Pretoria Portland Cement (PPC), South Africa’s largest cement maker, is reportedly considering selling its Zimbabwe business for approximately $200 million. The alleged plan to sell comes as some overseas investors are leaving Zimbabwe due to the difficult operating environment caused by the nation’s struggling economy, politically unstable environment and US sanctions against many of its politicians and business people. This follows Holcim’s completed deal to exit Zimbabwe, which has been impeded by economic sanctions imposed by the US Office of Foreign Asset Control (OFAC).
The Zimbabwean market has become increasingly challenging for multinational companies, with many facing the harsh realities of the struggling economy and political instability. The US sanctions against key players in Zimbabwe’s political and business landscape have only added to the difficulties. Holcim, a competitor of PPC, has already finalised its deal to leave the country, but it is currently facing hurdles due to sanctions imposed by OFAC.
The PPC unit in Zimbabwe has reportedly attracted interest from a local company involved in road construction and home building. Despite the challenges, demand for the construction material is expected to rise to 1.6 million tons this year, an increase of around 60% from 2017, according to PPC. The company manages to conduct about 80% of its sales in US dollars, driven by demand for its products in the mining, residential construction and government-funded infrastructure sectors.
PPC was founded in 1892 and has a long-standing presence in South Africa. The company has said that selling its Zimbabwe business would allow it to focus on its South African operations. Sources close to the company have stated that discussions are at an early stage, with pricing negotiations ongoing. There is no guarantee that a deal will be finalised. PPC has stated that it regularly receives unsolicited approaches for various parts of its business, including PPC Zimbabwe, and that its board has a duty to assess such approaches on their respective merits.
In conclusion, PPC’s potential sale of its Zimbabwe business is part of a wider trend of multinational companies leaving Zimbabwe due to the challenging operating environment. The country’s struggling economy, political instability and US sanctions against many of its politicians and business people have made it increasingly difficult for companies to operate in the country. Holcim’s completed deal to exit Zimbabwe has been impeded by economic sanctions imposed by OFAC. Despite the challenges, demand for construction materials in Zimbabwe is expected to rise in the coming year, providing opportunities for local players in the market.
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