2010 News

 

Dangote invests R779 million in Sephaku Cement Sephaku Holdings Limited (Sephaku) today confirmed the continued unbundling of Sephaku, along with a timetable for the distribution of the company’s mineral rights, other than those related to cement and fluorspar. At the same time, Sephaku has announced details of the investment by Nigerian industrial giant, Dangote Industries Limited (Dangote), of R779 million into Sephaku Cement, a wholly-owned subsidiary of Sephaku.

Commenting on the transactions, Sephaku Holdings CEO, Neil Crafford-Lazarus said; “The investment by Dangote and the unbundling of the non-core assets signals for Sephaku the birth of a recapitalised, financially sound business that will focus on the development of two key and highly sought-after industrial products - cement and fluorspar. With these developments the company has now secured the full equity requirement for the cement project and will be exceptionally well positioned to finalise debt funding terms.”

Dangote Investment Sephaku Cement will issue 217,597,765 ordinary shares to Dangote at an issue price of R3.58 per share. Dangote will accordingly increase its interest in Sephaku Cement from 19.76% (acquired in 2008) to 64%, at an average price of R4.47 per share. The balance will continue to be held by Sephaku. This significant equity investment by Dangote will be used to fund the development of Sephaku Cement’s Aganang and Delmas Projects. The Aganang Project comprises a limestone mine and cement manufacturing plant near Lichtenburg in North West Province and the Delmas Project comprises a cement milling plant in Delmas, in Mpumalanga. These flagship projects will come into production in late 2012 and will yield about 0.90Mtpa and 1.25Mtpa of cement respectively.

Shareholder Approval The transactions are subject to shareholder approval and a shareholders’ meeting has been planned for mid-September, after which the transactions will become effective.

About Sephaku Sephaku Holdings is a HDSA-controlled, South-African focused, industrial minerals exploration and development company, with two key projects in the limestone and fluorspar sectors. The advanced-stage limestone project is being developed through the company’s wholly-owned subsidiary, Sephaku Cement, and production is targeted for early 2012.

The Sephaku Holdings executive team comprises highly respected and experienced individuals with a wealth of financial, legal and technical expertise in all aspects of the mining industry.

Sephaku Holdings is listed on the JSE Limited in the mining sector and trades under the share code SEP.

About Dangote Established in 1981, Dangote Industries of Nigeria is one of the largest manufacturing conglomerates in sub-saharan Africa, with interests in cement, sugar, flour, salt and fish. Dangote is the largest cement producer in Nigeria and will have a cement production capacity of 16 million tons by the first quarter of 2011. Dangote has an aggressive Pan-African strategy to be the largest cement producer in Africa by 2014.

Queries: Nokuthula Nxumalo, Sephaku Holdings + 27 12 686 4837 (tel) + 27 82 954 6644 (mobile)
Distinguished Ladies and Gentlemen. It is my pleasure to welcome you here today on behalf of Sephaku Cement and Dangote Industries Limited. We are here to mark the completion of Dangote Industries’ additional investment of R779 million into Sephaku Cement, making it the single largest shareholder, with 64% of the issued shares. This brings Dangote Industries’ investment in the company to R1, 129 bn. We are also proud to discover that this is the largest single investment ever by an African company into South Africa; we can truly say that Africa is coming of age when we achieve such things.

This investment is an important milestone for Sephaku, for the Dangote Group of Companies and for South Africa, as the first clinker producing project since 1934. Development at Sephaku will now accelerate, with the project expected to be completed by 2012. The Dangote Group will bring its full experience and resources to the project, having completed other large scale cement projects in Nigeria and with similar projects currently underway in Tanzania, Ethiopia, Republic of Congo (Brazzaville), Senegal and Zambia.

We are strong believers in the future growth of the South African economy and of continued growth across the whole of Africa. The level of our investment here and in other markets is testament to that. We have embarked on an investment programme that will create modern cement plants in strategic locations as we seek to leverage both the local production deficit and increasing infrastructure investment. Cement can be one of the key building blocks to development as governments seek to address infrastructure deficits and a significant unmet need for housing. We are using the latest technology to ensure efficiency and the strictest adherence to environmental regulations.

