PPC’s strength and vision supports African infrastructure expansion

South Africa’s construction sector is under major pressure to sustain itself, but there are positive signs of an upward trend. Alastair Currie speaks to Bheki Mthembu, executive, PPC, about how the group’s operations are faring locally and in Africa.

What is PPC’s take on opportunities for the civils and building sectors in 2023?

BM The approximately R903 billion allocated by the South African government for public sector infrastructure investments over the next three financial years starting in 2023/24 is very encouraging. As we understand it, there are four provinces where the bulk of the funds will be allocated, namely Gauteng, KwaZulu-Natal, and the Eastern and Western Cape.

Historically, there have been funding constraints and implementation bottlenecks; but if we can effectively unlock elements of this investment pipeline, it will have a highly positive impact on our construction and broader macro economy. It is well known that we have an extensive infrastructure backlog in terms of energy, housing, rail, roads, water and sanitation, so the time for action is now.

As South Africa’s largest cement producer, PPC is well positioned and invested to support demand in the local market, backed by a comprehensive national distribution network stretching from Cape Town to Musina. Internationally, we also have operations in Botswana, Zimbabwe, the DRC and Rwanda.

Our products have been tried and tested over the past 130 years of our existence and, during that time, have been an integral ingredient in a large portion of South Africa’s existing infrastructure, including megaprojects like Gautrain. That is also certain to be the case going forward.

Our slogan – ‘Strength and beyond’ –underscores our commitment to a life-long journey with our customers in terms of product excellence, custom solutions and comprehensive technical support to meet specific project specifications. These services are backed by our state-of-the-art laboratory testing facilities housed at our Jupiter plant in Gauteng.

Together with all of these elements, however, the one crucial thing we need to get right is public and private sector alignment and collaboration. The best infrastructure master plans – including the National Infrastructure Plan 2050 – are only possible if there’s a strong and sustainable construction industry to execute them. Plus, we need to educate and empower our communities to realise the benefits of social infrastructure as an enabler for education, healthcare and employment.

How does the African regional construction economy compare with trading conditions in South Africa?

Currently, in other countries where we operate in Africa, most are reflecting positive GDP growth, plus there’s a high level of public accountability and willingness to get things done.

Rwanda is experiencing a construction boom with landmark projects underway that include the Bugesera International Airport, situated approximately 25 km south-east of Kigali, where PPC is supplying bulk cement. The road and bridge segments are also very active in Rwanda – and maintenance – as is the residential housing market.

Due to the strategic location of our Rwanda plant, we’re also seeing a surge in bulk cement export demand into neighbouring countries like the DRC.

Meanwhile, in Zimbabwe, the country is currently investing 5-7% of GDP on public infrastructure projects that include dams, housing, roads and solar power plants. Over the past eight years or so, the housing market in particular has created huge demand for bagged cement, and this trend is set to continue.

In terms of megaprojects, the Gwayi-Shangani Dam development stands out as a significant one. The dam has an estimated reservoir capacity of some 634 million m3 and is now at an advanced stage of construction. Then on the roads side, there’s the Beitbridge-Harare Chirundu Highway project, which is one of Zimbabwe’s largest transportation investments in decades.

In Botswana, we also expect to see a renewed investment in infrastructure in areas like water and sanitation, schools and gravel-to-asphalt road upgrades within towns and settlements. But back in South Africa, the pace has been slower than in our other territories; however, as I mentioned in the beginning, the pipeline is growing.

How is PPC helping to make a difference for contractors and communities?

Alongside our technical services for construction projects, PPC invests extensively in community training in the regions in which it operates. We definitely support the view that no one should be left behind.

Examples include our CETA-accredited training on the steps required to build a house using our products. Skills include construction management, bricklaying and plastering. We trained around 200 people in South Africa during the past financial year through the CETAaccredited programme. However, we believe this programme is invaluable for aspiring SMMEs everywhere, as well as unemployed persons seeking entry into the building industry.

Allied to this, we’ve trained about 4 000 brickmakers nationally through our brickmaking workshops. The training focus is on making a quality brick and the business side of running a brickyard.

Alongside our own internal graduate and allied artisan development initiatives, we also run apprenticeship programmes for external candidates who may subsequently be offered a position with PPC. Trades include fitters and turners, and boilermakers.

Foremost, though, is our appreciation that the building blocks for education and skills development start at preschool and primary school level. In response, we fund projects that include meals programmes, the building and refurbishment of schools, as well as the distribution of our ‘Build a Word’ educational board game kits that promote spelling, reading comprehension and writing.

Recent CSI outreach examples include a new creche facility for Redeemed Kids Kingdom Preschool in Daveyton, Gauteng. PPC also recently ‘adopted’ the Happy Sabby Day Care Centre in Gomora, close to the group’s Hercules plant in Pretoria.

Are cement import volumes into South Africa dropping off or increasing?

Currently, the entire South African cement producing industry has an estimated spare capacity well in excess of 35%. For this reason, there’s absolutely no justification for cement imports, but there’s still evidence of this. Estimations put this at around 1 million tonnes annually.

As a proudly South African company, PPC, like other local producers and companies in the cement logistics supply chain, is committed to transformation, SLP and CSI contributions, pays tax, and directly and indirectly creates employment. Cement imports do not contribute and may in fact not meet our strict quality standards, which has implications for potential structural failures.

The upside is that there has been an estimated 20% decline in imports, but this could partly be due to the recent slide in the rand against the US dollar, which makes it less attractive to import. But the threat remains when market conditions become more favourable.

What needs to change in South Africa to accelerate our economic reconstruction programmes?

For investors, policy certainty is essential, as are an enabling environment and legal enforcement, especially when it comes to procurement and stakeholder engagement.

A case in point is the so called ‘construction mafia’. We really need to get on top of this phenomenon, as it is a major downside risk, deterring investments and delaying projects along with the knock-on effect of cost overruns. It’s also not something we see happening in other parts of Africa where we operate.

How have sustained Eskom power outages affected PPC’s production in SA?

We have a dedicated supply agreement with Eskom as a heavy industrial user, so in principle we should not be affected. However, at times we’re requested to curtail demand on the grid during higher load-shedding stages. This means that we need to shutdown powerhungry units – sometimes for up to six hours – which has serious implications for our production on specific products. Sometimes, to meet an order, we’re also forced to operate during peak periods where the Eskom tariff is the highest, which significantly increases our manufacturing cost.

Then there are the power dips and subsequent surges that burn out critical equipment. So, load-shedding ripples across the value chain – from our mining operations to the factory and dispatch.

But clearly, we don’t function in isolation. The impact of load-shedding across society and business in general has been devastating. So, before we talk infrastructure development, we need to guarantee energy security and keep it affordable. In the meantime, we are rolling out solar solutions across our operations to reduce the baseload demand wherever practical.

And in closing?

As a manufacturer, we live by our brand promise of empowering people to experience a better quality of life. We are integral to South Africa’s future, as well as the other African countries where we operate. The potential for positive socio-economic gains within the sub-Saharan region are significant, and we need to leverage the opportunities together through stronger public and private engagement.