Foundations set for local cement industry as govt bans imports for state projects

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Local cement companies have gotten a significant boost after government banned the use of imports of the building material on state projects.
Local cement companies have gotten a significant boost after government banned the use of imports of the building material on state projects.

Local cement companies received a significant boost on Monday after government announced a ban on the use of cheaper imports of the building material on state projects.

South Africa’s cement industry, which includes companies like PPC, AfriSam, Sephaku Cement and Lafarge Industries, has been battling against a flood of imports. The industry has anti-dumping tariff protection against cement imported from Pakistan but Vietnam has been a problem.

A circular by the National Treasury said that bids for state projects must, in respect of cement, "contain a specific bidding condition that only locally produced or locally manufactured cement with a stipulated minimum threshold for local production and content will be considered." 

PPC said in a statement on Monday that before the new regulations imports of cement and related products made it tough for local producers to compete.

The manufacturer said the new regulations will save the local industry, create jobs and help grow the economy.

PPC’s share price climbed almost 9% after the announcement, while Sephaku Cement’s rose by 6%.

Bryan Perrie, CEO of industry association Cement and Concrete SA (CCSA), said the sector was "delighted"  by the designation, following years of lobbying for protection.

"This is an important ruling to protect a sector vitally important for the national economy. Furthermore, it has come at the right time in view of the multi-billion rand infrastructure projects planned by the government over the next three years," he said. 

Last year, the government announced a spending programme for 50 strategic infrastructure projects and 12 special projects.

"Although cheaper, imported cements reaching South Africa may conform to regulatory standards, South African cement producers have to comply with a Mining Charter, transformation targets, and social and labour plans, all of which importers do not have to comply with. In addition, local producers are subject to Carbon Tax which the importers are also exempt from," he said.

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