The Reserve Bank’s interest rate increases, while aimed at restricting inflation to the 3 – 6% band, could curb GDP growth in the short term. The infrastructure spend mentioned previously, along with delivery pressure from 2010 FIFA World Cup projects, still bodes well for the construction and cement industry, which we believe should allow for significant cement growth to at least 2014.

The South African cement industry continues its phase of expansion to accommodate current and projected future demand. PPC, Lafarge and Cimpor all have major expansion projects in place. In addition, the industry saw a new entrant when Orascom announced a 2 million ton per annum facility planned for the North West for completion by the end of 2010.

Progress on capital projects is going according to plan and the Batsweledi cement kiln at our Dwaalboom facility is on track to be commissioned early in 2008. After the ramp-up phase, it will have a capacity of 1,25 million tons per annum. It is testament to the hard work and dedication of the PPC team that this major project is on time and within budgeted cost. The new mill project at our Hercules plant in Pretoria is also on track. The civil work is under construction, and the mill itself has been ordered and is in the process of being manufactured. The Riebeeck West expansion and modernisation project study for the Western Cape is progressing well but has been delayed by the environmental impact assessment and regulatory approval process. Whilst this delay is unfortunate, we have continued with the specification of equipment, plant layout and engineering design. Over the past year there has been no growth in cement demand in the Western Cape and therefore this delay should not have any major impact on either the project or our ability to supply the cement requirements in the province over the medium term.

PPC has faced many challenges in the past year, and our team has tackled them with determination and commitment. We have been faced with increasingly difficult trading conditions. Price controls imposed by the government across the board in June are placing additional strain on the company. Whilst there has been some relaxation to the harsh pricing measures initially introduced, ongoing shortages of production inputs and a Zimbabwe selling price which is insufficient to cover production costs, require us to focus increasingly on exports to sustain operations. On a positive note, the ability to earn foreign exchange from these exports has allowed the company to continue with capital projects that will address production bottlenecks in the future. We extend our thanks to the team for their ongoing support and perseverance under very difficult circumstances. We remain committed to our Zimbabwe operation.

Our lime business has enjoyed a good year. We are seeing benefits from re-negotiated supply contracts, which have had a positive impact on performance. Our team is well placed to pursue export opportunities in Zambia and the DRC, following growth in the mining sector in those regions.