South African Cement Gets Boost From State Ban on Imports

(Bloomberg) -- South Africa’s cement companies got a boost after the government banned imports of the building material for use on state-awarded contracts.

Bidders for state projects will only have their offers considered if they agree to source all cement from local companies, according to a directive circulated by the National Treasury to other government departments. The order also applies to the raw materials used in production, the ministry said.

South Africa’s cement makers have long complained about how cheap imports are undermining their businesses, particularly during a protracted period of weak economic growth. PPC Ltd., the country’s biggest producer, said last month the practice is threatening the sustainability of the country’s industry.

PPC shares surged on the news, first reported by Business Day. The stock was 9% higher at 5.34 rand by the close in Johannesburg, the highest in almost 2 1/2 years.

“PPC Cement has noted with much appreciation the publication of the designated sector regulations,” the Johannesburg-based company said in a statement. They “will save the local construction industry, create jobs and sustain economic growth.”

The cheaper imports, which PPC and rivals such as AfriSam South Africa Pty Ltd. say is sub-standard, generally come from Asian countries with excess capacity and lower production costs.

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