DANGERS OF USING SUB-PAR CEMENT HIGHLIGHTED BY PPC

The cement industry has repeatedly asked for generalised tariff protection on imported cement.

African cement producer PPC has warned about the dangers of using subpar cement in construction projects. It cautions that the risk has increased amid the recent entry of many new competitors, especially in the blending space.

The warning comes as the cement manufacturer shifts its focus to its core South African and Botswana markets — having recently exited Rwanda — making a concerted effort to turn around its main business, which has experienced declines in core earnings  and margin over the past five years.

PPC, in its latest annual report, notes that the rise in substandard-quality cement in the South African market was a glaring safety and sustainability risk and called for the state to protect the local cement industry.

The report notes: “Substandard products erode public confidence in cement products and negatively impact the established environment in South Africa. To remain sustainable, the local cement industry must be protected from the unfair competition to which it is exposed, whether blended locally or imported.”

The construction and materials sector, with a market capitalization of R5.9 billion on the JSE, has faced ongoing issues with underperformance and declining profitability over the years. The industry has struggled with weak demand due to stagnant construction activity, an influx of low-cost cement imports, and locally produced blended variants.

Recent research from the Cement Import Monitor, published in March, highlighted the growing concern over cement imports despite ongoing port congestion. This data suggests that the issue of inexpensive imports is affecting the industry more broadly than just PPC.

The South African cement sector has persistently sought broad-based tariff protection for imported cement. They argue that anti-dumping duties targeted at specific countries are taking too long to implement and are insufficient to protect the industry from what is seen as unfair competition. Despite these efforts, the issues remain unresolved.

Chronux Research’s study has warned that local cement manufacturers might be forced to shut down plants, endangering thousands of jobs as they struggle to compete with a surge of inexpensive cement imports.

Vietnam remains the leading supplier of imported cement, with smaller quantities also coming from Mozambique and Namibia.

PPC stressed the need to uphold a high-quality, premium brand with exceptional standards and reliability to capture market share from competitors offering lower-quality products. The company is also set to work with the SA Bureau of Standards to bolster vigilance and enhance compliance testing.

Challenges such as overcapacity in the local cement market, low demand, climate change, and unreliable power and rail services from Transnet Freight Rail were identified as risks to PPC’s long-term sustainability.

Nonetheless, group chair Jabu Moleketi pointed out that the recent cessation of load-shedding has created a more stable operating environment for PPC. This improvement supports the company’s sustainability efforts by enabling consistent operations and reducing dependence on carbon-heavy backup generators.