Players in the cement industry have appealed for a reliable, cost-effective and modern railway network to maintain and grow its operations saying logistics account for 40% of total cost, the single largest cost item in the manufacture and distribution of cement.
Pretoria Portland Cement Zimbabwe director Gavin Stephens, in his capacity as Cement and Concrete Institute chairperson, said with the industry under pressure to guard against price increases National Railways of Zimbabwe (NRZ) could play a crucial role by making reliable wagons available.
Early this month, cement prices reached a peak of $22 per 50kg bag as dealers cashed in on shortages spawned by a plant breakdown at one of the country’s major producers.
“Transport is a major cost driver in the cement industry due to the nature of the product, and rail transport is, in most cases, the logical first choice,” said Stephens.
“The cement industry is heavily reliant on the NRZ. The industry is under pressure to restrict price increases and the NRZ can play a meaningful part in this. We look forward to the growth of the industry, the NRZ and the national economy.”
According to Stephens, 25 000 tonnes of cement per month is moved by rail and 80 000 tonnes per month by road.
He said though demand for cement declined from 1, 1 million tonnes in 1999 to 0,57 million tonnes in 2004 production has recovered since dollarisation and is expected to reach 1,016 million tons in 2011.
“Local demand has been very depressed from 2000 to 2010, but has shown strong recovery in 2011,” he said.
“At 2011 volumes, approximately 1,75 million tonnes of material need to be transported for the cement industry — the bulk of this should be by rail. Therefore this industry is about bulk transport” said Stephens.
He added: “Logistics account for 40% of total cost — the single largest cost item in the manufacture and distribution of cement”.
NRZ officials said the parastatal would this year fail to move 6,4 million tonnes of freight owing to operational challenges.