12 December 2012

Rwanda: South African Firm Buys Cimerwa for U.S.$69.4 Million

CIMERWA Ltd. Rwanda's only cement producers yesterday announced that they had sold 51 per cent of the company's stake to South African cement giants PPC Ltd in a deal worth US$69.4 million.

PPC Ltd. which is the leading supplier of cement in Southern Africa now takes over ownership of CIMERWA which has been in business for the last 30 years.

The name will remain unchanged for the foreseeable future with the new owners saying CIMERWA has a strong brand which they are willing to develop further.

Kampeta Sayinzoga, the Ministry of Finance and Finance Permanent Secretary welcomed the deal saying it comes at a time when the country is experiencing a heavy imbalance of trade due to many imports where cement is a leading item on the list.

"Reducing the balance of payment gap remains one of our key priorities and investments like this are very significant to the cause," she said.

CIMERWA currently only produces 100,000 tons of cement per year against an estimated current annual demand of 350,000 tons needed to support a construction sector which has been growing in double digits along with a progressive economy.

Being the lone producer of cement, Rwanda has to import the balance of over 70 per cent from especially Uganda and Tanzania to fill the gap huge gap.

But with deliberate efforts to attract investors in that area, Clare Akamanzi, the Rwanda Development Board (RDB) CEO says the country is determined to reduce the amount of construction imports.

"It's an exciting investment for the country as it means we draw closer to ending heavy cement imports," said Akamanzi.

The new owners come at a time when CIMERWA is undertaking an ambitious expansion drive that will see the firm finalizing a US$104 million loan to complete a plant expected to improve capacity to the level of producing 600,000 tons of cement per year, well above the current demand.

"That means even though domestic demand for the cement goes up there might be enough to enable some exports to neighboring countries such as Burundi and DR Congo.

The plant is expected to be completed sometime in 2014 but with Rwanda's economy expected to grow at 11% in the next few years as the global economy stabilizes, local demand for cement might as well have grown to march the plants new capacity as the construction sector grows in response to the general economy.

Where CIMERWA lacked in form of capacity and funding, the new buyers, PPC is widely respected having been in the cement business for the last 120 years when it was established as South Africa's first cement plant in 1892.

In 2010 the company became one of the few to belong to the elite group of 'listed centenarians' after it celebrated its century as a listed company.

It's the lack of reliable cement supplies in the East Central African region that attracted the South African giants to take over CIMERWA with PPC Ltd. CEO Paul Stuiver admitting that while their new plant is located in a challenging area, it posses strategic benefits and looks forward to exploiting the opportunities it presents.

"This transaction is a further step in our commitment to invest in the sub-Saharan Africa and we are very confident about the prospects in Rwanda," said Stuiver.

PPC which runs manufacturing facilities in South Africa, Botswana and Zimbabwe says it has the capacity to produce eight million tons of cement per annum.

Afrique Ramba, CIMERWA Ltd. chairman said PPC's substantial equity investment is a sign of strong confidence in Rwanda's business environment.

"CIMERWA is delighted to drive Rwanda's goal of a private sector led development," remarked Ramba.

The new owners returned the compliment by contributing US$100,000 to the Agaciiro Development Fund (AgDF) saying that it was a sign of their commitment to Rwanda's development.

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