South Africa’s cement companies got a boost after the government banned imports of the building material for use on state-awarded contracts.
The Treasury has banned the use of imported cement on all government-funded projects, prompting a surge in the PPC share price.
A circular has been issued by the Treasury to all relevant state departments notifying them that in terms of its preferential procurement regulations no imported cement can be used on project funded by the government as of November 4, according to a statement by industry body Cement and Concrete SA (CCSA)
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 by the close in Johannesburg, the most in almost four months.