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- Sephaku Cement saw its share price surge 26% on Tuesday.
- This comes as National Treasury banned the use of imported cement for the construction of public infrastructure projects.
- The company also resolved the cause of a power outage at its kiln facility.
JSE-listed Sephaku Cement, a subsidiary of the Nigerian group Dangote Cement, saw its share price surge by 26% on Tuesday. Its share price has now gained 460% since a year ago.
Like other cement producers, including PPC (+6%), its share price gained from the news that National Treasury would move to ban the use of imported cement for the construction of public infrastructure projects. Late on Tuesday, the company also confirmed that a kiln outage was also resolved.
In a statement released late on Tuesday, the company said that Treasury's circular prescribes that all government institutions and state-owned enterprises must stipulate in tenders that only South African-produced cement will be permitted for construction.
"This decision has resulted in a significant rally in the share price due to the 50 planned government infrastructure strategic integrated projects and 12 special projects as part of a drive to stimulate the economy," the notice said.
Sephaku said the Infrastructure Fund reported that it had submitted four projects worth R21 billion for National Treasury approval and will contribute R5.4 billion through finance from both public and private resources.
"The projects have supposedly been approved by Infrastructure South Africa, which is tasked with overseeing the government's Infrastructure Investment Plan. The Fund is apparently finalising four more projects valued at approximately R85 billion for submission in 2022," the notice said.
Sephaku said its subsidiary, Métier Mixed Concrete, had a plant footprint in Gauteng, Mpumalanga and the Western Cape to compete for the supply of concrete into these strategic infrastructure projects.
The company also announced that it has rectified the cause of a power outage which halted its kiln facility at the end of last month. The company previously warned that the outage would affect sales.
"The cause of the plant outage was identified and remedied. (Sephaku Cement) management has implemented several procedures to improve plant reliability and mitigate a reoccurrence. The kiln is running at operational capacity," the shareholder notice said.
Separately, the Public Investment Corporation confirmed on Tuesday that it now owns almost 5.4% of Pretoria Portland Cement (PPC). South Africa's cement industry has been battling against a relentless onslaught of imports.
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