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.
BY TATIRA ZWINOIRA
In a Press briefing after the official commissioning of its new plant on Friday, PPC Zimbabwe managing director, Kelibone 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.
Masiyane said the cement manufacturer would export its product to Malawi, Zambia and Mozambique after identifying opportunities in those 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.