NIGERIA's leading cement and building materials firm, Dangote Cement, and Sephaku Cement, have signed a shareholders agreement paving the way for the start of a R3bn project to build a cement plant in North West.

The agreement, announced on Friday, is the second leg of Dangote’s strategy to enter the highly lucrative South African market, following its acquisition of a 19,8% stake through a private placement in Sephaku Cement in April. The Nigerian firm hopes to increase its stake to 45% eventually.

The partners said they now had the operational framework to kick-start the project, which they billed as the first black-owned cement plant in SA. It would have an annual capacity of

2,2-million tons. They said talks were being held with technical partners before construction started.

Sephaku Cement is a subsidiary of black economic empowerment- controlled Sephaku Holdings, which has interests in the mineral sector. Dangote Cement is part of Nigeria’s largest diversified group, Dangote Industries, and also has operations in Benin, Ghana, Senegal and SA. The company said it aimed to be a multinational corporation and was eyeing at least 10 more African countries.

The two partners said the South African plant would be the largest single-line cement plant in the country.

Construction would begin in January and the first cement should be ready for delivery by the end of 2010.

Sephaku Holdings, as the majority shareholder in Sephaku Cement with a 55% stake, would provide the majority of the management team, and was finalising debt funding needed to finance the project.

Demand for cement in SA is set to continue to rise due to a slew of billion rand construction projects, among them the government's road-building programme, privately owned shopping complexes, and infrastructure and stadiums to meet the influx of visitors for the 2010 Soccer World Cup.

Analysts say despite the lull in housing construction in response to tightening credit conditions and waning demand as cash-strapped consumers prefer to rent, construction firms such as Group 5 and Murrary & Roberts have full order books that should keep them busy beyond 2010.

Dangote Cement CEO Tony Hadley said the joint venture was a key part of his group's pan-African expansion programme and provided direct access to the large South African market.

“We are delighted to be announcing that the joint venture is moving ahead smoothly and look forward to beginning the construction process,” he said.

“Dangote Cement is set to achieve 26-million tons of production capacity in Nigeria by 2010 and 50-million tons of production capacity overall by 2012.”

Sephaku Holdings chairman Lelau Mohuba said his group had a broader vision to become a major player in the local economy and across Africa.

He said the new plant was the first black-owned plant in SA and marked a “critical milestone (for the group) which was growing from exploration to development".

Sephaku Cement CEO Pieter Fourie said despite a slowdown in demand for cement since record levels achieved last year, the medium- to long-term forecast showed significant growth opportunities in the local market.

ALTX-listed distributor of tower cranes SA French’s profit fell in the year to June, knocked down by costs of expansion and acquisitions of additional units to meet an upsurge in demand in the rental market.

The costs were associated with new branches opened early this year in Cape Town and Durban as well as finance charges linked to the acquisition of additional units for the rental market.

Net profit fell to R6,9m compared with R12,7m in the previous year and headline earnings per share dropped to 4,68c from 10,12c. Revenue increased 25,7% to R152m from R121m while operating profit declined 36,8% to R12,9m.

The company’s gross profit margin decreased 2,7% from 25,2% to 22,5%, which it said was largely because of currency volatility.

CEO Quentin van Breda said the results were “satisfactory” despite “challenging” market conditions.

He the said opening of new branches and the acquisition of the new fleet was a capital intensive exercise that required a substantial investment on the company's part.

While developing infrastructure was costly and the initial costs were in most cases once off, management felt strongly that it was necessary to establish a national presence.

Van Breda said most of the expenses were budgeted for and SA French expected the investment to pay dividends in both the short and long term. “It is, however, undoubtedly the correct route to follow and as an emerging business model it will certainly generate substantial future cash flows,” he said.

“Despite challenging market conditions we have delivered satisfactory maiden results. We can now boast the biggest and most comprehensive tower crane rental fleet in Africa. The benefits and annuity income generated by a new fleet of tower cranes with an average lifespan of 20 years are undeniable.”

The company had to acquire new rental units after a spike in demand for crane rentals as a result of the uncertainty caused by the electricity shortages, the company said.

