Zhu Linhe, chairman at Sinoma Overseas Development Company (left) and Matias Cardarelli, PPC chief executive (right) at the signing of an agreement for Sinoma to build PPC a R3 billion cement plant in the Western Cape.
Image: Supplied
PPC, which this week announced a massive solar power project, saw its share price surge by 9.5% on Thursday morning after its board approved plans to build a R3 billion cement plant in the Western Cape.
The board also greenlit PPC's entry into an engineer, procure, and construct (EPC) contract with Sinoma Overseas Development Company, a leading global cement equipment and engineering firm, for the construction of the plant.
PPC had announced in January that it was conducting feasibility studies on a new state-of-the-art integrated cement plant, with construction expected to start in the second quarter of 2025 and commissioning anticipated by the end of 2026.
The share price traded at R4.61 on Thursday afternoon, representing a 21.3% increase from R3.30 a year ago.
Ahead of a capital markets day for investors on Thursday, the board stated that they had approved the R3bn capital expenditure after considering PPC's capital allocation criteria and its two times net debt to EBITDA (earnings before interest, tax, depreciation, and amortisation) covenant.
The new plant will have a capacity of 1.5 million tons of cement per year, replacing and increasing existing capacity. It will be constructed at an existing PPC site in the Western Cape, which has all the necessary permits in place. PPC's total cement production capacity in South Africa is around 7 million tons per year.
PPC's existing plants in the Western Cape will continue to operate during the construction and commissioning of the new plant.
“As anticipated, Sinoma will commence its work under the EPC contract in the second quarter of the calendar year 2025,” the board said.
PPC’s plants and facilities in the Eastern Cape include PPC de Hoek in Piketberg, a key facility for PPC operations in the region. The PPC Riebeek plant is located in Riebeek West, while the Montague Gardens Facility serves as a sales and distribution centre.
In the ten months to January 31, the group reported that the positive results of a turnaround plan had carried into the second half of the financial year from the first half.
Turnaround initiatives in commercial operations and supply chain were already showing results, including plant sourcing optimisation, sales product mix enhancement, improved thermal energy costs, and logistics management.
Revenue fell by 3% during the ten months, but earnings before interest, tax, depreciation, and amortisation increased by 20%. The decrease in revenue was primarily driven by lower revenue at PPC Zimbabwe, while the South Africa and Botswana group delivered a flat performance.
On Tuesday, PPC announced it had reached a 24.5 MWp solar power purchase agreement, to be generated from more than 20 000 solar panels, with Yellow Door Energy (YDE), a leading renewable energy independent power producer (IPP) for businesses in the Middle East and Africa.
The project will operate under a solar wheeling arrangement, where YDE’s solar park in Leeudoringstad, North West Province, will deliver electricity to four PPC operations via the Eskom grid.
These are PPC Slurry in the North West Province, PPC Dwaalboom in Limpopo, and PPC De Hoek and PPC Riebeek in the Western Cape.
The solar project includes the installation of a 43 kilometre overhead electrical line to connect the solar park to an Eskom substation, enhancing grid infrastructure and facilitating access to clean electricity.
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