South Africa cement maker PPC is to invest US$230-million in building a new manufacturing plant in the Democratic Republic of Congo (DRC), the company announced on Monday.
Chief executive Ketso Gordhan said PPC had signed a memorandum of understanding with local partner the Barnet Group to start work on the greenfield project, which includes the construction of a one-million ton per annum cement factory and associated quarry.
The new factory will be located 20 kilometres from Kimpese in the western DRC, which will ensure easy access into the main markets. According to PPC, while there are existing cement manufacturers in the region, the market is "severely undersupplied".
"At present, the DRC has 16kg per capita annual cement consumption, the lowest in Africa, compared with the South African average of 240kg and the global average of 400kg," the company said in a statement.
Gordhan said PPC was "very confident" about the DRC, adding: "Twenty-two percent of PPC's revenue comes from outside South Africa, at present, but the target is to increase this to 40% by our 2016 financial year."
Gordan said the company made "significant progress" with its Africa strategy last year, acquiring a 27% stake in the Habesha Cement Share Company in Ethiopia for $12-million, and 51% of Cimerwa of Rwanda for $70-million.
And, having received its certificate for compliance with Zimbabwe's indigenisation laws, the company announced in February that its Zimbabwean subsidiary, Portland Holdings Limited, would be building a new one-million ton per annum cement plant in Harare to service its markets in Zimbabwe and Mozambique.
PPC said it was partnering with local entrepreneur Jean Bamanisa on its DRC project. Bamanisa, the chairman of the Barnet Group, is also the honorary secretary of the Federation of Congolese Companies, and the elected governor of the Oriental Province of the DRC.
DRC Minister of Industry Remy Musungayi recently invited South Africa-based companies to explore the opportunities offered by its new special economic zone (SEZ).
The DRC government has also, like South Africa, placed an emphasis on infrastructure projects.
According to recent analysis from market researchers Frost and Sullivan, rapid infrastructure development in South Africa and its neighbouring countries is set to boost the prospects of the cement industry in the southern African region.
Frost and Sullivan's study, released last month, focused on South Africa, Zambia and Zimbabwe, predicting that $940-million would be invested in the cement industries of these three countries between 2013 and 2018.
Cement production would be instrumental to government expenditure plans, the study found, especially the Regional Infrastructure Development Master Plan which the Southern African Development Community (SADC) aims to roll out over the next 15 years.
Internally, the South African government is planning to spend in excess of R4-trillion on a massive state-led infrastructure drive over the coming years, with a substantial focus on rail, road, energy and water infrastructure.
"Higher government spending on public infrastructure, such as the construction of new energy and power facilities, as well as the expansion of transportation infrastructure, will boost the need for cement in southern Africa," Frost and Sullivan research analyst Yeukayi Kadzere said in a statement.