SA and Chinese firms to build cement plant

South Africa's Women Investment Portfolio Holdings and limestone miner Continental Cement have announced a joint venture with the China-Africa Development Fund and Jidong Development Group to build a R1.65bn cement manufacturing plant in Limpopo province.

The investment "will significantly increase South Africa's cement production capacity, while also contributing to economic activity and job creation in Limpopo," Women Investment Portfolio Holdings' (Wiphold's) Gloria Serobe said in a statement last week.

Growing SA, China links

The deal represents a significant foreign direct investment into the local cement industry, with an inflow of over R800 mn from China, 45 per cent of which will be equity investment and the rest in the form of commercial debt.

Jidong, a leading developer of cement plants and the largest cement producer in Northern China, and the China-Africa Development Fund (CADFund) are the majority shareholders in the joint venture, holding 51 per cent. Wiphold holds 23.9 per cent, with the remaining 25.1 per cent stake held by Continental Cement.

"This deal underlines the growing links between South Africa and China, and an increasing appetite for South African and Chinese institutions to provide export credit and debt finance," said CADFund CEO Chi Jianxin. "This creates increased opportunities for projects between our two nations."

Skills, knowledge transfer

The new plant, which will be located 85 kilometres north of the town of Brits and adjacent to Continental Cement's limestone deposits, will be designed to initially produce 2,500 tonnes of pure ordinary portland cement per day, with the capacity to significantly increase production according to market demand.

Jidong will both build and operate the plant, which will be based on the best technology available.

"We have significant experience in the developed and highly competitive Asian markets, where we have built plants that have added substantial capacity to the Asian cement industry," said Jidong chairman Zhang Zengguang.

"We are pleased that we will be able to transfer our knowledge, skills, best practices and efficiencies to South Africa."

Lower costs, job creation

The joint venture consortium expects to distribute most of the cement to the regional market in Gauteng, and believe they have a significant competitive advantage in that the cement plant will be closer to the province than any other cement plant, resulting in lower transport costs.

"The plant is in close proximity to the Raputi community which is dependent on the local farming community for employment. The plant will provide work for 600 people during the construction phase and 170 people during operation," said Continental Cement CEO Anton Weavind.

"A large proportion of this labour contingent will be sourced from this community."

The venture follows an agreement between Wiphold and Jidong, signed in 2007, in terms of which Wiphold would import and distribute Jidong/Wiphold-branded cement into South Africa, Tanzania and Angola.

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
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