One of South Africa’s oldest companies to build R3 billion plant in Western Cape

South African cement giant PPC will construct a new R3 billion best-in-class integrated cement plant in the Western Cape, with construction set to start this year.

PPC is one of South Africa’s oldest companies, having been incorporated in 1892 as the first cement manufacturer in South Africa.

The company has since grown its reach across sub-Saharan Africa, and its capacity has grown to around 11.5 million tonnes of cement products each year.

PPC cement was famously used to build the Union Buildings from 1909 to 1913, the first concrete structure at Loftus Versfeld, and the modern Cape Town City Stadium.

The company informed shareholders on Thursday, 27 March 2025, that its board of directors has approved the R3 billion needed to construct the new plant.

This construction was first announced on 16 January 2025. PPC said it would embark on the construction of a new state-of-the-art integrated cement plant, which would commence in the second quarter of 2025 and would be commissioned by the end of the 2026 calendar year.

The company said its board considered PPC’s capital allocation criteria and its current two times net debt to EBITDA covenant in reaching this decision.

The plant, with a capacity of 1.5 million tons of cement per annum, will replace and increase the company’s existing capacity and will be constructed at an existing PPC site in the Western Cape.

This site already has all the necessary permits in place, and PPC’s existing plants in the Western Cape will continue to operate during the construction and commissioning of the new plant.

The board has also approved that PPC enter into an engineer, procure and construct (EPC) contract with Sinoma Overseas Development Company, the leading cement equipment and engineering company in the world.

Sinoma will commence its work under the EPC contract in the second quarter of the 2025 calendar year.

PPC previously said this turnkey EPC contract will significantly de-risk any capital overruns.

PPC turnaround

While PPC is still a giant in the local cement industry, it has taken several hits over the past few years.

Sluggish economic growth, cheap cement imports into South Africa, and the country’s struggling manufacturing industry have significantly impacted the company’s performance.

Between 2019 and 2023, the company experienced fluctuations in revenue and profitability, with a notable decline in 2021.

Therefore, PPC embarked on a turnaround strategy, which has started to bear fruit.

On 3 March 2025, the company released an operational update detailing the progress it has made on its “transformative journey” so far.

The first key steps PPC has implemented so far include key strategic personnel changes, the simplification of its previously complex organisational structure, and the realignment of its organisational culture to ensure the appropriate results-orientated focus, cost discipline and a sense of urgency.

It said this journey is aimed at repositioning the group for sustainable profitability and long-term growth.

“The Awaken the Giant turnaround plan was developed to execute on the opportunities identified to improve the performance of the group while scoping strategic opportunities,” the company said.

The first sign of recovery for PPC came in its half-year performance reported on 18 November 2024.

The company said this has continued into the second half of the financial year as the plan gains momentum. 

“In the key areas of commercial, operations and supply chain, the initiatives under implementation are already showing results,” it said.

This includes plant sourcing optimisation, sales product mix enhancement, improved thermal energy costs and logistics management. 

These factors led to an improvement in PPC’s EBITDA, which grew by 20% in the ten months through January 2025. The company’s EBITDA margin also improved by 3.2 percentage points to 16.6%.

“The increase in both absolute EBITDA and EBITDA margins is due to all business units improving their results mainly as a consequence of the turnaround plan,” it said.

While there are still significant challenges at the company, it is securely on the road to recovery, with the construction of this new plant expected to aid its journey.

This project is expected to secure PPC’s cost competitiveness and low-carbon cement leadership.

The company previously said that only operating on one site will allow for a material reduction in variable costs due to the technology and fixed costs benefits. This will make the plant value accretive without relying on market growth.