PPC to pump $200m into Zimbabwe
Pretoria Portland Cement (PPC) Zimbabwe has become the latest South African-based company to comply with Zimbabwe’s indigenisation laws.
Not only is PPC Zimbabwe – the subsidiary of cement maker Pretoria Portland Holdings (PHL) – now 51% controlled by the Zimbabweans, it also plans a $200 million (R1.8 billion) ramp-up of its investment.
The company, which is listed on the JSE and Zimbabwe Stock Exchange, operates two manufacturing plants in the landlocked nation and has yearly production of 1 million tons.
PPC Zimbabwe received a certificate of compliance this week from indigenisation and empowerment minister Saviour Kasukuwere for meeting the 51% indigenisation threshold.
The new shareholding in the company will now include a 29.6% stake held by ordinary Zimbabweans, an increase from the previously held 21.4%.
Under the community share ownership scheme, the company will give to Gwanda and Umguza communities a 10% stake. A 5% stake will go to the employee ownership trust and a local indigenous special-purpose vehicle will receive 4.9%.
The National Indigenisation Economic Empowerment Fund will get 9.7% stake.
The company also announced plans to roll out a $200 million plant in Mashonaland Central province, which will increase its yearly cement output by an additional 1 million tons.
Tryphosa Ramano, the chief financial officer of PHL, expressed optimism about the Zimbabwe unit. “The growth in the financial year for Zimbabwe has by far surpassed all other years and we look forward to more exciting developments as we entrench our Africa footprint in line with our sustainable strategy.”
The optimism from PHL and plans to expand follows similar announcements to vamp up operations in Zimbabwe by Anglo American Platinum (Amplats).
Amplats is keen on injecting $400 million into a new platinum mine, in addition to the Unki platinum mine, which it owns and recently met the 51% indigenisation requirement.
Mimosa platinum mine, a 50-50 joint venture between Amplats and Zimplats, an Impala Platinum subsidiary, is also mulling expansion of its operations and recently received the green light for its indigenisation plan.
Zimplats, which “in principle” agreed to comply with the indigenisation law in March, is rolling out a $300 million expansion of its Ngezi mine.
Erich Bloch, a senior economist at H&E Bloch consultancy, said the interest in Zimbabwe’s mining sector was a signal that investors continued “to hope against hope” that recovery was still possible despite political uncertainty.
Finance minister Tendai Biti indicated in last week’s budget announcement that mining had now overtaken agriculture to become the “anchor sector”.
Meanwhile, Hippo Valley, the unit of sugar cane operator Tongaat Hulett, has downplayed the ultimatum it received from Kasukuwere and said it was in talks with the relevant authorities to comply.
In its financial statement released this month, the company noted the increase in sugar production from 259 000 tons in 2009/10 to an expected 490 000 tons this year.
A substantial reinvestment into the business is expected to be made by Tongaat Hulett, which reported a 25.4% rise in profit from R1.047 billion to R1.313 billion this year.
“Zimbabwe, with Tongaat Hulett as a partner, has the potential to further develop indigenous private cane farmers substantially,” said Peter Staude, Tongaat Hulett’s chief executive.
“Based on Tongaat’s view of its existing mills, a further 600 farmers on 12 700 hectares could supply an additional 1.4 million tons of cane per year.
“In total, all these indigenous private cane farmer developments could earn $150 million gross revenue per annum and employ more than 12 000 people.”