development opportunities.
    • The migration to low carbon processes, alternative fuels and energy-efficiency solutions.

    Threats

    • Declining demand for cement and related products.
    • Energy supply challenges and power outages.
    • External geopolitical threats and global macroeconomic pressures, which could result in lower levels of investment.
    • Funding shortfalls and delays in the rollout of infrastructure projects.
    • Sub-standard blended products on the market.
    • The influx of cheap imports.
    • The spiralling cost of coal, fuel and other inputs.
    • Weakening macroeconomic environment.

    Outlook

    The established cement manufacture industry has been under pressure from imports, cheap unbranded blended cements and new competitors. The result has been a market of low margins, oversupply, declining producer prices and declining production. Meanwhile, pressure to reduce emissions has accelerated with the introduction of carbon tax in 2019, bringing new costs to the industry. Costs have been accelerated by rising electricity costs and extensive loadshedding. In response the industry has been chasing efficiency gains through product and process innovations finding cost advantages in addressing its emissions- and energy-intensity while also addressing debt levels and improving operational profits. While the pandemic brought further unwelcome pressure on the industry it also cut out imports for a period in 2020 and caused such pent-up demand in the third quarter that most notable players posted revenue gains and improved prices. Hardware retail has driven sales with residential building and renovations. Two other factors appear to be lining up timeously and could improve the immediate outlook of the cement factory. The first is the apparent recovery of the construction industry and the second is government’s infrastructure plan, which if implemented well, will see a substantial increase in general government and state-owned enterprise infrastructure spending. Much of the immediate outlook for the industry will be determined by the government. In November 2021, treasury implemented government’s order that only locally-produced cement could be procured for government projects. The International Trade Administration Commission undertook a review of anti-dumping measures that have been in place since 2015. The measures, initiated to protect the domestic industry from low-cost imports from Pakistan, were a source of protection which the industry hopes will be extended and broadened.

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    The Manufacture of Cement, Lime and Related Materials Industry In South Africa
    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2022

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    Table of Contents

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    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 5
    2.2. Geographic Position 6
    2.3. Size of the Industry 8
    2.4. Key Success Factors and Pain Points 16
    3. LOCAL 17
    3.1. Key Trends 17
    3.2. Notable Players 19
    3.3. Trade 21
    3.4. Corporate Actions 28
    3.5. Regulations 29
    3.6. Enterprise Development and Social Economic Development 31
    4. AFRICA 32
    5. INTERNATIONAL 36
    6. INFLUENCING FACTORS 38
    6.1. COVID -19 38
    6.2. Economic Environment 39
    6.3. Government Expenditure on Infrastructure 41
    6.4. Environmental Issues 43
    6.5. Technology, Research and Development (R&D) and Innovation 45
    6.6. Input Costs 46
    6.7. Labour 48
    7. COMPETITIVE ENVIRONMENT 50
    7.1. Competition 50
    7.2. Ownership Structure of the Industry 51
    7.3. Barriers to Entry 52
    8. SWOT ANALYSIS 52
    9. OUTLOOK 53
    10. INDUSTRY ASSOCIATIONS 54
    11. REFERENCES 54
    11.1. Publications 54
    11.2. Websites 55
    APPENDIX 1 57
    Summary of Notable Players 57
    COMPANY PROFILES 60
    Afrimat Ltd 60
    Afrisam (South Africa) (Pty) Ltd 66
    Bontebok Limeworks (Pty) Ltd 72
    Cemza (Pty) Ltd 74
    Idwala Industrial Holdings (Pty) Ltd 76
    Kerneos Southern Africa (Pty) Ltd 79
    Lafarge Industries South Africa (Pty) Ltd 81
    Mamba Cement Company (RF) (Pty) Ltd (The) 85
    NPC Intercement (RF) (Pty) Ltd 87
    PBD Holdings (Pty) Ltd 90
    PPC Ltd 92
    S A Lime and Gypsum (Pty) Ltd 97
    Sephaku Holdings Ltd 99

    Introduction

    The past decade has been extremely challenging for South Africa’s producers of cement, lime and related products. Current domestic demand for cement totals around 13 million tons per year, well below the peak of 2008 when local sales volumes surged to 15 million tons. In 2019, domestic sales volumes declined by over 5%, due largely to the distressed state of the South African construction sector, protracted economic stagnation and reduced government spending on infrastructure. Local producers of lime, cement and related products entered 2020 with their production capacity utilisation rates in decline, demand weakening and competition for market share intensifying. Although South Africa and its neighbours are oversupplied, imported cement continues to pour into the saturated market.

