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Sephaku casts R1.8bn project in cement

21 April 2011

Publication: Business Report
Author: Roy Cokayne

Sephaku Cement, part of JSE-listed Sephaku Holdings, has decided to go ahead with a second major project in South Africa, a 3 000 ton a day clinker and cement production facility near Dwaalboom in Limpopo at a cost of about R1.8 billion.

Sephaku has already started with the establishment of new cement plants in North West and Mpumalanga at a cost of R3.3bn.

Sephaku Cement managing director Pieter Fourie said the decision to go ahead with the new project followed the recent completion of a 12-month limestone prospecting programme in the project area.

Construction is expected to begin in 2013 once production started at its Aganang project near Brits.

Fourie said changes in the scope of the existing project had resulted in an increased capacity from 2.2 million to 2.5 million tons a year with a minimal three-month delay to the production timeline.

The Aganang project was expected to yield 900 000 tons of cement a year and the Delmas project 1.25 million tons a year.

Fourie said the investment in the new project was “in the region of about R1.8bn” but its viability had not yet been finalised because it was dependent on environmental impact assessment approvals.

He said it would create about 250 direct jobs and about 600 indirect jobs.

Dangote Industries, the largest industrial conglomerate in Nigeria, invested R1.1bn into Sephaku Cement late last year, giving it a 64 percent shareholding in the company with the balance held by Sephaku Holdings.

Fourie said Sephaku Cement remained firmly of the view the South African growth story was not yet over “and it has legs deep into the future”.

Coronation analyst Quinton Ivan admitted surprise that Sephaku had decided to go ahead with the project because even if the cement market recovered, there was likely to be an oversupply in a few years and it was unlikely these new investments would earn a decent return on capital.

Full Financial Analysis


Bodibeng Trading Proprietary Limited

Founded by Mr Gaopalelwe Olebogeng from the Verdwaal Village in the North West province who is the sole managing member of Bodibeng Trading Proprietary Limited. Mr Gaopalelwe has previous experience in plant cleaning that he acquired during his tenure as a plant cleaner at another cement company in Lichtenburg. Bodibeng Trading Proprietary Limited employs 36 employees from the local community and currently has a short-term contract with SepCem which includes mentorship to ensure that it effectively provides the plant cleaning services at Aganang.


Mancamane Trading Enterprise

Mancamane is a black female-owned enterprise that started operating in 2010 as a plant cleaning, construction and mining supply company. Ms Daisy Maseko, a renowned entrepreneur, founded the enterprise in the Delmas area, Mpumalanga province and currently employs 28 permanent staff. SepCem adopted Mancamane into the enterprise development programme in 2014. The company is currently supplying plant cleaning services to the Delmas grinding plant and has demonstrated the ability to grow sustainably.


MM&JK Cleaning Projects Proprietary Limited

In 2014, SepCem contracted the cleaning services of MM&JK Cleaning Projects, an enterprise established in 2013 by Mr Sipho Mazibuko from a village called Springbokpan in the North West province. SepCem identified MM&JK Cleaning Projects as a well-managed enterprise that is appropriately suited to benefit from the programme. In the case of MM&JK, SepCem has partnered with another major industrial organisation to mentor Sipho.

The partner’s role is to assist MM&JK Cleaning Projects with inproving its cleaning skills through training, providing cleaning equipment and required detergents. SepCem’s role is to develop Sipho’s business management skills including cost management, record keeping and negotiation. SepCem is assisting MM&JK to develop a marketing strategy to increase its customer base to reduce the single-customer dependency risk and ensure that the company is sustainable. MM&JK Cleaning Projects currently has a three-year contract with SepCem for general cleaning at Aganang and employs 14 permanent staff.



Millicent’s Enterprise

Millicent’s Enterprise is 100% black female-owned and was founded by Ms Millicent Mahlabe, an entrepreneur from Delmas in the Mpumalanga province. The company was selected for the programme because it has historically demonstrated the ability to supply large contracts but lacks administration skills. Millicent’s has a good reputation and positive track record of being able to cater for large provincial government events.

SepCem secured Millicent’s catering services in 2013 for its canteen at the Delmas plant that provides meals to 150 employees. Millicent’s currently has seven permanent employees and several contract employees who are sourced as and when required.