South Africa’s Consol Glass has suspended construction of a R1.5 billion ($85.3 million)glass manufacturing plant in Nigel, Gauteng, indefinitely.
The container glass packager said the suspension was due to the reduction of demand for glass products, which was driven by the Covid-19 pandemic and a government ban on the sale of alcohol.
“The combined effect of Covid-19, the current alcohol ban, ongoing restrictions on on-premise consumption, and lost compound growth will see the South African glass industry decline by an estimated 15% over the next 12 months,” it said.
The R1.5 billion project commenced construction in Nigel, southeast of Johannesburg just before lockdown. It would have added 130,000 tons of glass production to Consol Glass’s capacity and doubled capacity at its Nigel facility.
It said that an additional R800 million investment to rebuild and maintain its current furnace capacity and footprint domestically is on hold pending clarity on market demand.
Mike Arnold, CEO of Consol Glass, said: “It is clearly a tremendous disappointment and a considerable loss to South African industrial capacity.
"It was a difficult decision to make, but unavoidable given the significant impact of the pandemic and the second ban on alcohol sales in South Africa.
“Had there been no alcohol ban, as in most other countries around the world who have dealt with the impact of the pandemic, our models indicate that demand would have reduced only slightly.
“In that instance, the glass industry would still have been short of capacity and the Nigel expansion would definitely have still been required.
"As it is, however, the second alcohol ban has not only reduced consumption in the short term, it has created massive uncertainty going forward.”