PRETORIA PORTLAND CEMENT COMPANY LD - PPC AND IDC JOINTLY ACQUIRE A US$21 MILLION STAKE IN ETHIOPIA?S HABESHA CEMENT COMPANY

PPC AND IDC JOINTLY ACQUIRE A US$21 MILLION STAKE IN ETHIOPIA’S HABESHA CEMENT COMPANY

Pretoria Portland Cement Company Limited
(Incorporated in the Republic of South Africa)
(Company registration number: 1892/000667/06)
JSE Code: PPC
ISIN: ZAE000125886
("PPC" or the “Company")

PPC AND IDC JOINTLY ACQUIRE A US$21 MILLION STAKE IN ETHIOPIA’S HABESHA
CEMENT COMPANY

PPC and South Africa’s Industrial Development Corporation (IDC) have jointly secured a 47%
equity stake in the Habesha Cement Share Company (HCSCo) of Ethiopia.

PPC’s US$12 million cash investment secures a 27% equity stake in HCSCo and is a
significant step in PPC’s African expansion strategy. This is PPC’s first investment into the
east African cement market. The IDC will simultaneously invest US$9 million for a 20% equity
stake in HCSCo.

HCSCo has raised an initial 53% equity through the investment of more than 16 000 local
shareholders. This fulfils one of PPC’s key requirements which is to partner with local
shareholders when investing in a new country. The founders and management of HCSCo
have considerable experience in the cement industry in Ethiopia.

HCSCo’s initial project is to build a $130 million cement plant with an annual capacity of about
1.4 million tons. The project is being funded by a combination of the above mentioned equity
and US$86 million debt financing from the Development Bank of Ethiopia.

“We are on record that our strategy is to grow our revenue earned outside of South Africa to
40-50% during the next few years and that we have been working on various opportunities on
the African continent. This is one of those opportunities which meets our criteria. We look
forward to a rewarding partnership with Habesha in the years ahead.” said Paul Stuiver, PPC
CEO.

The plant, which is currently in the early stages of construction, is located 35km north-west of
Addis Ababa and cement production is expected to commence during the first half of 2014.
The plant will be supplied and built by China’s Northern Heavy Industries Group which, apart
from building more than 100 cement plants in China, has recently supplied and erected a
plant for Ethiopia’s National Cement in Dire Dawa. HCSCo’s plant will consist of a 3000 ton
per day kiln and future development plans include an option to double the capacity by adding
an adjacent production line.

Ethiopia, with a population of almost 85 million, is the second most populous country in Africa
and has one of the fastest growing economies on the continent. Infrastructure development is
high on Ethiopia’s agenda and the government has embarked on a significant housing reform
programme. Cement demand has experienced strong growth in Ethiopia in recent years and
latest research indicates that local capacity has struggled to meet the estimated 10 million
tons per year demand. During the past year cement had to be imported in order to meet
demand.

“The HCSCo plant will be the closest integrated cement plant to the key demand hub of Addis
Ababa where cement selling prices are about US$140 per ton. The competitive cost of
constructing the plant and its favourable location are further reasons that attracted us to this
project” concludes Stuiver.

During the initial construction phases PPC will assist HCSCo by providing operational and
technical expertise and with the training of plant personnel at the PPC Academy in South
Africa.

25 July 2012

Sponsor:
Merrill Lynch South Africa (Pty) Limited


PPC:
Kevin Odendaal
Tel: +27 (0) 11 386 9024
KOdendaal@ppc.co.za

Financial Communications Advisor:
College Hill
Jacques de Bie
Mobile: +27 (82) 691 5384
Jacques.deBie@collegehill.co.za


Background notes on Ethiopia:

•       Ethiopia, with a population of approximately 85 million, is the second-most populous
country in sub-Saharan Africa (SSA).
•       One of the world’s oldest civilizations, but also one of the world’s poorest countries.
•       2011 GDP per capita of US$354, which is lower than the average of sub-Saharan
Africa.
•       In recent years, Ethiopia has been one of the fastest growing economies in Africa.
The Ethiopian economy has navigated the global economic crisis better than most developing
countries. The current account deficit was 8.7% of GDP in 2011 and GDP growth was 8.8% in
2011. Inflation was recorded as 25% in 2011.
•       The current democratically elected ruling party (the Ethiopian People’s Revolutionary
Democratic Front (EPRDF) has governed Ethiopia since 1991.
•       Over the past two decades, there has been significant progress in key human
development indicators:
o       Primary school enrolments have quadrupled, child mortality has almost halved;
o       The poverty headcount, which stood at 46 % in 1999/2000, fell to 39% in 2004/5.
•       The Government has launched a 5-year (2010/15), Growth and Transformation Plan
(GTP), which is geared towards fostering broad-based development in a sustainable manner.
The plan seeks to double the GDP and the agricultural production and to increase electricity
coverage from 41% to 100% and access to safe water from 68.5% to 98.5%.
•       Since 2003, the government has embarked on a housing reform programme. 11 000
apartments were completed to date providing individual ownership of affordable quality
housing.

Source: PPC Research, HCSCo Research, IMF, Business Monitor International

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