    Strengths

    • Installed production capacity is high.
    • Proactive initiatives to lessen the industry’s carbon footprint continue to be implemented.
    • Producers continue to improve operational efficiencies.
    • South Africa has sufficient limestone to meet domestic demand.
    • There is a high-level of vertical integration across the value chain.

    Weaknesses

    • Barriers to entry are high.
    • Cement and lime are relatively low value, high weight products that are expensive to transport.
    • High operating and logistical costs.
    • Installed production capacity is underutilised.
    • Shortage of technical skills.
    • The cement industry is energy-intensive and has a high carbon footprint.
    • The geographic distribution of quarries and markets present barriers to entry.
    • The industry has a high level of exposure to public and private construction activity.

    Opportunities

    • Development of environmentally friendly cements and other building materials.
    • Expansion into high-growth markets in sub-Saharan Africa, where cement is one of the fastest-growing sectors.
    • Small-scale quarrying and artisanal lime-making offer small business development opportunities.
    • The migration to low carbon processes.
    • The South African government’s infrastructure stimulus package, with a potential increase in the number of public-private partnerships and a possible uptick in construction activity over the medium-term.

    Threats

    • Declining demand for cement and related products.
    • Energy supply challenges and power outages.
    • External geopolitical threats and global macroeconomic pressures, which could result in lower levels of investment.
    • Funding shortfalls and delays in the roll out of infrastructure projects.
    • The influx of cheap imports.
    • The spiralling cost of coal, fuel and other inputs.
    • Weakening macroeconomic environment.

    Outlook

    With the energy crisis showing no signs of being resolved in the short-term, economists warn that there is a high likelihood that the South African economy will plunge into recession and that international ratings agency Moody’s will downgrade the country’s credit rating to junk status in March 2020. Given that domestic cement demand tends to track real GDP growth and gross fixed capital formation, analysts say that unless there is a rapid roll out of large infrastructure projects, the cement industry’s growth prospects will remain subdued in the short to medium-term. Local lime and cement producers say that they will continue to focus on strategies to improve profitability by improving operational and energy efficiencies. Although the influx of imported cement remains a key concern, stakeholders are hopeful that the International Trade Administration Commission will implement measures to stem the flood of cement products and “level the playing field”.

    The Manufacture of Cement, Lime and Related Materials Industry In South Africa
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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 3
    2. DESCRIPTION OF THE INDUSTRY 3
    2.1. Industry Value Chain 7
    2.2. Geographic Position 8
    3. SIZE OF THE INDUSTRY 10
    4. STATE OF THE INDUSTRY 13
    4.1. Local 13
    4.1.1. Trade 16
    4.1.2. Corporate Actions 19
    4.1.3. Regulations 20
    4.2. Regulatory Developments 21
    4.2.1. Enterprise Development and Socio-Economic Development 22
    4.3. Continental 23
    4.4. International 27
    5. INFLUENCING FACTORS 29
    5.1. Economic Environment 29
    5.2. Construction and Government Expenditure on Infrastructure 30
    5.3. Input Costs 30
    5.4. Cheap Imports 31
    5.5. Technology, Research and Development (R&D) and Innovation 31
    5.6. Labour 33
    5.7. Environmental Concerns 34
    6. COMPETITION 36
    6.1. Barriers to Entry 37
    7. SWOT ANALYSIS 37
    8. OUTLOOK 38
    9. INDUSTRY ASSOCIATIONS 39
    10. REFERENCES 39
    10.1. Publications 39
    10.2. Websites 40
    APPENDIX 1 42
    Summary of Notable players 42
    COMPANY PROFILES 45
    AFRIMAT LTD 45
    AFRISAM (SOUTH AFRICA) (PTY) LTD 51
    BONTEBOK LIMEWORKS (PTY) LTD 56
    CEMZA (PTY) LTD 58
    IDWALA INDUSTRIAL HOLDINGS (PTY) LTD 60
    KERNEOS SOUTHERN AFRICA (PTY) LTD 63
    LAFARGE INDUSTRIES SOUTH AFRICA (PTY) LTD 65
    MAMBA CEMENT COMPANY (RF) (PTY) LTD (THE) 69
    NPC INTERCEMENT (RF) (PTY) LTD 71
    PBD HOLDINGS (PTY) LTD 74
    PPC LTD 76
    S A LIME AND GYPSUM (PTY) LTD 81
    SAINT-GOBAIN CONSTRUCTION PRODUCTS SOUTH AFRICA (PTY) LTD 83
    SEPHAKU HOLDINGS LTD 85
    SPECIALTY MINERALS SOUTH AFRICA (PTY) LTD 88

