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Afrimat’s latest acquisition adds strength to its diverse African mix

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Afrimat’s Brewelskloof Quarry in Worcester in the Western Cape province of South Africa. Image credit: Afrimat

Afrimat’s latest acquisition adds strength to its diverse African mix         

South African mining and materials company Afrimat’s acquisition of Lafarge South Africa (LSA) will further increase the company’s diverse offering to the African construction market.  

Afrimat’s latest acquisition will be housed in the company’s Construction Materials division, which together with its subsidiaries supply a wide variety of aggregates and concrete-based products to the African market.

LSA Group, a member of the Holcim Group, is a provider of construction materials in South Africa, offering an extensive range of products to the construction and infrastructure industry, including aggregates, concrete, cement, and fly-ash.

According to Andries van Heerden, CEO of Afrimat a key focus of the company is operational efficiencies, which are aimed at expanding volumes, reducing costs, and developing the required skill levels across all staffing categories.

“This exciting deal forms part of the Afrimat Group’s ongoing diversification strategy and will increase Afrimat’s offering in the construction industry, by expanding our quarry and readymix operations nationally and allowing for Afrimat to enter the cement value chain competitively,” says Van Heerden.

Maintaining a healthy balance sheet (Afrimat’s latest acquisition adds strength to its diverse African mix)

Afrimat is highly cash-generative and effectively debt free, allowing this acquisition to be financed largely in cash. “We are confident that this acquisition is a good use of our cash reserves, and following the purchase, the Afrimat Group’s balance sheet will remain healthy with debt levels well within our target range,” Van Heerden adds.

Core assets acquired consist of aggregate quarries, readymix batching plants, an integrated cement plant, cement grinding plants, cement depots, and high-quality fly-ash sources.

The lime and aggregate sources are long-life assets, well-designed and all with good-quality plants and infrastructure characterising the entire portfolio being acquired.

The purchase price for the acquisition of the equity in the LSA Group is USD6-million, with an additional amount of R900-million towards repayment by or on behalf of LSA of an amount owing by LSA to the Holcim Group.

Time was right to strengthen Construction Materials division (Afrimat’s latest acquisition adds strength to its diverse African mix)

Van Heerden says that operational synergies between the two businesses are substantial, considering Afrimat’s existing national footprint of aggregate quarries, readymix concrete operations and precast manufacturing operations. “We believe that the time is right to strengthen our Construction Materials division,” he adds.

“Afrimat operates its Construction Materials segment at a low and efficient cost, supported by ongoing efficiency projects. This philosophy will be applied to the acquisition, where we believe further efficiencies can be extracted, and build on our successful integration of similar transactions. Afrimat’s Construction Materials division contains all the expertise and strategic management execution capabilities required to ensure successful integration and expansion of our products into the infrastructure and construction sectors of South Africa.”

According to Van Heerden, management is confident that a sharp commercial strategy comprising operations, marketing, and logistics, will enhance the Afrimat Group’s overall business strategy in the Construction Materials segment.

Aggregates needed for infrastructure maintenance (Afrimat’s latest acquisition adds strength to its diverse African mix)

“Afrimat believes the private sector will assist significantly in reducing the need for loadshedding over the next two years and that Government will, at the very least, realise that it needs to maintain infrastructure. This will greatly benefit the Construction Materials and Industrial Minerals divisions as Afrimat is well-positioned to provide the aggregates and products necessary for this infrastructure maintenance,” says Van Heerden.

Van Heerden concludes that this acquisition is planned in accordance with the Afrimat Group’s cash generation, operational expertise and capacity, and thorough market research.

“I am confident that we have the marketing and logistics know-how, expertise, experience, skills and business acumen to inculcate all elements of this acquisition into our current businesses and continue to ensure the growth of Afrimat through diversification. As always, Afrimat will execute this exciting endeavour guided by the precision and cautiousness that we have come to be known for,” says Van Heerden.

Afrimat’s latest acquisition adds strength to its diverse African mix

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Afrimat’s latest acquisition adds strength to its diverse African mix

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