26 August 2010
South Africa’s Sephaku Holdings has concluded an agreement with the Dangote Group that will see the Nigerian manufacturing conglomerate investing a further R779-million and increasing its ownership in Sephaku Cement from 19.8% to a controlling 64% stake.
The capital injection follows Dangote’s initial R350-million investment, and will fully fund the equity requirement for Sephaku Cement’s R3-billion expansion project, which involves the construction of two new cement manufacturing facilities – a clinker and cement producing facility in the North West province, and a cement grinding facility at Delmas in Mpumalanga province.
Debt financing guarantees
In terms of the agreement, Dangote will provide the necessary guarantees for the debt financing; fund any project overruns up to R265-million with a loan on commercial terms; and fund Sephaku Cement’s limestone exploration project in the Western Cape and Limpopo provinces up to R35-million, also with a loan on commercial terms.
“Having completed the early works on site, we are now well positioned to start the main construction on our projects by the end of July this year, with completion scheduled for the third quarter of 2012,” Sephaku Cement CEO Pieter Fourie said in a statement this week.
Major continental producer
Fourie added that with adequate funding in place, Sephaku Cement would become a significant cement producer at a time when continued economic recovery would see a resurgence in construction activity and increased demand for the company’s cement products.
Dangote Group CEO Alhaji Aliko Dangote told Business Report this week that the group was delighted to increase its pan-African footprint to include an enhanced presence in the South African market.
“We look forward to bringing our experience and expertise to the project and to producing cement by the end of 2012 as we seek to become the largest cement producer in Africa by 2014,” he said.
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