South African cement manufacturing giant PPC plans to invest into building a new $230 million factory in the Democratic Republic of Congo (DRC) in a move that will further boost the company’s aggressive expansion within the sub Saharan region.
This is a bold venture into a politically volatile country which in parts continues to be haunted by a civil war. However the DRC is considered a potentially attractive market due to rich natural resources. Large parts of the vast country have experienced relative calmness in recent years and word is extended political stability will deliver phenomenal economic growth.
PPC announced its DRC plan yesterday and added that it has signed a Memorandum of Understanding (MOU) with DRC’s Barnet Group sprl, to be its local partner of choice.
The company said “To better understand the market, PPC has partnered with local entrepreneur, Jean Saidi Bamanisa, Chairman of the Barnet Group, who is also the Honorary Secretary of the Federation of Congolese Companies. He was elected Governor of the Oriental Province of the DRC”.
PPC CEO, Ketso Gordhan, said the Greenfield project includes the construction of a one million ton per annum cement factory and associated quarry. The preferred site is located 20km from Kimpese in the western DRC, which will ensure easy access into the main markets.
He noted that there are existing cement manufacturers in the region, however, the market is severely undersupplied. At present, the DRC has 16kg per capita annual cement consumption, the lowest in Africa, compared with the South African average of 240kg and the global average of 400kg.
Gordhan highlighted significant progress made by PPC in its strategy to expand across the sub-Saharan region. Last year the company acquired a 27% stake in the Habesha Cement Share Company in Ethiopia for $12m and 51% of Cimerwa of Rwanda for $70m. It also received its Zimbabwean indigenisation certificate, which opened the way to expand its operations. This was followed by the announcement PPC made regarding its intention to invest in a new one million ton per annum cement plant in Harare.
“This investment is another of PPC’s commitments to invest in sub-Saharan Africa and we are very confident about the DRC. 22% of PPC’s revenue comes from outside South Africa, at present, but the target is to increase this to 40% by our 2016 financial year. We look forward to a growing contribution and partnership with the DRC in the years ahead,” said Gordhan.
PPC noted that recently, Remy Musungayi, the DRC Minister of the Industry and Small and Medium Enterprises, welcomed South Africa-based companies to explore the opportunities offered by its new special economic zone (SEZ). The DRC Government has also placed an emphasis on infrastructure projects.