While inadequate infrastructure may be the
single biggest threat to Africa’s long-term growth, at the same time it also
represents a significant opportunity for investors to finance physical
infrastructure assets such as ports, railway lines, toll roads, power stations,
hospitals and broadband ICT.
With governments across the continent
committing billions of dollars to infrastructure, Africa is at the start of a
20 to 30-year infrastructure development boom. The strategic importance of the
cement sector will play a key role in these government’s infrastructure roll
out plans, which are going to require a sustainable supply of cement if their
ambitious targets are to be met. It is expected that these rapid infrastructure
developments in Southern Africa will brighten the prospects
of the cement industry in the region.
Cement production stood at 14.9 million
tonnes in 2012 and is expected to reach 18.1 million tonnes in 2018 – owing to
the addition of new cement manufacturing plants in South Africa, Zambia and
Higher government spending on public
infrastructure, such as the construction of new energy and power facilities, as
well as the expansion of transportation infrastructure, is playing a role in
the increased demand.
This rising demand for cement opened up an
opportunity for a new player in the market. Nigerian-backed Sephaku Cement will
be the first new entrant to the South African cement
production market to open its own new plant since 1934, and will be looking to
challenge big local producers PPC, AfriSam, NPC and French multinational Lafarge
as the country’s infrastructure-building program starts to take off.
Cement has recently commenced production at their newly build state of the
art milling plant in Delmas. Another plant Aganang are being developed in the
North West Province and is expected to commence production in the second
quarter of 2014. Sephaku said its plants used the latest cement-making
technology. This reduced power consumption and improved general environmental
control. This is the first time the Nigerian cement giant will be producing
cement in the same country as its competitor in sub-Saharan Africa.
An increase in demand for cement is a good
indication that the construction industry is slowly recovering with confidence
at a five year high at the end of last year. This is despite the fact that
government infrastructure plans have largely stalled.
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