PPC Zimbabwe managing director Albert Sigei says a surge in cement imports is choking local cement manufacturers amid fears this could trigger job losses.
Local cement is more expensive than the one manufactured by other Sadc countries owing to several macroeconomic challenges, prevailing in the country such as currency volatility, high cost of doing business, regulations, powercuts and foreign currency shortages.
In a Press briefing in Harare on Friday last week, Sigei said competition from imports, which had previously been restricted, created an unfair environment for local manufacturers.
“At an industry level, local cement manufacturers have more than sufficient installed grinding capacity. We estimate that the country will unnecessarily lose over US$50 million in scarce foreign exchange annually if action is not taken regarding the 1,8 million tonnes of imports,” he said.
“Despite this, we continue to witness a massive influx of imports into the country. Our installed capacity is just over 3 million tonnes, while the annual demand is estimated at 1,8 million tonnes.”
He said imports benefited from an uneven competitive advantage over local manufacturers, as importers do not have to invest in the market.
The PPC boss warned that prolonged imports into the country could eventually lead to a slowdown in local production and job losses, as local cement players would be forced to rationalise costs.
“The first half of the financial year was a difficult period, with revenues recording a decline of 9% compared to the prior year,” Sigei said.
- PPC Zimbabwe appoints Albert Sigei as new MD
- PPC Zimbabwe lays off managers
- Imports choke cement industry
Keep Reading
“This was primarily due to the influx of imports, which were not allowed into Zimbabwe during the comparative period, resulting in our earnings before interest, tax and amortisation (EBITDA) dropping by a lower rate of 4% and an improvement in EBITDA margin by close to 2%.”
In the outlook, the company projects to encounter a rapidly evolving business landscape marked by increased competition, including a surge in cement imports and the emergence of new entrants in the market.
“While we have maintained uninterrupted power supplies from our Colleen Bawn, Bulawayo and Harare factories, power supply remains a major threat. For example, we experienced close to four electricity supply-related stoppages every month at our Colleen Bawn plant,” Sigei said.
“This resulted in about 180 hours of lost production, equivalent to 20 000 tonnes of clinker, with an adverse financial impact of more than US$1 million. The company continues to engage ZETDC [Zimbabwe Electricity Distribution Company] to address the incessant power challenges.”
He added that the cement maker was accelerating its 20 megawatt (MW) and 10MW solar projects at the Colleen Bawn and Bulawayo factories under a power purchase agreement model.
