Women Investment Portfolio Holdings (Wiphold) has partnered with Shenzhen-listed Tangshang Jidong Cement to import cement from China.
Wiphold will be the sole distributor of Jidong’s branded cement called Dunshi. Jidong is 52% owned by the state and is the largest manufacturer and provider of cement in northern China where it sells a ton of cement for $40 compared to the market price of $120 in some parts of the world.
Gloria Serobe, executive director at Wiphold, would not say how much the investment company would be selling cement for in SA, but said that the company’s pricing structure would be very competitive.
But, Chinese imports in the clothing and textile industry have caused large-scale job losses. Local factories have been forced to scale back because they could not compete with the cheap prices offered by their Asian counterparts. Serobe said that this would not be an issue in the construction industry as there was a shortage in cement.
“We still have a long way to go before we’ll have a situation where the factories will close down. Instead what’s happening now is that people are closing down their business because there’s a shortage in cement,” she said.
Asked about quality assurance and labour practices in China, Serobe said that they were confident that Jidong met the relevant criteria.
Serobe said that Wiphold has been looking for opportunities to extend its operational involvement outside the financial services sector. She said that the company had developed a new portfolio where it will house its infrastructure assets and that this trading partnership with Jidong is their first asset.
Wiphold has shareholdings in Old Mutual, Nedbank, Mutual and Federal, Futuregrowth and Legae Securities in the financial services sector, as well as shareholdings in Telkom, Distell, Afrisun Leisure, Adcorp and others.
Jiuzhou Yu, deputy chairman of Jidong said that if the agreement with Wiphold is a success, the company would build a cement plant in South Africa.
“Our Dunshi brand cement is currently delivered to Southeast Asia, America and Nigeria. We look forward to Wiphold expanding our markets and believe there is much opportunity in South Africa and on the African continent,” he said.
According to a study prepared for the Presidency, the capacity of the four major local cement producers was approximately 14,8m tons last year and with the government’s R400bn infrastructure plan underway, producers expect to increase local supply to 21,4m tons by 2011.
Serobe said that Jidong produced 25m tons of cement every year, more than what local companies combined produce, proving that they have the capacity to meet South Africa’s cement challenges.
The plan is to ship bagged cement from China to Durban harbour and have it delivered direct to the customer at docking stations, Serobe said.
“Currently, Lafarge is importing 10% of its total cement volumes, or 600 000 tons a year. Because of such shortages, the local economy has seen price hikes of up to 20% for bagged cement from Lafarge in the past five months and Holcim’s 9,9% increase in January is expected to be followed by another in July,” she said.
“Expanding our operations to support infrastructure development underpins economic growth and will play a part for job creation, a successful 2010 and more broadly for the transformation challenges of South Africa and the continent.”