    Introduction

    This report examines the manufacture of cement and related building materials in South Africa and the region. The South African cement industry has an installed capacity of over 20 million tons per annum and employs some 16,000 people. Cement consumption is markedly lower than supply and the industry continues to suffer from low demand growth due to a struggling construction industry and stagnant infrastructure spending. Manufacturers have been supported by successes in their regional markets but many remain concerned that their South African business is exposed to a number of regulatory changes related to transformation and carbon emissions.

    Strengths

    • Cement is one of the fastest-growing sectors in sub-Saharan Africa.
    • Installed cement capacity is very high.
    • Limestone production is plentiful.
    • Widespread vertical integration in the supply chain.

    Weaknesses

    • Energy-intensive.
    • Lack of skills.
    • Significant barriers to entry related to capital outlay and the geographic distribution of quarries and markets.
    • The industry is highly dependent on macroeconomic growth and government infrastructure spending.
    • Very high logistical costs.

    Opportunities

    • Development of environmentally friendly cements and other building materials.
    • Expansion into fast-growing African markets.
    • Further investment into plant and process efficiencies to reduce costs.
    • Government stimulus package.
    • Potential increase in the number of public private partnerships and an uptick in construction activity.
    • Raising prices as price competition has fallen and prices have stabilised.

    Threats

    • Continued slow economic growth and declining cement volumes.
    • Delays in the roll-out of budgeted infrastructure spending.
    • Failure of government stimulus package and declining infrastructure spending.
    • Increasingly strict regulatory environment through the Mining Charter and Carbon Tax.
    • Lack of investor confidence due to political and policy uncertainty regarding land expropriation and radical economic transformation.

    Outlook

    South African cement demand declined in 2017 and continued to fall in the first half of 2018. South African cement manufacturers have nevertheless delivered muted but positive results on the back of regional sales growth, operating efficiencies, and price increases. Price competition has eased as competitors seek to increase their revenue rather than market share. The majority of players have shifted their strategy towards a “disciplined approach”, prioritising cost-cutting over expansion and capital expenditure has fallen dramatically. Stakeholders such as PPC and Sephaku continue to identify increased infrastructure spending as the potential key to buoy the industry but, according to the Master Builders Association, “the South African construction industry is in a critical state”, facing slow civil, residential, and commercial building activity and stagnant order books.\r\n\r\nSouth Africa’s proposed economic stimulus package, including a R400bn infrastructure fund, presents a possible opportunity for the sector. The package makes provision for increased co-operation between government and the private sector as well as a substantial increase in infrastructure spending to drive demand. However, many analysts remain sceptical of government\'s ability to implement the stimulus effectively with ratings agency Fitch stating that “South Africa\'s latest economic plan is unlikely to deliver a significant boost to economic growth.” Construction associations such as the Master Builders Association have nevertheless welcomed the announcement and remain optimistic that it will have a positive impact.\r\n\r\nCement manufacturers stress that the industry, with its large installed capacity, is “well positioned to benefit from growth” but are resigned to a challenging business environment in the short- to medium-term. PPC forecasts “minimal growth in GDP and cement demand” in 2018/2019 while the regulatory and policy environment may undermine investor confidence.

    The Manufacture of Cement, Lime and Related Materials Industry In South Africa
    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2018

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    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2020-01-24

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    The Manufacture of Cement, Lime and Related Materials Industry in South Africa 2017-03-08

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    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2015-10-26

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    The Manufacture of Cement, Lime and Plaster Industry in South Africa 2014-07-30

