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China Cement Maker Signs S. Africa Deal

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China continued its investment in Africa’s infrastructure—and in South Africa’s deep need for cement—when a Chinese cement maker formed a partnership to build a plant with two South African companies.

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Jidong Development Group, the largest cement producer in northern China, has signed a partnership with South Africa’s leading black-women-owned company, Women Investment Portfolio Holdings Limited (WIPHOLD), and with limestone mining firm Continental Cement. The deal is for construction of a new $218-million cement plant in Limpopo, the northernmost province of South Africa.

The venture for the 2,500-tons-a-day cement facility also involves the China-Africa Development Fund (CAF Fund), a leading Chinese equity fund that focuses on promoting China’s investment in Africa. Together with Jidong, the equity fund will have a controlling 51% stake in the business.

A briefing by WIPHOLD, which will hold a 23.9% stake in the cement plant, said construction will start next September and finish in the second quarter of 2012.

Demand for cement should be strong because of the 630,000 government housing units slated for construction in South Africa by 2015.

“We are very pleased to enter this strategic partnership with Jidong,” said WIPHOLD’s chief executive officer, Louisa Mojela. “South Africa has many impediments to growth, including cement supply and infrastructure development, and we believe this joint venture, a trading partnership, will go far to satisfy the demand until local cement producers address capacity issues.”

Jidong’s chairman, Zhang Zengguang, said that, under the partnership, Jidong and CAF Fund will invest $103 million, representing China’s biggest direct investment in South Africa. The investment will be split almost equally between debt and equity. Nedbank Group, a South African bank, is leading the financial arrangements.

Statistics by China’s commerce ministry estimate that trade between the country and sub-Saharan Africa soared to $106.8 billion last year from about $10 billion in 2000. Late last year, China’s president, Hu Jintao, announced China would make a $20-billion investment toward the refurbishment of Africa’s infrastructure over the next three years.

 

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