Challenge awarded to Chinese language firm ‘will use native supplies’, Sanlar says

The South African Nationwide Roads Authority (Sanral) has assured the cement business that Chinese language corporations which have just lately been awarded main Roads Authority contracts will use native supplies in these tasks.

Cement & Concrete SA (CCSA) wrote to Sanral to confirm that the Chinese language firm would use native merchandise and “they assured us”, Njombo Lekula, PPC’s managing director for South Africa and Botswana, mentioned on Monday.

Nevertheless, Njombo mentioned it was as much as the South Australian Bureau of Requirements (SABS) to implement using native merchandise in these tasks.

“them [SABS] Apparently, by the NRCS [National Regulator for Compulsory Specifications]Be the one to impose or ensure it is the native product getting used. “

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He added that whereas the procurement legislation – the Preferential Procurement Coverage Framework Legislation – has been questioned, he believes “we are able to belief the assurances we’ve acquired from Sanral that they are going to use native merchandise”.

Njombo’s feedback got here in response to analyst questions throughout a presentation on PPC’s monetary outcomes for the six months by September 2022 on Monday.

That is as follows Sanluol introduced earlier this month that it had canceled 4 of the 5 tenders in Could this yr.

The successful tasks are:

  • Mtentu Bridge: R3.428 billion to CCCC MECSA Joint Enterprise (JV);
  • R56 Matatiele rehabilitation: R1.057 billion to Down Contact Investments;
  • Ashburton Flyover: R1.814 billion funding in Base Main/CSCEC JV; and
  • EB Cloete Interchange Enhancements: R4.302 billion to Base Main/CSCEC JV.

Sanral Attorneys Contact Moneyweb

Sanral, by its legal professionals, wrote to Moneyweb searching for correction of an article printed that known as into query the compliance of two members of the successful three way partnership companion.

It additionally issued a media assertion on Sunday during which it supplied “proof of compliance by the profitable bidder” to deal with what it known as “growing allegations of irregularities and non-compliance in tendering to joint ventures (JVs)” and Chinese language firm”.

A Moneyweb search of the Development Business Improvement Board’s (CIDB) contractor registers of the 2 three way partnership companions revealed:

  • the registration of one of many corporations has expired, and
  • One other firm was deregistered.

Sanral mentioned Moneyweb had confused the 2 three way partnership companions with different corporations with comparable names, stressing that CSCEC South Africa (Pty) Ltd and MECSA Development have been a part of the successful three way partnership.

Looking the CIDB Contractors Register utilizing the precise firm title supplied by Sanral yielded the next end result for each searches: “No information to show.”

CIDB has not but responded to a request to confirm the accuracy of the registration standing of the 2 corporations and to touch upon the conflicting info.

PPC able to ship

PPC chief government Roland van Wijnen mentioned on Monday that the PPC was inspired by Sanral’s latest announcement to award main building tasks in South Africa and by Finance Minister Enoch Godonwana’s feedback on elevated infrastructure spending in his latest mid-term price range speech.

“With further capability to seize the rise in demand with out further capital expenditure, PPC is properly positioned to help much-needed building work throughout South Africa,” he mentioned.

Nevertheless, Van Wijnen mentioned cement costs in South Africa are so low cost that costs must rise by one other 15% for the cement business in South Africa to outlive.

Within the six months to the tip of September, PPC raised cement costs in South Africa and Botswana by a median of 5%.

Cement revenues in South Africa and Botswana have been reported to have risen by 4% to R2.9 billion, with margins squeezed by inflationary pressures regardless of price containment measures, leading to earnings earlier than curiosity, taxes, depreciation and amortization (Ebitda) falling from R515 million down that is R368 million.

Van Wijnen mentioned SA’s cement margins fell as a result of PPC’s power prices elevated an excessive amount of to get better all of those prices by worth will increase.

The PPC is specializing in initiatives to offset enter price inflation to forestall prices from rising because of inflation, he mentioned.

Cement import progress

Njombo mentioned world provide chain constraints and a weak rand led to decrease cement imports within the Western Cape, which had a constructive affect on cement gross sales within the retail sector.

Imports of cement and clinker fell 32% year-on-year, PPC estimates.

Njombo mentioned imports proceed to threaten the long-term sustainability of the native cement business, which is problematic for infrastructure enlargement and socio-economic growth.

He mentioned the cement business was nonetheless awaiting the response from the Worldwide Commerce Administration Council (Itac) on its software for tariff safety on imported cement.

Strategic actions have enabled PPC to proceed to cut back debt and preserve its main market place regardless of difficult and aggressive buying and selling situations in its core markets through the reporting interval, in line with Van Wijnen

“With the South African authorities gaining momentum in its infrastructure growth plan, we’re properly positioned to fulfill any enhance in demand,” he mentioned.

“On the identical time, PPC has a powerful monetary place and the precise focus to climate the present financial cycle.”

Business rationalization?

Van Wijnen dismissed strategies that PPC’s South African cement enterprise wouldn’t be capable to ship acceptable returns with out rationalizing the variety of producers available in the market.

In his expertise, consolidation has by no means elevated market demand, he mentioned.

“Finally, profitable industries in any nation depend upon fastened capital formation and infrastructure tasks,” he mentioned.

PPC mentioned its outcomes for the six months to the tip of September have been distorted by hyperinflation in PPC Zimbabwe’s efficiency.

Income rose 9% to R4.2 billion from R3.9 billion following the cessation of operations and divestiture of PPC Zimbabwe.

Ebitda fell 12 % to R580 million and margins fell to 13.7 % from 16.9 % because of a pointy enhance in gasoline and different power prices.

Nevertheless, cost-saving initiatives and worth will increase boosted Rwanda’s Ebitda margin.

Revenue earlier than tax rose 4% to R259 million from R250 million.

General earnings per share fell 60% to 4 cents from 10 cents.

No dividend was declared.

This text initially appeared on Moneyweb and is republished with permission.
Learn the unique article right here.

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