17 December 2012

Rwanda: Cement Firm in U.S.$69 Million Buy-Out

Kigali — CIMERWA Ltd. Rwanda's sole cement producers on Wednesday last week announced that they had sold 51% of the company's stake to South African giants PPC Ltd in a deal worth US$69.4million.

The deal means PPC Ltd. which is the leading supplier of cement in Southern Africa takes over ownership of CIMERWA which has been in business for the last thirty years.

The development has been welcomed as a major transaction by the Government with Kampeta Sayinzoga the Permanent secretary in Rwanda's Ministry of Finance and Planning saying it comes at a time when the country 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 in an address last week.

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% from especially Uganda and Tanzania to fill the gap huge gap.

But with deliberate efforts to attract investors in that area, Clair Akamanzi, the Rwanda Development Board (RDB) CEO says the country is determined to reduce on 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 in a separate interview with The EABW.

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 in an address last week.

PPC which runs manufacturing facilities in Southern Africa says it can produce eight million tons per annum.

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