AfriSam: Creating Concrete Possibilities

“AfriSam has been operating for more than 85 years and despite the extremely tough economic environment, the company still has a vision of being around and making a positive contribution to the development of our country’s infrastructure through the products and services it provides, but first, we have to position our business correctly so that we can successfully navigate our way through the current storms and the headwinds facing our industry in the
next two to three years,” says Richard Tomes, AfriSam’s Sales & Marketing Executive.

The company’s product range includes cement, slagment, aggregates and readymix concrete.

AfriSam is known for the high-quality cement it manufactures. This is from a number of its operations, including two fully integrated cement plants, one in Ulco in the Northern Cape, and the other near Lichtenberg in the North West province. “We also operate in Eswatini and Lesotho, where we have two cement blending and packing plants.

It is also a supplier of aggregates and readymix concrete. “The readymix and aggregate side of our business
(construction materials) focuses on large infrastructure projects – roads, dams and bridges. We supply aggregates
to many SANRAL projects, and concrete to sizable infrastructure projects,” says Tomes.

AfriSam provided the concrete for the tallest building in Africa, The Leonardo (the 55-floor mixed-use property
development in Sandton), as well as many of the Sandton CBD buildings with readymix concrete. On the residential
side, several large property developers receive concrete from AfriSam.

Most of the company’s bagged cement products are sold through the retail industry. Tomes says that the wide cement product range offered by all producers, importers and blenders and being sold through hardware retail
stores throughout the country, is proving a little confusing for consumers. “Because cement is such a technical
product, selling the right cement product for the right application can present challenges, especially in a country
like ours where we have unfortunately lost a lot skilled artisans in the built environment and are still confronted
will low levels of literacy across large sections of our population,” he explains.

“To make it easier for the consumer, we offer an all-purpose product, AfriSam All Purpose Cement, that is safe for use in concrete, mortar and plaster. For all the reasons mentioned above, expecting consumers to find the
appropriate product for laying bricks or casting concrete for foundations or other structural parts of a building can
be quite risky. Consumers can build the home of their dreams with confidence of using a dependable, reputable product. We understand the importance of quality when it comes to building materials. Nobody can afford to
continuously make repairs to their homes due to sub-quality products, so we focus on quality products that
meet the needs of all South Africans, from the smallest house to the biggest piece of infrastructure – we cover all
segments in our industry.

“For the private sector and commercial developments, we have a product called AfriSam High Strength Cement, a
technical specialist product for those who do their own concrete mix designs and are able to decide how much
cement they need per cubic metre of concrete for the right strength. That is our flagship product for the technical
specialist,” Tomes adds.

Approach to sustainability
Pivoting to AfriSam’s sustainability practice, Tomes says that low-carbon cement is a driving force for the
company. “We are focused on reducing our carbon footprint and have embarked on a number of initiatives such as renewable energy and making sure we use as much extender as possible to produce extended cement, without compromising on quality,” he says.

AfriSam is a market leader in this space, the first company to produce an eco-friendly cement with the lowest carbon footprint of all cementitious products in SA. “All our operations are green-orientated; we recycle water and reduce energy consumption. All our cement products are aligned to Government’s carbon tax regulations. Consumers of our products can make an informed decision about the best product to use with the lowest carbon footprint.”

Industry overview
Tomes comments that even prior to the Covid-19 pandemic, the SA big five construction companies, as
well as construction material businesses, were faced with difficulties. This is due to low economic growth in the
country, the reduction in infrastructure spend and local fixed capital formation.

AfriSam recently hosted webinars with renowned economists as guest speakers who forecast that the construction industry will decline by between 20% to 30% in 2020 compared to 2019, and that GDP will shrink by between 7% to 8%. The President has announced some stimulus packages to help boost the economy and the country has already seen the Reserve Bank reduce interest rates quite significantly in the past few months. The impact of these stimulus packages usually takes a while to materialise and show in the form of new projects.

“There will probably be a slight bounce back in 2021, but it won’t get back to pre-lockdown levels. However,
in the next 18 to 24 months we will see the construction industry gradually start to pick up again. South Africa has been through many growth cycles over the years and we have seen severe declines in economic growth and overall
confidence levels, the worst probably being in the run-up to the country’s first democratic elections in 1994. We do,
however, know that in the long term we cannot write off this industry.

“There is a massive need for infrastructure development in our country and on our continent, with the rapid rate
of urbanisation and the need for housing, schools and clinics. Some economists predict the level of urbanisation
in South Africa to be around 80% by 2050. We are going to have to ride through these difficult periods for now, but
the construction industry will thrive again in the future.

AfriSam’s response to Covid-19
“As part of the mining sector, AfriSam was fortunate to reopen its cement and aggregate operations under lockdown Level 4 to supply products to the essential services as highlighted by the Presidency.

“Unfortunately, during Level 4 the general construction industry was not able to operate, so the demand for our products was from retailers (mainly bagged cement products). Now in lockdown Level 3 our aggregate and readymix businesses are ready to supply, but unlike in the case of cement, demand for these products has dropped significantly and the uptick is much slower. “At AfriSam, the health and safety of our employees remains our number one priority. For this reason, we want to encourage as many people as possible to work from home, especially our head office people. All our operations have implemented strict screening protocols regarding symptoms, personnel movement and interaction data to ensure we have the right testing and tracing in place.

“I must commend our Covid-19 Task Team. We’ve already had successful inspections from the DMR (Department
of Mineral Resources) at our plants and the Department has been complimentary of our post-lockdown safety
measures,” Tomes says.

“Post-lockdown, the way forward for AfriSam is to ensure the business’s sustainability. Since 2017, the company
has been running on efficient capacity of two kilns in its cement plants. The readymix and aggregate businesses
have also been working tirelessly at preparing themselves to cope with the ongoing decline in infrastructure spend
for the last few years already.

“Even though we could not have predicted Covid-19, we had already adapted our business to make sure that production capacity reflects market demand and we will continue to do so. We were fortunate to have recently completed our balance sheet restructuring which has placed us on a better footing to weather the Covid-19 storm and its after-effects. The support that we received from our bankers, equity providers, suppliers and customers has played a significant role in helping to manage our liquidity position so far. The value of good relationships and stakeholder engagements cannot be underestimated, especially during difficult times like these.

“Businesses cannot be sustained if they do not have customers, so we have to ensure that we limit the spread of Covid-19 and the impact it is going to have on our economy. As President Ramaphosa said, we have to find the right balance between protecting lives and kickstarting the economy. AfriSam looks forward to the role it can play in rebuilding our beautiful country,” concludes Tomes.

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