Having built a market leading position in the Nigerian cement market with 8 million tonnes of existing installed production capacity and a further 12 million tonnes due to come on-stream in 2011 we are looking outside our home for growth opportunities. Our long-term ambition is to develop 46 million tonnes of production and terminal capacity in Africa by 2015. We want to become a truly pan-African champion in the sector, capable of competing globally with the largest cement companies in the world.

These are ambitious targets, but they are achievable and our rationale for doing so is clear. Africa remains the only continent in the world with a significant cement production deficit. We are also the continent with the highest cement prices in the world and our cement consumption is significantly lower than other regions. We currently rely on imported product from surpluses produced overseas and the lack of strong infrastructure across the continent creates significant price premiums. In many countries supply never satisfies demand.

At the same time, Africa is growing. GDP growth rates remained attractive throughout the global financial crisis and are now rising as the world emerges back into a growth phase. Significant investments are being made to improve infrastructure, whether by national governments, the private sector or investors like the Chinese. This growth in infrastructure will only increase demand for cement. Our development plans are designed to address the current gap between supply and demand and provide additional capacity to ensure that the two remain closely aligned over the coming years.

Tomorrow, Dangote Cement Plc will list on the Nigerian Stock Exchange with a market capitalisation of approximately US$14 billion. Last week the board of Dangote Cement Plc agreed to pursue negotiations to acquire the cement assets held by Dangote Industries outside Nigeria, including Sephaku. Our intention is to consolidate our cement assets into one company that will have the scale and resources to compete globally.

Thank you for the time.
Johannesburg: On Monday, 25 October, Sephaku Cement (Pty) Limited (Sephaku Cement) held a media and investor briefing to discuss the finalisation of its agreement with Dangote Industries Limited (Dangote) and the start of construction at its key projects. The transaction, which comprises a R779 million investment into Sephaku Cement by Dangote, was concluded at the shareholder general meeting of Sephaku Cement on 15 October 2010.

In terms of the agreement, Dangote has received 217,597,765 ordinary shares at an issue price of R3.58 per share, an agreement which increases the company’s interest in Sephaku Cement from 19.76% to 64%, at an average price of R4.47 per share. This further investment follows an initial R350 million of equity funding concluded in March 2008, making the R1.129 billion total investment the largest ever foreign direct investment into South Africa by an African company. The remaining 36% will continue to be held by Sephaku Holdings.

The agreement places Sephaku Cement in a unique position to develop its Aganang and Delmas projects. At completion, the Aganang Project, located near Lichtenberg in the North West Province, will consist of a limestone mine and a cement manufacturing plant. Moreover, it is the first new clinker-producing entrant into the South African cement market since 1934 and the 2.2 million tonne per annum cement-producing facility is expected to be in production by late 2012. The Delmas Project comprises a cement milling plant in Delmas, in Mpumalanga, and full production is also anticipated towards the end of 2012.

Aliko Dangote, President and Chief Executive of Dangote Industries Limited and the new Chairman of Sephaku Cement, has praised the transaction as taking place “at a crucial moment in the history of cement demand and supply, and at a crucial moment in terms of Dangote’s pan-African ambitions. We are immensely excited about the future prospects of both Aganang and Delmas and look forward to a long and prosperous relationship with Sephaku Cement.”

Commenting on transaction, Sephaku Cement CEO, Pieter Fourie, said: “Our partnership with Dangote reflects the attractiveness of South Africa to foreign investors and we are firmly committed to bringing a new entrant into the South African cement market for the first time in over 70 years. Construction is underway at both Aganang and Delmas, we are on track to enter the market in 2012.”

Queries:

Anthony Chijiena, Dangote Industries + 234 807 049 0149 (mobile)

Nicola Taylor or Charmane Russell, Russell and Associates + 27 11 88- 3924 (tel) +27 82 927 8957 or + 27 82 372 5816 (mobile)