Pretoria Portland Cement Limited has announced plans to enter the Algerian cement market through a partnership with Hodna Cement Company. Hodna’s experience in construction and related sectors is expected to aid PPC’s aim to partner with local shareholders in Algeria.
The Algeria plant will add to PPC’s US$1bn African project portfolio.
The project is being planned for development near the north-eastern Algerian town of Sétif and it will be constructed by Chinese engineering, procurement and construction group Sinoma.
Algerian cement demand is estimated at 22 million tons a year and PPC has entered the market through the acquisition of a 49% interest in the Hodna Cement Company, which will be constructing a two million ton per annum plant for approximately US350mn roughly 300km east of Algiers, and assume management control.
This would allow for the consolidation of the financial results of this project into the PPC group accounts. The transaction is also expected to be funded on a project finance basis, with 80 % of the debt funding coming from local Algerian banks.
PPC, which has operations in Botswana, Mozambique and Zimbabwe as well, indicated that once the feasibility study had been concluded, construction of the plant in Algeria would take up to 30 months, with commissioning anticipated by the fourth quarter of 2016.
PPC are already building cement plants in Ethiopia, Rwanda and the Democratic Republic of the Congo. According to PPC this project gives them confidence that by 2017, 40% of its revenues will be earned outside of South Africa.