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 2
    2.2. Geographic Position 3
    3. SIZE OF THE INDUSTRY 5
    4. STATE OF THE INDUSTRY 8
    4.1. Local 8
    4.1.1. Corporate Actions 13
    4.1.2. Regulations 14
    4.1.3. Enterprise Development and Social Economic Development 17
    4.2. Continental 18
    4.3. International 23
    5. INFLUENCING FACTORS 24
    5.1. Economic Environment 24
    5.2. Construction and Government Infrastructure Spending 25
    5.3. Input Costs 26
    5.4. Labour 27
    5.5. Technology, Research and Development (R&D) and Innovation 29
    5.6. Environmental Concerns 31
    6. COMPETITION 32
    6.1. Barriers to Entry 33
    7. SWOT ANALYSIS 34
    8. OUTLOOK 35
    9. INDUSTRY ASSOCIATIONS 35
    10. REFERENCES 36
    10.1. Publications 36
    10.2. Websites 36
    APPENDIX 1 38
    Summary of Major Players 38
    COMPANY PROFILES 41
    AFRIMAT LTD 41
    AFRISAM (SOUTH AFRICA) (PTY) LTD 46
    BONTEBOK LIMEWORKS (PTY) LTD 51
    CAPE LIME (PTY) LTD 53
    IDWALA INDUSTRIAL HOLDINGS LTD 56
    KERNEOS SOUTHERN AFRICA (PTY) LTD 60
    LAFARGE INDUSTRIES SOUTH AFRICA (PTY) LTD 62
    MAMBA CEMENT COMPANY (RF) (PTY) LTD (THE) 67
    NPC-CIMPOR (RF) (PTY) LTD 69
    PBD HOLDINGS (PTY) LTD 72
    PPC LTD 74
    S A LIME AND GYPSUM (PTY) LTD 79
    SAINT-GOBAIN CONSTRUCTION PRODUCTS SOUTH AFRICA (PTY) LTD 81
    SEPHAKU HOLDINGS LTD 84
    SPECIALTY MINERALS SOUTH AFRICA (PTY) LTD 87

    Introduction

    This report focuses on the domestic and regional manufacture of cement, lime and related materials. It examines overall production and demand as well as the performance of key players in South Africa and regional Africa. Further consideration is given to the manufacture of specialised industrial minerals, notably ground and precipitated calcium carbonate, and the key markets for these products. Demand in the cement industry is lagging behind supply and the sector is characterised by intense competition with consequently pressured profit margins. By contras3t, competition is relatively low among producers of ground and precipitated calcium carbonate, and profits are healthy. However, both the cement and limestone industries are feeling the consequences of the depressed economic environment in South Africa and players are waiting on improved macroeconomic conditions to drive volume growth.

    Strengths

    • Installed cement capacity is very high.
    • Large profit margins in the GCC and PCC segments.
    • Limestone production is plentiful.
    • The cement industry is one of the fastest-growing sectors in sub-Saharan Africa.
    • Widespread vertical integration in the supply chain.

    Weaknesses

    • Lack of skills.
    • Limestone calcining is energy-intensive and has a high carbon footprint due to usage of coal as fuel. Affects both cement and calcium carbonate manufacturers.
    • Only two major calcium carbonate manufacturers in the local market.
    • Significant barriers to entry comprising high initial capital investment and geographic distribution of quarries and markets.
    • Significant logistical and transport costs.
    • Volume growth for cement, limestone and calcium carbonate is dependent upon the macroeconomic environment.

    Opportunities

    • Expansion into Africa.
    • Increased percentage usage of super fine calcium carbonate products particularly in the paper sector.
    • Partial replacement and substitution of TiO2 with calcium carbonate, particularly in plastics and paint industries.
    • Potential increases in tyre industry\'s usage of calcium carbonate.
    • Proposed Carbon Tax driving industries to lower their carbon footprint. Calcium carbonate represents potential low-emission substitute particularly in the growing market for green cements.
    • Sectors making use of calcium carbonate identified by government as growth areas and are to receive support through the NDP and IPAP.

    Threats

    • Carbon tax to raise costs of limestone and cement manufacture due to coal burning.
    • Continued decline in the PWP segment of the paper industry. PWP is the major consumer of GCC and PCC in paper.
    • Continued delayed roll-out of government infrastructure spending projects.
    • Continued slow economic growth.

