HARARE – South Africa’s biggest cement maker, PPC, says it hopes to complete its $80 million plant in Zimbabwe in the next 12 months, in a development that is expected to reduce cement prices in the country.
The company, which already runs two cement manufacturing plants at Cementside in Bulawayo and Colleen Bawn in Matabeleland South, began construction of its new 700 000-tonne per annum mill in Harare in early 2015.
PPC chief executive Darryll Castle yesterday said the company’s African expansion was intact, but it planned in future to “stagger projects” so that only one came into production per year rather than several simultaneously.
“Our projects in Democratic Republic of Congo, Zimbabwe and Ethiopia are all at advanced stages and will be commissioned in the next 12 months — ensuring we offer shareholders a diversified portfolio of businesses in different geographies,” he said.
The cement maker said it was forced to invest in the Harare plant to meet rising demand from Zimbabwe’s budding construction projects in the northern part of the country.
In addition, the company said then, it was also aiming at supplying more into the northern corridor which includes exports to Zambia and other countries north of Zimbabwe.
This comes as the Johannesburg Stock Exchange-listed group, which is one of the most successful South African companies operating in Zimbabwe, is also advancing plans to raise about
$227 million to overcome its near-term liquidity constraints.
A syndicate of banks, made up of Standard Bank, Nedbank, Absa and FirstRand’s Rand Merchant Bank, has been mandated to assist with the capital raising.
PPC is being forced to raise funds after its credit rating was cut following investment in new African projects that have yet to contribute to cash flow.
Meanwhile, PPC has scrapped its dividend for the first time in over a century, seeking to conserve capital to repay debt.
Castle said PPC, which paid its first dividend when it was founded in 1908, abandoned the payout for the six months ended March
because it was in the midst of raising cash from shareholders.
“We felt under the conditions it didn’t make sense to be asking investors on the one hand to be putting money into the company and us potentially giving it back to them via a dividend,” he said.
PPC shares, down nearly 40 percent this year, fell one percent to 9,60 rand and are hovering around levels last seen in 2003.
The giant cement manufacture, which has pushed deeper into the rest of Africa as profit has slumped in its domestic market, is grappling to service dollar-denominated debt after the rand lost more than a third of its value over the past year.