South Africa’s cement manufacturing giant, PPC, is rushing to cement its position within the sub Saharan region as can be seen through its latest acquisition of a 51% stake in Cimerwa of Rwanda.
Announced today the Rwandan $69.4 million acquisition comes shortly after PPC spread its wings into the Ethiopian market. PPC said “Combined with our recent investment in Ethiopia, the Cimerwa transaction will increase PPC revenue outside of South Africa to more than 30% by 2015/2016.”
PPC seems to have been shaken out of its southern African comfort zone by the entry of Nigerian industrial holdings giant, Dangote Group onto the South African market. Through a subsidiary called Dangte Cement, the Nigerian group is leading the establishment of a multibillion rand Greenfield cement manufacturing operation in South Africa. The operation is called Sephaku Cement. This movement comes as infrastructure development is picking up within the sub Saharan region at the back of a scramble for natural resources and a growing middle class. This movement is expected to lead to higher construction activity.
Commenting on the Rwandan deal PPC CEO, Paul Stuiver, said “This transaction is a further step in our commitment to invest in sub-Saharan Africa and we are very confident about Rwanda. The Cimerwa plant is located in a challenging but very strategic region in east Africa, which currently lacks significant cement production capacity.”
Cimerwa, situated in south-western Rwanda, has been the only cement producer in Rwanda for the past 28 years. It has a current capacity of 100,000 tons cement per annum and is constructing a 600000 tons per annum expansion that will be commissioned during 2014.
In addition to shareholder equity contributions, Cimerwa is in the process of finalising US$104m debt financing to complete the expansion project.
Current demand for cement in Rwanda is estimated at 350,000 tons per annum. Based on Rwandan and the surrounding region’s positive economic outlook, regional cement demand is projected to increase to 1 million ton during the next decade.
The chairman of Cimerwa, Afrique Ramba said; “We are excited with the PPC relationship and the potential of Cimerwa to play an even bigger role in the future development of Rwanda.”