    Outlook

    The current levels of competition in the cement sector represent a challenge for domestic players and margins have continued to contract over the last three years. Firms have focused on cutting costs but PPC recently expressed doubts that the market can sustain all extant firms. Sephaku Cement suggested that declining Pakistani imports will result in volume growth in coastal regions but falling prices are expected to mitigate much of the gains. According to PwC, construction spending is likely to remain under budget. PPC Cement and Afrisam have identified infrastructure spending as the potential key to buoy the industry, but barring a sudden change in the domestic macroeconomic situation, the challenging business environment is likely to persist.\r\n\r\nThe calcium carbonate market is likewise suffering flat volume growth thanks to stagnant GDP. The shrinking paper sector remains a potential threat, with copy and newsprint grades showing no recovery from their decline. However the demand of the plastic and paint sectors has been growing in line with GDP and such marginal but steady growth should offset declines in the paper sector. Relatively low levels of competition, with only small exposure to the calcium carbonate import market, have seen Idwala and Speciality Minerals South Africa report healthy and growing profits, with Idwala describing the market as stable.

    The Manufacture of Cement, Lime and Related Materials Industry in South Africa
    The Manufacture of Cement, Lime and Related Materials Industry in South Africa 2017

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    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2020-01-24

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    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2018-10-11

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    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2015-10-26

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    The Manufacture of Cement, Lime and Plaster Industry in South Africa 2014-07-30

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 3
    2.2. Geographic Position 5
    3. SIZE OF THE INDUSTRY 8
    4. STATE OF THE INDUSTRY 14
    4.1. Local 14
    4.1.1. Corporate Actions 30
    4.1.2. Regulations 32
    4.2. Enterprise Development and Social Economic Development 34
    4.3. Continental 35
    4.4. International 40
    5. INFLUENCING FACTORS 40
    5.1. Economic Environment 40
    5.2. Infrastructure Spend and Government Initiatives 41
    5.3. Input Costs 44
    5.4. Labour 45
    5.5. Technology, Research and Development (R&D) and Innovation 46
    5.6. Environmental Concerns 47
    6. COMPETITION 48
    6.1. Barriers to Entry 50
    7. SWOT ANALYSIS 51
    8. OUTLOOK 52
    9. INDUSTRY ASSOCIATIONS 53
    10. REFERENCES 54
    10.1. Publications 54
    10.2. Websites 54
    COMPANY PROFILES 56
    AFRIMAT LTD 56
    AFRISAM (SOUTH AFRICA) (PTY) LTD 62
    BONTEBOK LIMEWORKS (PTY) LTD 67
    CAPE LIME (PTY) LTD 69
    IDWALA INDUSTRIAL HOLDINGS LTD 71
    KERNEOS SOUTHERN AFRICA (PTY) LTD 75
    LAFARGE INDUSTRIES SOUTH AFRICA (PTY) LTD 77
    MAMBA CEMENT COMPANY (RF) (PTY) LTD (THE) 84
    NPC-CIMPOR (RF) (PTY) LTD 86
    PBD HOLDINGS (PTY) LTD 89
    PPC LTD 91
    S A LIME AND GYPSUM (PTY) LTD 95
    SAINT-GOBAIN CONSTRUCTION PRODUCTS SOUTH AFRICA (PTY) LTD 97
    SEPHAKU HOLDINGS LTD 100
    SPECIALTY MINERALS SOUTH AFRICA (PTY) LTD 104

    Report Coverage

    The report on the domestic and regional cement sector describes the current market, outlines developments within the sector and focuses on factors influencing the success of industry. The report also profiles 11 key players in the local market and details the continental footprint of six major cement manufacturers, including multinational Lafarge Africa Plc and Germany-based Heidelberg Cement.

    Introduction

    This report focuses on the manufacture of cement and other cementitious products both domestically and regionally. South African sales of cementitious products totalled 13.1 million tons in 2014, a 3.4% increase on the previous year’s volume. Total sub-Saharan demand totalled an estimated 80 million tons in the same period.\r\n\r\nThe local market is under pressure from increased competition caused by an industry over-supply, a number of new entrants into the market and cheap imports from Pakistan. The industry is nevertheless following the regional trend of capacity expansion, driven by the expectation of increased demand both locally and continentally. As a result, a number of local firms, notably PPC Cement, are aggressively expanding their regional operations in an effort to compete with other African and multinational players who are likewise expanding into Africa. Notable players in the region include Dangote Cement, Lafarge-Holcim, and the Heidelberg Group.

    Strengths

    • Some level of demand is guaranteed.
    • The cement industry is one of the fastest growing sectors in sub-Saharan Africa.
    • Very high capacity installed.
    • Widespread vertical integration in the supply chain.

