Western Cape Business News

Send  Share  RSS  Twitter  15 Nov 2009

VENTURES: Imported Cement Slashes Costs


Recent Western Cape Business News

AN innovative step that Cape Town property developer and entrepreneur Chris Tapsell took two years ago to trim building costs on his own developments has proved so successful that it has led to the establishment of a thriving new business that he believes will enable developers, the construction industry, municipalities involved in low-cost housing projects, and owner-builders to slice off 5% to 10% of their total construction costs, as he has done.

Faced with tough conditions in the property market, Tapsell came to the conclusion that he would either have to sell his properties at a lower price and drastically cut profit margins, or try to trim his costs without sacrificing quality. After a close examination of all his building material costs, he decided that, as cement is used extensively in the construction industry for foundations, walls, plastering, cement blocks and so on, he would begin importing it for his company Group 3 Properties’ own needs.

He and his business partner Jono Erskine, who heads Group 3 Properties’ UK office, drew on the network of contacts that the latter had established while running a coal-exporting business to India, and forged an exclusive deal with Saurashtra Cement, one of India’s top cement-producing companies, to supply its Hathi brand to their company.

After conducting extensive tests on the Indian supplier’s cement, Tapsell began importing it in small quantities for use in his company’s 15 current developments around South Africa. He found that not only was the cement cheaper than local products but that less could be used because of its strength. “We use a mixture of one 50 kg bag of this cement, which is produced to 42.5 CEM 1 quality, to four bags of sand to achieve a 15 MPA strength for footings,” he says. “For brick- and block-making, we use one bag of cement to eight bags of sand.”

The saving that he achieved in his own developments led him to consider the benefits of importing cement for a broader market. After marketing the product to a small group of customers and finding that they were as happy with the cement as he was, he set up a company called International Portland Cement (IPC) to distribute it on a wider scale.

Tapsell says the importation of cement is subject to stringent regulations. “A representative from the National Regulator for Compulsory Specifications, a government organisation that regulates the quality of all cement used in South Africa, visited the Indian factory to inspect and approve our cement before we could bring it in. We are the first South African importer to be registered with the NRCS.”

Every shipment of cement leaving India is also certified by Société Generale de Surveillance (SGS), an international inspection agency that regulates quality control of products. In addition, IPC has obtained SABS approval for the use of its cement in South Africa and Southern Africa, he says.

Since launching the product, Tapsell and his team have sold over 80 000 tonnes of cement through their warehouse premises at South African Container Depots (SACD) in Durban, Richards Bay, Port Elizabeth, East London and Cape Town. “We have 2 000 tonnes arriving at each port every two weeks so we can provide stock on a continuous basis to our clients, which include builders, building supply companies and cash-and-carry outlets throughout Southern Africa,” he says.

IPC is currently also engaged in setting up warehouses in Angola, Namibia and Mozambique.

Tapsell says IPC aims to acquire a 20% share of the Southern African cement market. “We’ve already made some very big inroads into the municipalities in the cities where we’ve got warehouses, to assist them in bringing down the cost of their low-cost housing projects,” he says. “We’ve just taken an order for 180 000 bags of cement from one municipality in the Eastern Cape. The municipalities typically use between 20 and 30 bags of cement for the top structure of each home, so the cost savings we offer could impact on them quite significantly.”

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