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PPC LIMITED - PPC prepares to enter the Algerian Cement Market

Release Date: 10/02/2014 07:48
Code(s): PPC     PDF:  
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PPC prepares to enter the Algerian Cement Market

PPC Ltd
(Incorporated in the Republic of South Africa)
(Company registration number: 1892/000667/06)
JSE Code: PPC
ISIN: ZAE 000170049
("PPC" or the "Company")

PPC PREPARES TO ENTER THE ALGERIAN CEMENT MARKET

PPC is pleased to announce that advanced plans are in place to
enter the Algerian cement market through a partnership with
Algerian   private  sector   investors  in   Hodna  Cement  Company
(“Hodna”). Our partners have experience in construction and related
sectors, and fulfil one of PPC’s key requirements - to partner with
local shareholders when investing in a new country.

Hodna will be constructing a 2 million ton per annum plant for
approximately US$350 million in the Hodna area, roughly 300km east
of Algiers and close to the university and technology-focused town
of Setif.

PPC will acquire a 49% stake of Hodna and assume management control
which allows for the consolidation of the financial results of this
project into the PPC group accounts. The transaction will be funded
on a project finance basis, with 80% debt funding from local
Algerian banks.

“The Algerian cement market is very attractive as consumption
exceeds local production by approximately 3 million tons of cement
per annum. Moreover the Algerian government has committed itself to
large scale capital spending programmes, including the US$6 billion
New City Hassi Messaoud project, which will see the rollout of
thousands of housing units. This will certainly boost the demand of
cement in this country,” said Ketso Gordhan, CEO of PPC.

Once the feasibility study has been concluded, construction of the
plant will take up to 30 months with commissioning anticipated by
the fourth quarter of 2016. As with its other expansion projects,
PPC intends to engage China’s Sinoma International Engineering as
the contractor that will supply and build the plant; supported by
India’s Holtec Consulting, specialists in project management.

Cement selling prices in Algeria range between US$80 and US$120 per
ton with favourable costs of production due to affordable gas
prices. The factory site is well located with the necessary raw
materials in close proximity. The well-developed road and rail
network also assist in managing the cost of logistics.

With a population of close to 40 million people, of which 74% live
in urban areas and a relatively high GDP per capita of US$5582,
Algeria still requires the construction of 225 000 housing units
per year to meet demand. The national housing shortage in Algeria
is estimated at 1.2 million units.

Ketso Gordhan, added “We are already building cement plants in
three countries; Ethiopia, Rwanda and the Democratic Republic of
the Congo. This project sees us entering yet another African
country and gives us confidence that by 2017, 40% of PPC revenues
will be earned outside of South Africa.”

Sandton
10 February 2014

Sponsor
Merrill Lynch South Africa (Pty) Ltd

PPC:
Azola Lowan
Tel: +27 (0) 11 386 9000
Azola.Lowan@ppc.co.za

Financial Communications Advisor:
College Hill
Louise van der Merwe
Mobile: +27 (71) 605 4294
Louise.vanderMerwe@collegehill.co.za

Sources: PPC research, Hodna Research, IMF, Centre for Affordable
Housing Finance in Africa

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