Cement manufactuer PPC Zimbabwe says it expects to increase exports into the region after commissioning a $85 million plant in Harare which will double the firm’s cement production capacity to 1.4 million tonnes per year.
Apart from PPC, Zimbabwe’s cement industry comprises of two other players, Larfarge Zimbabwe and Sino-Zim, with installed capacity of 450,000 tonnes and 250,000 tonnes respectively.
The country’s demand for cement for the year is estimated at 1,17 million tonnes.
“At the moment we are exporting very little into Zambia, Malawi and Mozambique but it is nothing really to write home about,” said PPC managing director, Kelibone Masiyane during a tour of the new plant.
“We have to intensify our efforts to try capture that market but already we are at a disadvantage because the manufacturing cost in Zimbabwe is pretty high. So to compete in those markets will be pretty difficult but we are looking at the benefits that will come from this increased capacity,” he said.
Masiyane said one of the major cost drivers was electricity, with them paying 15 cents per kilowatt hour.
“If you go to Zambia, they charge 6 cents and we are setting up a plant in Ethiopia, where they charge about 3 cents. As such, competing in other countries will be difficult for Zimbabwe. Transporting cement from Botswana is quite expensive, so we are hoping that the plant will help with that,” he said.
PPC has two other plants in Zimbabwe, in Bulawayo and Colleen Bawn near Gwanda with production capacity of 700,000 tonnes annually.
“The market might be depressed at the moment but this investment it is strategic. We understand that currently the economy is in turmoil but we have a long range view for Zimbabwe we have confidence that it will take a turn.
Apart from South Africa and Zimbabwe, PPC also has units in Botswana, Ethiopia, Rwanda.
Cement manufacturer, PPC Zimbabwe says the country has a huge manufacturing cost base, which makes it difficult to operate in, compared to other regional countries.
In May this year, cement players complained of high costs, which were making it hard for them to compete with imported cement.
The Confederation of Zimbabwe Industries is on record saying high electricity, water and transport costs were a major challenge to local producers.
This was a major factor in excessive pricing of their products to the local market.
PPC invested in the new plant to cut costs involved in relying on Bulawayo plant to service Harare and northern region markets.
In 2014, Chinese engineering firm, Sinoma International was hired to develop the plant.
PPC has invested $85 million into the new plant, which has a capacity of up to 700 000 tonnes annually.
The plant boasts of some of the latest technology that involves a palletised packaging machine, which is new in the country.
It has also developed its research and development lab meant for testing the finished product before it gets to the market.
Masiyane said repayment on the investment from the plant would begin in December.
PPC Ltd group CEO, Darryll Castle said investing in Zimbabwe was part of the company’s long-term strategy.
“We remain committed to growing in this country. Our decision to invest in an $85 million milling plant in Zimbabwe is a reflection of our confidence in the country and the economy of Zimbabwe. The Msasa mill is part of bigger plan to develop a fully integrated plant in Harare in time, as the economy and local demand grows,” he said.
“Cheap imports have the potential to cause significant injury to the local cement manufacturing industry, including job losses, underutilisation of production capacity and reduced return on assets employed.”
The new plant boasts of a faster turnaround time in developing cement, meaning PPC will be able to deliver more in shorter periods.