Quarry Southern Africa May 2018 - Page 3

COMMENT POLITICAL CHANGE A BOOST TO BUSINESS T he political change in southern Africa has resulted in renewed optimism. Sweeping changes across the whole continent, in fact, bodes well for the construction and infrastructure sectors and suppliers in the value chain – including quarries and cement companies – should keep an eye on developments in West and southern Africa. Liberia and Sierra Leone’s economies are expected to grow after the appointment of new leaders, however, recent developments in southern Africa promises exciting developments. South Africa, Angola and especially Zimbabwe are expected to bloom over the next three or four years. The Zimbabwe government has awarded more than 100 new exploration licenses to various mining companies over the past three months, and a host of mines (especially in the battery mineral space) are about to be developed. This naturally means that new infrastructure will need to be constructed and – with the commodity cycle on the rise and South Africa and Angola joining the race to lure investors – it’s starting to look rosier that it did a year ago. Despite Trump’s and China’s trade war, the global economy is in a growth phase, and alongside that, the appetite to take on new infrastructure projects. This is well reflected in the 2017 results released by the leading global cement companies recently. Last year was a year of growth for most of them. HeidelbergCement saw its revenues advance by 13.8% year-on- year, while China's Anhui Conch reported sales growth of 34.7%. Nigerian giant Dangote recorded an improvement in revenue of 31% while Cemex, Buzzi Unicem, Vicat and CRH all saw more marginal expansions of between two and 5.1% year on year. The only major to report a fall in sales revenue was LafargeHolcim, dipping 2.9% as its cement volumes contracted by 10.2% year-on-year to 209.5Mt. Much of the growth seen by the leading players is driven by a strong US market and the ongoing recovery in Europe. Although the figures for Africa in 2017 were not as good as expected, this is bound to change as the political winds of change start making an impact. Predictions are that strong GDP growth and new housing projects are set to bolster the African markets. Higher energy and raw materials prices, however, remain an ongoing challenge. In 2017 the African cement market was dominated by falling demand in Nigeria, where Dangote saw its cement volumes decline by 15.9% year on year, as consumer spending tightened, despite the country coming out of recession in the quarter two of 2017. South Africa's economy also remained subdued, leading to muted activity in the domestic cement market. Elsewhere, Cameroon performed well with cement consumption driven by housing and infrastructure projects, while Ethiopia saw its construction sector boom, fuelled by the housing market with 2.4 million homes due to be built between 2015 and 2020. Meanwhile, in South Africa, the construction sector continues to outperform the economy by a considerable margin, with the Afrimat Construction Index (ACI) having expanded by 25.4% since the third quarter of 2010 (the base period). This is substantially higher than the rate of growth of 15.8% for the economy over this period (in real terms). The ACI is a composite index of the level of activity within the building and construction sectors, compiled by renowned economist Dr Roelof Botha on behalf of Afrimat. Botha says the composite index provides a balanced and realistic view of the level of activity in the construction sector as it evens out the contradictory trends of conditions in the sector often portrayed by the individual indicators that comprise the index. According to Botha, improvement in the ACI bodes well for the sector’s growth prospects in 2018, particularly due to the change in the country’s political leadership. ■ Leon Louw - Interim editor llouw@interactmedia.co.za QUARRY SA | MAY/JUNE 2018 _ 1