17.01.2025 16:22

PPC signs Memorandum of Agreement for a new r3 billion integrated cement plant in South Africa

The leading Southern African supplier of cement and related products, PPC Ltd (PPC), has signed a memorandum of agreement with a Chinese company for the construction of a new R3 billion state-of-the-art integrated cement plant in the Western Cape. 

PPC and its Chinese partner entered into a strategic co-operation agreement in July 2024 to collaborate with each other to identify new projects and opportunities to improve efficiencies at PPC’s operations. The 1,5 million tons of cement per annum plant, which will replace and increase existing capacity, is planned to be constructed at one of PPC’s current sites. The new plant will be equipped with the latest technology, including a fully dedicated solar generation system, and will enable PPC to supply the lowestcarbon cement in the country. Overall, the technology will result in substantial improvements in energy efficiency, reduced coal consumption and lower emissions per ton of cement produced. This will contribute to meaningfully lowering production costs, thereby making PPC significantly more competitive and profitable. 

PPC CEO, Matias Cardarelli, said, “South Africa’s changing cement market dynamic urgently requires modern and cost-efficient assets, and environmentally conscious producers. At the heart of our “Awaken the Giant” turnaround strategy is the active pursuit of strategic opportunities and projects to ensure that we are successful in a more competitive future market context. With this new and most advanced energy and environmentally efficient plant in the country, we will be able to supply our customers with lowercarbon cement at a more competitive cost. It represents a major step in the sustainability of our business moving forward and will play a key role in achieving PPC’s commitment to reduce its carbon emissions and to deliver value to shareholders.” 

While the feasibility studies for the plant have reached an advanced stage, over the next three months the parties will finalise the scope and final assessment of the new plant, as well as the associated turn-key engineer, procure and construct (“EPC”) agreements. Subject to PPC’s board approval, it is anticipated that the construction of the new plant will start in the second quarter of 2025 and will be commissioned by the end of calendar year 2026. 

The existing plants in the Western Cape will continue to operate during the construction and commissioning process, thereby providing funding support and a smooth transition. Based on analyses done to date, management is of the view that the new plant robustly meets all PPC’s capital allocation criteria. The funding structure is being finalised, but management believes that it can fund the new plant from debt facilities within its current two times net debt to EBITDA covenant. This is assisted by cash that will be generated by the existing operations during construction and a milestone payment structure agreed in principle with the Chinese company. 

Region: Africa
Source: PPC
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