PPC Ltd plans to enter the Algerian cement market by acquiring a 49% stake in Hodna Cement Company. Hodna will establish a new US$350 million cement plant with a capacity of 2 million tpa. The plant will be located in Hodna, which is some 300 km east of Algiers and near to Setif, a town known for its university and technological focus. The site is also close to raw material resources and has access to the country’s well-developed rail and road network, which will help to reduce logistics costs. Affordable gas prices will also maintain production costs at a favourable level.
Following a feasibility study, construction of the Hodna plant is expected to take 30 months. Commissioning is likely to commence in 4Q16. China’s Sinoma International Engineering will be contracted to supply and build the facility, while India’s Holtec Consulting will provide project management services.
According to PPC Ltd, cement prices in Algeria are currently around US$80 – US$120/t and demand for new housing stands at 225 000 unites pa.
“The Algerian cement market is very attractive as consumption exceeds local production by approximately 3 million tons of cement per annum. Moreover the Algerian government has committed itself to large scale capital spending programmes, including the US$6 billion New City Hassi Messaoud project, which will see the rollout of thousands of housing units. This will certainly boost the demand of cement in this country,” commented Ketso Gordhan, CEO of PPC.
The South African cement company’s plans, which are at an advanced stage, will see them partner with local shareholders in the form of Algerian private sector investors. In addition to its stake in Hodna, PPC will assume management control, enabling it to include the financial results of the project into PPC group accounts. The transaction will be funded on a project finance basis, including 80% debt funding from banks in Algeria.
“We are already building cement plants in three countries; Ethiopia, Rwanda and the Democratic Republic of the Congo. This project sees us entering yet another African country and gives us confidence that by 2017, 40% of PPC revenues will be earned outside of South Africa,” added Gordhan.
Adapted from press release by Louise Fordham
Read the article online at: https://www.worldcement.com/africa-middle-east/10022014/ppc_to_enter_algerian_cement_sector_714/