Cement Industry Shake-Up Looms

The cement industry will have greater competition from the end of next year when new entrant Sephaku starts production, CEO Pieter Fourie said last week.

Sephaku is working with Sinoma, a Chinese company with cement plant building experience. The company will be the first new entrant to the local cement production market since 1934.

Sephaku is also building a cement mill near Delmas, in Mpumalanga. “We look like we will produce 2.5-million tons a year from the end of next year,” Mr Fourie said.

Sephaku is largely funded by Nigerian partner Dangote Cement, which has pumped in money for new technology.

“Our plant will be more advanced than the old plants, some of them up to 50 years old, that other cement makers have in South Africa,” Mr Fourie said.

Sephaku has contracted 800 Chinese experts and employed 400 South African workers to build the plant. It has been criticised for not using more locals. “The use of Chinese staff is due to their skills,” Mr Fourie said. “Sinoma has built more than 200 cement plants globally. There are only three global suppliers of cement plants: one German, one Danish and Sinoma.

“When we initially negotiated the contract, we asked South African contractors to quote as well, in partnership with European suppliers.”

Mr Fourie said South African contractors were unable to quote a fixed price for the building contract.

Sinoma, on the other hand, committed to a fixed price.

Further, an audit showed that skills needed for the project were not available locally.

Alistair Anderson: andersona@bdfm.co.za Published on BusinessDay December 10 2012