BRYAN PERRIE: SA cement and concrete sector embraces low-carbon future

Cement and concrete are essential to modern development. As the second most consumed product globally after water, concrete constitutes the foundation of the built environment. Houses, schools, hospitals, roads, bridges, dams and wind turbines are all dependent on cement and concrete for their construction, and, in turn SA’s, economic growth is dependent on the rollout of such infrastructure.

The challenge lies in the fact that cement manufacturing emits significant quantities of greenhouse gases, which affect SA’s decarbonisation commitments as it moves towards net zero within the framework of the much-anticipated Just Energy Transition Investment Plan (JET-IP). 

Cement underpins the successful buildout of the JET-IP

Because of the scale of cement and concrete required for the buildout of this ambitious plan, creating a facilitative environment for cement manufacturers to invest in low-carbon technologies and product alternatives should be a component of securing the just energy transition. However, it’s not as simple as a single action. A just transition requires a systemic approach to securing an inclusive and just industry transition in alignment with the country’s sustainable development goals (SDGs) — and this will take collective action to develop sustainable solutions for a sector that is integral to our economy.

Local cement has a long and highly integrated value chain. Its quarries and cement production plants are often located in deep rural areas and provide the only source of employment and infrastructure for communities. Cement plants constitute a major capital investment and their operations contribute significantly to national revenues. Road and rail operators rely on local cement transportation contracts, as do thousands of wholesale and retail sellers.

Furthermore, the SA cement sector has prioritised transformation and broad-based BEE, and provides some 35,000 direct and indirect jobs, many of them highly skilled. And while meeting its significant commitments to the fiscus each year, including the payment of new carbon taxes, the sector has still managed to support the country’s climate change nationally determined contribution (NDC) targets by adopting leading-edge environmental and sustainability practices, such as the use of energy-efficient technologies and material inputs in the manufacturing process that reduce its carbon footprint.

A collaborative commitment made concrete

As responsible stakeholders committed to playing our part in SA achieving its NDCs in terms of the UN Framework Convention on Climate Change (UNFCCC), the local cement sector has committed itself to Vision: Net Zero Carbon by 2050. This includes an undertaking to decarbonise in accordance with the 1.5˚C global temperature increase pathway in the Paris Agreement and re-enforced at COP26 held in Glasgow in 2021. Beyond the rhetoric, the local cement and concrete sector has set key milestones for 2030 in accordance with SA’s technical reporting guidelines and in line with the Intergovernmental Panel on Climate Change (IPCC) reporting framework.

Achieving this ambitious target will require a blend of company-specific interventions and efficiencies, as well as technological and fiscal support. All future SA cement plants will ensure the use of energy-efficient technologies. Critically, the achievement of this progressive mitigation pathway will require appropriate policy implementation and support to secure both green energy and alternative fuels and resources. More broadly, access to carbon offsets must be secured as part of the overall net-zero programme.

Importing obstacles to JET-IP success

There is an unnecessary external threat to achieving this ambition, however, and that is the vast quantities of cheap international product flooding our local market. The producers of imported cement are the beneficiaries of uneven scrutiny and generate little positive impact for local value chains.  Furthermore, they do not adhere to the social and environmental stewardship imperatives that local producers uphold, and are purported to be a critical element of the just energy transition framework environment minister Barbara Creecy has highlighted as the core of how the economy grows.

Imports are not competing on an equal footing with local cement producers. In fact, they are derelict and detractive in the frame of what our government is claiming to prioritise. Not only do they seriously threaten the industry’s ability to sustain itself, they undercut margins for local producers that could be allocated towards investments in greener technologies, products and practices.

In excess of 1-million tonnes of cement imports, the equivalent of an entire cement plant, enter our market annually. SA’s local demand/consumption is about 12-million tonnes, with a potential production capacity of 20-million tonnes, but no incentive to meet it when capacity is filled with foreign product. With no incentive to increase capacity or production, the significant direct and indirect job-creation benefits and local value-chain growth that should be unlocked by investment and expansion in our sector are lost.

And when you add the potential benefit of a lower-carbon cement sector’s role in the JET-IP, it is not just counterintuitive not to protect the sector against erratic imports in a country that has sufficient local production capacity to reliably cater to current and future demand, it is foolhardy.

Putting SA first

With so much at stake, the sector is in discussions with the SA International Trade Administration Commission (Itac) and the department of trade, industry & competition (Dtic) to take positive action to prioritise its local cement industry. Moreover, newly published government regulations do not require localisation of product such as cement and concrete, leaving this to individual departments and state-owned enterprises (SOEs). Thus, more is required to secure the sustainability of a sector affected by both the global pandemic and a decade-long slowdown in SA’s planned infrastructure buildout.

We have requested that general import tariffs be put in place for a limited period to support the industry in weathering the current headwinds and to allow it time to recalibrate. We are confident that given the breathing room to increase production capacity, implement decarbonisation programmes and grow local value chains, we will secure a win-win-win for SA, its citizens and our sector.

The SA cement and concrete sector stands ready to play its part in the sustainable future of our country, but to do so requires true partnership with government — one that includes the political will to provide an enabling operating environment to the benefit of all.

• Perrie is CEO of Cement & Concrete SA.