Consol Glass has indefinitely suspended construction of a new R1.5bn glass manufacturing plant in Ekurhuleni, Gauteng, as the government’s ban on the sale of alcohol to combat the spread of the coronavirus shatters demand for glass products.
“The ongoing ban on alcohol sales and restrictions around on-premise consumption results in massive future demand issues and lost confidence in these markets recovering,” Consol chief executive Mike Arnold said.
The legal alcoholic beverages industry accounts for about 85% of sales in the glass packaging industry, according to Consol.
The SA glass industry’s national revenue is expected to decline by an estimated 15% over the next 12 months.
“It is clearly a tremendous disappointment and a considerable loss to SA 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 SA,” said Arnold.
Consol’s plant in Nigel, southeast of Johannesburg, would have added 130,000 tonnes of glass production to Consol Glass’s capacity and would have repatriated imports of glass for Coca-Cola, Heineken and AB Inbev.
It was expected to create 120 direct jobs, and approximately 2,600 additional employment opportunities across the value chain, from waste pickers to truck drivers, computer numerical control machine operators, glass machine operators, fitters, electricians and additional senior managers.
The expansion would have doubled the capacity of Consol Glass’s existing Nigel factory, and would have required additional, locally sourced raw materials, including silica, lime, feldspar and cullet or recycled glass, and was expected to support new investments in the mining industry.
Arnold said the first alcohol ban resulted in losses of R1.5bn in the glass packaging industry. He said if the second ban continues without clarity on its duration, it will place 25,000 direct jobs and hundreds of thousands of indirect jobs in the industry’s supply chain at risk.
Consol’s announcement comes a day after SA Breweries, owned by AB InBev, said it had cancelled R5bn in planned investments. Heineken has said it was rethinking its “expansion ambitions” in SA.