Modern Quarrying Q2 2019

INDUSTRY NEWS

Calling for new beginnings

Despite the oversupply in the cement sector, AfriSam is now in a better position to cope with current market conditions after a period of right-sizing its business. Following Finance Minister Tito Mboweni’s first budget, economist Dr Azar Jammine has raised hopes for a “major recovery” in the South African economy, but warns it is unlikely to happen before 2021. Speaking at AfriSam’s 2019 National Budget Breakfast in Sandton recently, Dr Jammine told a diverse audience of more than 200 people from the construction sector that 2019 and 2020 would remain very difficult. Planned government investment in infrastructure, for instance, is expected to rise only 4%, spelling a continued slump for civil engineering. He says one of the key drivers of recovery would be restor- ing the tax-collecting capacity of the South African Revenue Services, which has fallen about R40-billion short of target in the last financial year. He also hopes that government expenditure will be made more effective if the challenges at the State-Owned Enterprises are addressed and the more- than -34% of the tax revenue being spent on the civil service is reduced significantly. Focusing on the state of the construction sector and its prospects, Industry Insight senior economist David Metelerkamp painted a sombre picture for most segments. The hard-hit civils sector will see some light from the 14% increase in planned government expenditure in transport and logistics infrastructure. Metelerkamp notes that this is off a low base from last year, moderating its likely impact. Water infrastructure will see an 8% increase in public spending, but investment in power facilities is only slightly raised due to the Medupi and Kusile projects approaching completion. The renewable energy sector will bring some relief to contractors, as its role in power generation could grow as these technologies show evidence of reducing the cost of generating electricity. The building industry looked better than civils, he said, especially the residential segment. This was mainly in demand for flats and townhouses, where square metres completed grew considerably in 2018. Demand for ‘luxury homes’ was down. The future held promise for large mixed- use develo pments, of which over 30 were on the table,

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MODERN QUARRYING QUARTER 2 - 2019