South Africa’s cement maker Pretoria Portland Cement (PPC) on Tuesday announced that it would roll back its interest in its Zimbabwean operation through an indigenisation-related equity disposal to local investors.
The local unit is already listed on the Zimbabwe Stock Exchange, which implies the indigenisation and empowerment deal is likely to be executed as a private placement with Zimbabwean institutional investors.
In terms of Zimbabwe’s Indigenisation and Economic Empowerment Act, foreign operations with a minimum net asset value of $500 000 must roll back to an equity ceiling of 49% in five years.
PPC CEO Paul Stuiver said it would ensure the indigenisation transaction makes commercial sense.
But the company will have to wait for government to announce sector-specific indigenisation equity thresholds, still being developed.
In the group’s full-year financial statement to September 30, PPC reported that it intended to expand to Mozambique and other countries in southern Africa, to increase its footprint on the continent.
Outside South Africa, the cement giant is established in Zimbabwe and Botswana.
In Zimbabwe, PPC sells cement under the brand Unicem, while in Botswana and South Africa it trades under Surebuild.
PPC is involved in the production of metallurgical grade limestone, burnt lime and burnt dolomite and its total installed capacity can produce seven million tonnes of cementitious products every year from its eight cement manufacturing facilities and five depots.
In the financial report, PPC said cement volumes in the region fell 7% during the period, as a result of a drop in construction in the region, which weighed on its earnings.
Net income for the group declined to R1,01 billion or $148 million from R1,02 billion last year.
Sales grossed R6,8 billion. “We remain concerned about the outlook for cement demand in the short term,” Stuiver CEO said in the statement.
“(But) PPC is well positioned to benefit from the medium to long-term recovery.”