MANUFACTURING: PPC's Other R3bn Plan For Cape
Recent Western Cape Business News
CEMENT giant PPC has finally pulled the plug on its long mooted expansion at Riebeeck West - a cement capacity expansion project that was bedevilled by delays by the environmental impact assessment and the regulatory approval process.
It might be easy to review the decision cynically. The new Riebeeck plant would have boasted a capacity of 1.4 million tonnes a year – perhaps excessive considering PPC recently reported that its first half cement sales (down 15% overall) were particularly badly hit in the Western Cape.
The local market is very soft at present with other well known companies with local cement interests (Afrimat and Argent) reporting a flat residential market and a lack of new projects (post the World Cup building frenzy).
But PPC is not ditching plans to boost longer-term capacity. The company will still be spending a not inconsiderable R3 billion to upgrade existing cement manufacturing facilities in the next five years.
Reading between the lines it would seem PPC is banking on a gradual recovery in the province’s building activities, and perhaps opportunities to consolidate market share if smaller cement producers crimp capacity or even close down.
The decision to call off plans for a new cement factory at Riebeeck West was announced as part of an official review by PPC of its Western Cape capacity expansion programme. Recent interim results from PPC showed around R50 million was already spent on preliminary developments at Riebeeck West this year.
PPC CEO Paul Stuiver says the revised programme will see the company upgrading and increasing capacity at its existing Riebeeck operation as well as its De Hoek operation near Piketberg instead of building a single new factory.
He says the upgrade of existing plant will still increase capacity in the Western Cape by around 50% up to 2016. “The upgrade plan will allow PPC to increase capacity with lower impact on the surrounding communities and the environment and at a lower capital outlay.”
Stuiver says the new plan required phased expenditure of R3 billion over six years rather that the original R4.5 billion envisaged over four years for the Riebeeck West project.
“The original design was done during a period of peak demand and cement shortages. The economic landscape and capacity requirements have changed significantly since then.”
Stuiver says pending legislative changes will also make it more onerous to withdraw environmental applications in future. “Hence our withdrawal of the original application now.”
He stresses that with the revised plan PPC will still achieve its original objectives with regard to environmental standards, energy efficiency and capacity expansion in the Western Cape region. But now this will be achieved in phases and over a longer time.
The new expansion programme, Stuiver reassures, will also not result in any job losses at the PPC operations.
Stuiver says the new phased approach will still incorporate best available technology to meet world-class environmental standards with specific focus on energy efficiency.
He says the programme will also result in more traffic being routed onto the national road - having less impact on the smaller surrounding towns and less visual impact.
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