Wednesday, January 26

PPC will spend R664m for three years to reduce its carbon emissions by 10%


JSE-listed cement and construction materials producer PPC will spend R664 million over its next three financial years to reduce its carbon emissions by 10% and has developed a strategy to achieve net zero emissions by 2050.

PPC Chief Executive Roland van Wijnen said on Monday that if PPC succeeds in reducing its carbon intensity by 10%, it will also reduce its carbon tax bill by 10%.

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But he emphasized that the strategy is not just about reducing its tax obligations.

“There are also benefits in production costs. If, for example, we reduce the amount of clinker in our cement, we reduce CO2 but we also cut costs, ”said Van Wijnen.

“So all the projects that are an integral part of the R664 million capex are value added,” he said following the release of the inaugural Report of the PPC Task Force on Climate-Related Financial Disclosures (TCFD).

Structure

The report describes the company’s assessment of risks and opportunities related to climate change and its sustainability solutions.

“This report represents the first steps of PPC’s net-zero journey,” said Van Wijnen.

“It does not provide all the solutions to the climate change challenges we face, rather, it establishes what we have learned about the impact of climate change on our business and our carbon reduction ambitions in the short, medium and long term. .

“It also highlights PPC’s commitment to play its role in contributing to reducing emissions and mitigating climate change for the sector in Africa,” he said.

Van Wijnen said that PPC is not aware that any of its cement competitors in South Africa have published a similar carbon reduction strategy, but internationally, especially in Europe, major producers have.

He said Sasol has announced carbon reduction targets in South Africa, but is not sure whether it followed TCFD, which was established by the Financial Stability Board in 2015 to provide a framework for organizations to better understand and address and develop related strategies. with the weather effectively.

Capex integration

Van Wijnen said that the initiatives to be implemented over the next three years in terms of R664 million in capital expenditures are to some extent integrated into PPC’s normal future capital investment plans.

He said that PPC provided guidance to the market last week that it spends between R500 million and R550 million annually on its capital programs and part of the short-term carbon reduction costs of R664 million are included in this.

Van Wijnen added that an additional R300 million will come in capital expenditures for a specific project over two years.

Read:

PPC secures R2.1bn in new facilities from its SA lenders

“Since we are in a much better financial position than before, we hope to be able to finance this [R300 million] of our normal cash flows.

“At the same time, we are engaged with our major lenders to identify ways to use some of the incentives related to green finance for some of these projects,” he said.

Van Wijnen said that in the short term, PPC believes a 10% reduction from its current 756 kg of CO is feasible.2 per tonne of cementitious materials at 680 kg or less by its fiscal year 2025 and has set aside R664 million during that period to achieve that goal.

He said the next step is a 27% reduction in its carbon emissions by its financial year 2030, when the group expects to be at 550kg of CO.2 per ton or less.

Van Wijnen said that PPC has a very good idea of ​​what it wants to do to achieve its fiscal year 2030 goal, but has not yet disclosed the capex that will go hand in hand with that.

The simple reason for this is that there are still many assumptions that need to be validated and verified before PPC has reasonable certainty around these numbers.

The long-term goal also depends heavily on a regulatory framework and the speed and cost of innovation, he said.

Group effort worldwide

“I really hope that we see as a world in which we come together, share new ideas to implement this imperative and do not do the same thing that happened last Friday when the new variant of Covid-19 was discovered in South Africa and we were literally punished by various countries of the world.

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“If we want to be successful in defeating Covid-19, or in tackling climate change, this has to be an effort that we all do together,” he said.

Policy and opportunity

Kribs Govender, PPC’s technical chief for its South African and Botswana operations, said that in the short term PPC is considering using waste materials, including tires, as part of the feedstock in its furnaces for power.

“We need to take hold on that side with regard to policy and policy certainty. We are committed to [government] about that in terms of obtaining some, certainly, but also in terms of shaping it and giving our contributions to it, “he said.

Van Wijnen said there are opportunities for new revenue from South Africa’s energy transition, which will require large amounts of concrete for the renewable energy program, particularly solar energy.

But he said there will be other opportunities arising from building materials that PPC may not yet have in sight.

“As PPC, we will be at the forefront of building materials that come with less carbon intensity than what we know today,” he said.

Van Wijnen said emissions reductions will require investments in mitigation technologies that are currently largely undeveloped.

Deliberate collaboration of the public and private sectors is key to charting a pragmatic path forward for new technologies and innovations, as well as supportive policies and investment frameworks that will be developed to enable a net zero future, he said.

PPC shares rose 5.21% on Monday to close at 5.05 rand per share.


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