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Home Africa

Zimbabwe cement firms push for enhanced capacity

Staff by Staff
May 11, 2020
in Africa, Cement, COMESA, Construction, Export, Industry, South Africa, Zambia, Zimbabwe
Reading Time: 3 mins read
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Dangote Returns To Zimbabwe

Local cement manufacturers have invested US$200M towards enhancing production efficiencies in the last five years, according to a recent Zimbabwe Cement Industry 2019 position paper.

“Cement players have invested an additional US$195M over the past five years in kiln upgrades, packing, grinding station and other cement processes in order to add efficiency to the existing equipment and to reduce cost of manufacturing,” it says.

Pretoria Portland Cement Zimbabwe, Lafarge Cement Zimbabwe, Sino Zimbabwe Cement, Livetouch and Pacstar Cement are the dominant players in the sector.

Sino Zimbabwe Cement recently spent US$4M on an equipment upgrade and an additional US$25M on a new brick factory.

PPC has invested US$53M since 2010 on kiln and mill upgrades and quarry optimisation at its two existing operations.

It is also setting up a new grinding plant in Harare at a cost of US$80M.

Further, Lafarge has invested US$37M over the past five years in quarry rehabilitation and equipment, cooler upgrade and systems automation.

“The cement industry in Zimbabwe is heavily invested, thus the need for local players to secure a return on these investments,” reads the paper.

According to the cement producers, the country is exposed to serious competition from South Africa and Zambia.

“The top five contributors to Zimbabwe’s adverse cost of production are logistic services, maintenance, consumables, packaging and power.

“However, protection by the Government of Zimbabwe provides relief to the industry, except for smuggled stock.”

The assessment was done in order to inform recommendations that seek to address the threats posed by imports.

The local cement industry is a significant contributor to economic growth, employment creation and trade.

Given the significant role that the industry plays, all regional countries, with the exception of South Africa and Zambia, have adopted tariff measures to protect their industries from imports.

Local cement manufacturers are lobbying Government to put further protectionist measures for the industry.

“Zimbabwe attracts imported cement due to the high selling price in the market and excess capacity in the region.

“This poses a serious threat to the local market as regional players will find it lucrative to export into Zimbabwe without fully recovering their costs.

“The industry is therefore requesting for ‘protection’ from imported cement until such a time that the playing field is even with cost drivers in local production have been revised to competitive levels.”

South Africa, Zambia and Mozambique pose the biggest threat because of their huge excess capacity.

“Zambia enjoys tariff exemptions because of its membership to Comesa (Common Market for Eastern and Southern Africa).

“This makes Zambian cement the biggest threat to Zimbabwean cement industry. Given the cost comparison figures, Zambian producers should not be landing cement competitively in Harare unless if their product is sold at variable cost or some other form of discount.

“On the other hand, Zimbabwe cement industry cannot profitably export cement into Zambia as cement prices obtaining there are not attractive,” added the position paper.

Mozambique has significant overcapacity, which ordinarily would have posed a threat of imports into Zimbabwe.

However, their country’s cost of production is high as they import their clinker.

High logistical costs into the Zimbabwean market make it difficult for them to land cement competitively.

“Zimbabwean cement industry can no longer export into Mozambique competitively after their government introduced a restrictive tariff two years ago.”

Export opportunities appear to be limited because of the increasing production capacities in the region, as well as the characteristics of cement that usually prevents it from being transported over long distances.

There is also protectionist behaviour in the region despite commitments to regional integration and free trade agreements.

The country’s cement demand is currently estimated at 1,4 million tonnes per year, compared to local cement production capacity of 2,6 million tonnes.

Source: The Zimbabwe Mail

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Tags: africaCementcement businesscement industryconstructionLafarge ZimbabweLivetouchPacstar CementPretoria Portland CementSino Cementzimbabweафриказимбабвеأفريقيازيمبابويアフリカジンバブエ津巴布韦非洲
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