The electricity supply crisis earlier this year caused uncertainty for many of its key clients in the construction industry. This resulted in delays in the awarding of several infrastructure projects and construction companies responded by restricting or delaying capital expenditure decisions such as the purchase of tower cranes, it said.

“This change in market dynamic resulted in a change of focus in SA French’s business. The group has experienced an increase in demand for crane rentals as many of its clients were seeking to keep costs variable until there was certainty on power supply,” SA French said.

Construction work on the 2010 soccer stadium in Mthatha could be in jeopardy as R70 million is needed before the end of this month to ensure its completion.

Construction work on the 2010 soccer stadium in Mthatha could be in jeopardy as R70million is needed before the end of this month.

The Construction Transformation Charter Group announces that the Construction Industry Charter was submitted to the Department of Trade and Industry with the full endorsement of Minister Thoko Didiza.

Co-Chairman of the Integrated Management Committee, Mr Mike Wylie, said:

“This is a big step forward on the road to transformation of our industry and we would like to thank you all for the four years of commitment to this process.

“We would especially like to thank Minister Thoko Didiza for her guidance, advice and support.

“However, we believe this is only the end of the beginning of a journey into the future that will see our industry delivering the infrastructure to South Africa and transforming into an entity of which all of us, our Government and South Africa, can be proud.”

JSE-listed construction company Group Five yesterday reported a strong performance for the year to June, despite tougher trading conditions in the second half of its trading period.

It was able to ride global stock markets turmoil, higher interest rates, a weaker rand and load shedding in the first half of the year thanks to a buoyant construction sector and its product and geographic diversification strategy.

“Against these factors, we believe our strategy of balancing our portfolio of businesses in targeted geographic spread where we have strong markets in African resources and high-growth economies in the Middle East made us much more resilient to the turbulence than before,” said CEO Mike Upton.

The group said revenue rose 16% to R8,9bn from R7,7bn in the previous period, while operating profit before fair value was up 62% as Group Five shifted its focus from private to larger public sector infrastructure projects and consolidated its operations abroad.

Fully diluted headline earnings per share increased 70% to 398c from 233c in the previous year. Disposal of its 3,5% stake in a highway in Hungary had resulted in the fair value adjustment of R111m, the group said.

Cross-border operations, including activities in the Middle East and eastern Europe as well as the rest of Africa, accounted for 34% of total revenue with the rest being generated locally.

Overall operating margin before fair value adjustments improved from 5,1% to 7,1% after all costs, and cash generated from operations rose to R1,8bn for the year to June.

Upton said the results reflected the group’s continued shift from a “pure contractor to that of a diversified construction services, materials and investment group with product and geographic diversification”.

The construction division remained the group’s largest revenue contributor, turning over 79,5% of total revenue and 60% of operating profit. The group reported a record 12-month construction order book of R8,5bn, a growth of 76% from last year, while the current total order book stood at R14bn.

Construction materials and investments and concessions respectively contributed 7,7% and 6,5% of total group revenue and 22,3% and 8,4% of operating profit.

“The construction market, especially in SA, is very healthy and likely to remain so for the foreseeable future in the key sectors in which Group Five has strategically positioned itself,” Upton said. “The opportunities in the order book provide us with the scope to choose higher-margin contracts, improve cash-flow management and maximise our allocation of resources.”

Internationally, Upton said the group would continue focusing on African resources and power markets and continued growth in eastern Europe and the Middle East.

In SA, it would pay particular attention to public sector spending in such areas as low-cost housing, infrastructure public-private partnerships, power generation, roads and water.

“The group has a clear strategy and a balanced portfolio of business diversification aligned to the markets we serve. Given this, we expect to continue on our growth trajectory next year, with strong earnings,” Upton said.

Unions are seeking a R1500-a-month "project bonus" for all workers at Cape Town's Green Point 2010 stadium site, regardless of whether construction targets are met. They believe the bonus should be paid even if the workers go on strike.

This has emerged from the proceedings of an arbitration hearing held under the auspices of the Building Industry Bargaining Council (BIBC).