    Weaknesses

    • Energy-intensive and vulnerable to fuel price hikes.
    • High logistical costs.
    • Very dependent on high levels of economic growth.
    • Very high barriers to entry.

    Opportunities

    • Entrance into adjacent markets offering high levels of demand.
    • Government support through state infrastructure projects.
    • Increasing African urbanisation and economic growth will necessitate large-scale construction and infrastructural spending.

    Threats

    • Environmental concerns and/or regulations such as carbon tax.
    • Over-supply; regional demand has yet to increase in parity with the vast levels of increasing capacity installed.
    • Regional economic downturn due to the poor global economy.

    Outlook

    According to a number of large domestic players, the South African cement industry is unlikely to face a fundamentally better situation in the short-term. Depressed economic conditions and the slow roll-out of government infrastructure projects will continue to pressure industry profit margins. Domestic over-supply is substantial and while measures taken against imports from Pakistan may go some way to easing the issue, the entrance of a number of new market players with substantial annual capacity will immediately reverse these gains. Nevertheless, the revenue of major local players is increasing even as their profit margins shrink. According to PPC, it is the state of slow domestic growth that is likely to drive those firms who are capable of large-scale expansion into the African market to pursue opportunities. Mid- to long-term prospects are expected to be positive with a number of players predicting sustained demand growth of around 4.5% in the next ten years.\r\n\r\nThe cement industry in the rest of Africa is one of the largest-growing sectors on the continent. The expectation that demand will continue to grow, driven by a booming population and economy, seems ubiquitous among analysts, despite the recent downward revisions to sub-Saharan growth forecasts. The high levels of real GDP growth in evidence among those countries identified as key regions for the cement industry recapitulate the notion that sub-Saharan Africa will continue to become an increasingly important area for large-scale infrastructural investment and the region’s substantial capacity installed should position it to leverage this increased demand.

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    The Manufacture of Cement, Lime and Related Materials Industry In South Africa
    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2015

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    Table of Contents

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    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 3
    2.2. Geographic Position 4
    2.3. Advertising and Marketing 5
    3. SIZE OF THE INDUSTRY 6
    4. STATE OF THE INDUSTRY 11
    4.1. Local 11
    4.1.1. Corporate Actions 15
    4.1.2. Regulations 17
    4.1.3. Enterprise Development and Social Economic Development 18
    4.2. Continental 19
    4.2.1. Pricing 28
    4.3. International 29
    5. INFLUENCING FACTORS 30
    5.1. Economic Environment 30
    5.2. Government Infrastructure Spending 31
    5.3. Input Costs 32
    5.4. Cyclicality 33
    5.5. Labour 33
    5.6. Technology, Research and Development (R&D) and Innovation 34
    5.7. Environmental Concerns 36
    6. COMPETITION 37
    6.1. Barriers to Entry 38
    7. SWOT ANALYSIS 39
    8. OUTLOOK 39
    9. INDUSTRY ASSOCIATIONS 40
    10. REFERENCES 40
    10.1. Publications 40
    10.2. Websites 41
    COMPANY PROFILES 43
    Afrisam (South Africa) (Pty) Ltd 43
    Bontebok Limeworks (Pty) Ltd 48
    Cape Lime (Pty) Ltd 51
    Idwala Industrial Holdings Ltd 54
    Kerneos Southern Africa (Pty) Ltd 58
    Lafarge Industries South Africa (Pty) Ltd 60
    Lime Distributors (Pty) Ltd 65
    Lime Sales Ltd 67
    NPC-Cimpor (RF) (Pty) Ltd 68
    PPC Ltd 70
    Saint-Gobain Construction Products South Africa (Pty) Ltd 77
    Sephaku Holdings Ltd 80

    Introduction

    This report focuses on the manufacture of cement, lime and plaster. Domestic sales of cementitious products totalled 12.2 million tons in 2013, a 5.2% rise on 2012’s volumes. The local cement market is under pressure with the establishment of new players and imports which surged 34% to 1.16 million tons in 2013. Sephaku Cement entered the market in January 2014, joining the four other major producers, PPC Cement, Afrisam, Lafarge SA and Natal Portland Cement-Cimpor (NPC-Cimpor). Another new entrant, Mamba Cement is also building a 1 million ton plant which is expected to be completed within 18-24 months. The South African cement and lime industry employs in the region of 13,000 people.

