The cement industry is not the inflation culprit it is made out to be.p>

Bruce Whitfield:
The cement industry coming under severe criticism recently with fingers being pointed at it saying a high proportion of building inflation comes from cement inflation. Well not so, says a Wits University School of Construction Economics Report, it’s gone about debunking that theory which is no doubt a big relief to John Gormersall, who is the chief executive of PPC. Why is there John, do you think this perception that cement is such a high cost component when it comes to building projects?

John Gormersall:
Yes Bruce, I think that one looks at a massive rugby stadium as an example and people say, look it’s all cement, it’s made out of cement, but in actual fact what they are talking about is concrete and concrete contains steel reinforcing, it has voids underneath, it looks as though it is very heavy but it has lots of voids. It has got sand and stone in it and the smallest volume and value of material is in fact the glue that holds all of that together, namely the cement. So in the case of the Green Point stadium in a newspaper article cement amongst other building materials was mentioned specifically as contributing to the escalation in costs of the Green Point stadium and as our numbers indicate, because we have the contract for that cement, it is only 40 000 at a value of about five-million I think it was roughly I mean it works out at 1.2 percent of the total value of the finished stadium.

Bruce Whitfield:
Your point is there that cement actually comes in as a very low proportion of project costs and just a couple of figures to throw at you; in low-cost housing 5.9 percent of project costs is cement but in medium cost developments it is 1.1 percent which implies that the higher you go up the scale the finishes becomes a greater part of the cost and at the lower end with the very basic housing cement is a more important component I suppose.

John Gormersall:
Yes and I must just point out in this study, this is not just the cement that is used for example, to glue bricks together or to make the concrete. The study done by Wits, we were quite specific, if take in the case of low-cost housing or any housing you must assume the bricks are cement bricks and that the roof tiles where roof tiles are used are cement containing roof tiles and they calculated the cement in all of the products used including kerb stones if there were roadways, all of the low-cost housing was based on the Alexandra East bank projects and so there they would have looked at any bricks that were used for paving stones, kerb ways, storm water drain pipes, storm water gullies which had bricks and concrete and then that was allocated across the number of houses built so it is not just the cement, glue in the bag it is what comes in the bricks and everything so it is the total cement.

Bruce Whitfield:
Over the past 12 months, how much have cement prices increased?

John Gormersall:
Slightly in excess of the PPI and one of the reasons is that input inflation in cement manufacture is running considerably higher than PPI and we will be disclosing some facts to shareholders which will then be in the public domain on Wednesday with the release of our results.

Bruce Whitfield:
Okay, so we have got cement prices up of 14, 15 percent year-on-year.

John Gormersall:
No, it's not as much as that, not at this stage.

Bruce Whitfield:
Okay, not at this stage, but certainly we look forward to talking to you on Wednesday night, John Gormersall, thank you very much, indeed for your time this evening, chief executive of PPC.