In an advisory award handed down this week, arbitrator Jacobus Koopman said the Labour Relations Act "clearly precludes the applicable unions from striking over matters bound by the collective agreement" -including the bonus.

The three-year agreement between unions and employers he referred to, which was reached in the BIBC, covers wages and conditions of service.

Green Point and other 2010 stadia under construction in other provinces have been dogged by strikes.

This week workers at the Mbombela stadium in Mpumalanga who were dismissed following a strike over wages allegedly burned a truck, motor bikes and a mobile office on the construction site.

A strike at Green Point in September last year led to losses of about R1 million a day.

Koopman's award followed an application brought by the National Union of Mineworkers and the Building Construction and Allied Workers Union against the Murray & Roberts/WBHO joint venture contracted to build the Green Point stadium.

The unions represent some 35% of the just over 900 workers on the site, the rest of whom are not unionised.

The unions complained that the employers had refused to negotiate at site level over a union proposal for a R1500 a month "project bonus" for all workers, not linked to productivity, and a R15 an hour wage increase.

The increase would be a 90 percent hike in their wages.

BCAWU organiser Eugenia Peter maintained in the arbitration hearing that the workers should get the proposed bonus even if they went on strike.

As the stadium superstructure is due to be completed in September, this would mean an additional R6000 for every worker.

In his submissions to the arbitrator, the joint venture's advocate, Colin Kahanovitz, said the workers were already being paid a performance-linked incentive bonus.

Although an agreement for a "project bonus" had been concluded after a strike at the Durban stadium, the payment of that bonus had also been linked to the achievement of construction targets, he said.

The employers had argued that the unions' application was "frivolous and vexatious".

"The main purpose of these hearings seems to have been to allow the unions involved to show their members that they were prepared to try to do something in order to cultivate membership," Kahanovitz said.

Koopman said in his findings that the unions believed that if the matter remained unresolved, it would ultimately give them the opportunity to embark on a protected strike.

But he found that the unions at the Green Point Stadium had no right to demand negotiations at a site rather than a bargaining council on remuneration issues.

He said he had decided not to make any costs order.

"The relationship between the parties is at a delicate stage and a costs order may exacerbate tension," he said.

Angry Mbombela Stadium workers allegedly burnt a heavy duty truck, two motorbikes and a mobile guard house on Wednesday after they were dismissed.

Construction once again came to a grinding halt as a result of a labour dispute that saw 500 employees dismissed. The stadium is already 60 days behind schedule owing to a number of previous protests.

Police spokesman Dawie Pretorius said no one had been arrested. He said police had identified some suspects who would face the might of the law.

“The suspects face charges of malicious damage to property, arson and public violence,” Pretorius said.

NUM spokesman George Ledwaba said the strike, which started last Friday, was in protest against management’s threat not to pay the promised R1500 performance bonus if workers did not agree to work night shift at an allowance of R120 a month. Ledwaba said workers would only agree to work for an allowance of R800 a month.

Basil Read and Bouygues Civil Works said in a statement that they had terminated the employment contracts of all employees who took part in the strike with immediate effect.

“We have taken a difficult but necessary decision to dismiss these employees.”

The owner of the George Tourist Resort has won a Cape High Court bid to rezone and subdivide his land.

BUILDMAX, a supplier to the mining and construction industries, has set itself the ambitious targets of raising turnover 15-fold in the present financial year. As if to underline this, its share climbed more than 6% yesterday.

The R111,5m revenue the group made in the year to February is minuscule compared with the R1,7bn it expects to make this year.

However, the recent results do not take into account two major acquisitions the group made between December and March, which are expected to enhance an enlarged Buildmax’s earnings.

The group spent about R1,5bn to acquire equipment and services supplier Buildco and Diesel Power Open Cast Mining, strengthening its position in the both the mining (especially coal mining) and the construction sectors.

These are both high-growth sectors, given the increased demand for coal by Eskom, as well as billions of rands being spent by both the government and private sector on infrastructure projects.

The group has also projected an after tax profit of just above R200m, making it a competitor in its sector.

CEO Paul de Klerk said the group’s equipment and services division would do even better than expected because it was already dealing with huge demand.

The prospects look rosy.