    Strengths

    • Capital intensive industry with a long construction\nperiod, creating a natural barrier to new entrants
    • High levels of innovation.
    • Increasing manufacturing capacity.
    • The regulatory environment and the NRSC ensure there\nare high manufacturing standards.

    Weaknesses

    • Dependent on coal to heat kilns, so energy intensive and not environmentally friendly.
    • Transport costs for cement are high and this keeps cement\nfrom being profitable over long distances.

    Opportunities

    • Government infrastructure spending of R847bn on\nvarious construction projects.
    • Growth through mergers and acquisitions in the African\ncontinent and new operations being set up.
    • Partnering with local players in African projects who\nprovide the limestone resources needed to establish\ncement plants.

    Threats

    • Cheaper Asian imports threatening coastal markets.
    • Mining strikes and labour disputes adversely affecting the economy.
    • New entrants will result in capacity increases and raise the possibility of an oversupply situation.
    • Rising input costs.
    • Slow economic recovery will keep growth subdued in South Africa.
    • Substitution of cement structures for clay bricks, aluminium, steel, wood and stone in the construction industry.
    • When implemented, the carbon tax will see companies taxed on the amount of carbon they emit.

    Outlook

    According to the FNB/BER building and civil construction confidence indexes, weaker economic growth will weigh on the construction sector and the outlook is dampened going forward. The former Minister of Finance, Pravin Gordhan, highlighted slow infrastructure rollout as a potential risk to South Africa’s economic outlook. The passing of the Infrastructure Development Bill could alleviate some concerns as the legislation is designed to speed up and improve the implementation of infrastructure projects.\r\nCheaper Asian imports are still a threat to domestic sales and cement demand is likely to be weak amidst the increase in supply from the entry of Sephaku. Further investment by local cement companies will likely be used in upgrading dated and inefficient plants. To counter the threat posed by imports and an oversupply in the local market, cement companies are accelerating expansion plans across the African continent as emerging markets are expected to be the main drivers of demand. Lafarge has shifted its focus to developing countries, mainly in Nigeria, Tanzania and Zambia. PPC has shifted its attention to the rest of Africa as they are encouraged by the continents growth prospects. PPC’s strategy is to grow revenue outside South Africa to 40% by 2017.

    The Manufacture of Cement, Lime and Plaster Industry in South Africa
    The Manufacture of Cement, Lime and Plaster Industry in South Africa 2014

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    The Manufacture of Cement, Lime and Related Materials Industry In South Africa 2015-10-26

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF INDUSTRY 1
    2.1. The Industry Supply Chain 1
    2.2. Geographic Position 2
    3. SIZE OF THE INDUSTRY 3
    4. STATE OF THE INDUSTRY 5
    4.1.1. Local 5
    4.1.2. Corporate Actions 7
    4.1.3. Regulations 8
    4.1.4. Enterprise Development and Social Economic Development 9
    4.2. Continental 10
    4.3. International 12
    5. INFLUENCING FACTORS 13
    5.1. Economic Environment 13
    5.2. Government Infrastructure Spend 13
    5.3. Input Costs 14
    5.4. Cyclicality 15
    5.5. Labour 15
    5.6. Technology 16
    5.7. Information Technology 16
    5.8. Environmental Concerns 17
    6. COMPETITION 18
    6.1. Barriers to Entry and Substitute Products 18
    6.2. Research and Development (R&D) and Innovation 19
    7. SWOT ANALYSIS 20
    8. OUTLOOK 20
    9. INDUSTRY ASSOCIATIONS 21
    10. REFERENCES 21
    10.1. Publications 21
    10.2. Websites 21
    ORGANOGRAM 23
    0
    COMPANY PROFILES 24
    AFRISAM (SOUTH AFRICA) (PTY) LTD 24
    BONTEBOK LIMEWORKS (PTY) LTD 27
    CAPE LIME (PTY) LTD 29
    IDWALA INDUSTRIAL HOLDINGS LTD 31
    LAFARGE INDUSTRIES SOUTH AFRICA (PTY) LTD 34
    LIME DISTRIBUTORS (PTY) LTD 38
    NPC-CIMPOR (PTY) LTD 39
    PPC LTD 41
    SAINT-GOBAIN CONSTRUCTION PRODUCTS SOUTH AFRICA (PTY) LTD 45
    SEPHAKU HOLDINGS LTD 47

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