PPC’s decision to pump R3bn into its cement operations in the Western Cape is a bold move in the face of cement oversupply in South Africa, unfettered cheap imports, and an economy that is still limping along without the infrastructure investment from the state that it so desperately needs. It was also poorly received; the news pushed its shares down more than 3% on Thursday, though over one year PPC is still almost 23% up.
Still, it’s probably what another company in a different but similarly at-risk industry – steelmaker ArcelorMittal South Africa – should have done 20 years ago. That is, invest in high-tech, efficient technology to allow it to properly compete without state subsidies.
Currency spoke to PPC CEO Matias Cardarelli about the deal.

This feels like a supremely confident move in what is a very unconfident environment. Does South Africa’s growth situation justify such a big investment for PPC?
I have to answer this in two different ways: first, the analysis and assessment we have done was based on a scenario that we will not see growth in South Africa in the years to come. So we ran all our scenarios in a very conservative way. We are very confident that even in a scenario of no growth, this project makes financial and business sense. From my perspective about the market – and I’ve been here for six years – I think we are reaching the bottom of the cycle. If South Africa would like to decrease the unemployment rate and would like to see better numbers in terms of GDP, infrastructure must happen.
There are plenty of parallels to be drawn between South Africa’s steel and cement industries – so even if you’re at a low point, are these investments essential for the future viability of the company?
This is exactly the case. In the industrial sector, it’s impossible to survive unless you invest heavily in new technology. Personally, I think there has been a big misunderstanding for years in the cement sector to talk about overcapacity and compare all new capacity as if it were the same. You can’t talk about overcapacity when you have more capacity from the same technology.
What we’re seeing more and more is a significant difference in terms of technology in plants. We currently have the newest cement line in the country already in the North West that was built in 2018. In terms of technology, we have pretty modern assets in Gauteng in cement mills and blending plants. The only old capacity we have currently is in the Western Cape, where we have one plant that is 60 years old and another that is 40. So that is why we’re 100% convinced that it’s the right move from a business point of view, not to mention sustainability, in terms of financial results plus environmental impact. For me, it was a no-brainer to build a new plant in the Western Cape.
Some analysts work with the scenario that volumes only come from the economy growing, but it’s not always like that. You can get volume from market share; PPC has been losing market share for many years, but our turnaround plan focuses on recovering market share and bringing volume back.
Specifically, how much cheaper will it be to produce cement?
We are looking at about a 25%-30% cost reduction. So, basically, we require much less fuel, namely coal, but at the same time the plant will have a co-processing facility, meaning that it will allow us to use alternative fuel. That will impact significantly on the variable costs but also our CO2 emissions. Then we will run one plant instead of two, so there’ll also be a fixed-cost reduction. We’ll be able to offer our customers in the Western Cape, Eastern Cape and Northern Cape a significantly better value proposition, which ultimately also will help infrastructure to come back.
It’s tempting to say you’re building this in the only truly functional province in South Africa, and that was the reason for its construction. Was that a consideration?
No. The reality is that PPC has been investing for the past 20 years in inland regions; the only place in the country where we have old facilities is the Western Cape.
You’re using debt to fund this investment; are you able to handle the debt increase that it will entail?
We have sufficient capacity for the amount of debt we may need. We could also potentially get green funding because the banks are keen to provide that, and it will be the lowest carbon emission plant in the country.
You’ve announced this investment in conjunction with Chinese group Sinoma Overseas Development Company – what exactly is its role?
We started this partnership in July of 2024; they are the leading engineering equipment cement operator in the world, and they came to make an assessment on all our sites and to help support our turnaround plan. We knew that a big part of it was the possibility of a new cement plant in the Western Cape. When the new management team came to PPC [Cardarelli began as CEO in December 2023] the project was already here, but the estimated cost was double what we are getting through this partnership. So, by December Sinoma came up with the proposal and in the next 60 days I’m very confident that we will finalise the details of the feasibility process, and we should be good to go by April.
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