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Sephaku pins its hopes on clinker plant as loss widens

22 February 2013

Publication: Business Day
Author: Edward West

SEPHAKU Holdings, the listed company with a 36% shareholding in Sephaku Cement, widened its headline loss to R9.8m in the six months to December 31 from a R5.6m loss a year before, but it was in a strong cash position, CEO Lelau Mohuba said on Thursday.

Sephaku Holdings’ share price fell 7.6% to R4.25 on Thursday after its results were released.

Sephaku Cement plans to commission a clinker plant towards the end of the year, which aims to produce 2.5-million tons of cement per year. It is 64%-owned by Nigeria’s Dangote Cement.

Mr Mohuba said the commissioning was on schedule and Sephaku would become a major player in the national cement market, which produces about 14-million tons of cement per year. “We will be among the big boys,” he said.

Sephaku Holdings’ operating loss widened to R10.1m from R6.9m in the interim period. The headline loss per share widened to 5.13c compared with 3.01c last year.

Shareholder approval for the acquisition of Metier Mixed Concrete was obtained on January 11 this year.

The company concluded a 10-year funding agreement deal valued at R1.95bn with Standard Bank and Nedbank in October.

Sephaku’s directors said this agreement would close the gap in terms of the capital they would require for Sephaku Cement to be fully prepared for market entry and for it to become a significant competitor in the wholesale and retail cement trade.

Dangote has, according to reports, invested more than R1.1bn in the cement venture at Aganang, near Lichtenburg in North West, making it the largest foreign direct investment in South Africa by a company from elsewhere in Africa.

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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.

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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.

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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.

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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.

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