PPC’S expansion into Africa would make the company a favourite with investors, especially in South Africa, says investment banking group Imara.
Imara predicted that competition in sub-Saharan Africa’s cement market would intensify in the short to medium term, as supply exceeded demand, but that PPC’s entry into Algeria would buoy the group’s fundamentals.
“In the long term we see demand growing ahead of planned supply and PPC realising the targeted growth in revenue and earnings,” the Botswana-listed group said.
PPC has new projects in Zimbabwe, Rwanda, the Democratic Republic of Congo (DRC), Ethiopia and Algeria and aims for 40% of its total revenue coming from outside South Africa by 2017, compared with 26% percent currently.
PPC International MD Pepe Meijer recently said the company had a major appetite for west, east and north Africa.
“We are still focused on west Africa and east Africa. Rwanda is well aligned to the eastern side of the DRC and the Burundi area. Uganda, Kenya and Tanzania – that’s an area that we are seriously considering.
“However, it’s becoming very competitive, particularly Kenya. West Africa is the area where we haven’t really set our flag down yet. Ghana is still a country to look at. Nigeria is not to be excluded. And then the surrounding countries – Niger is also getting to the front in terms of opportunities and so is Mali,” he said.
Meijer was quoted as stating that Algeria was often seen as a difficult country to enter, admitting it had been a steep learning curve for PPC. He said Algeria had a cement shortage of about 4 million tons a year.
By Roy Cokayne
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