16 October 2018

Zimbabwe: Cement Sector Has Excess Capacity - Lafarge

Zimbabwe cement industry has excess capacity to meet the 1,3 million tonnes annual domestic demand as the sector has an installed capacity of 2,4 million tonnes, an official has revealed.

Last month the market experienced cement shortage, which the country's largest cement producer, PPC Zimbabwe, attributed to annual maintenance works at its factories in Harare and Bulawayo.

As a result of the temporary shortage some hardware shops, despite the improvement in cement supply, increased the price of the commodity from $11 for a 50 kilogramme to $15 depending on the brand.

There are reports that some dealers are also demanding US$12 per 50kg bag of cement, while others are charging 25 bond notes.

Lafarge Cement Zimbabwe commercial director Ms Edith Matekaire said the sector has enough capacity.

"The current installed capacity in the cement industry still sits at around 2,4 million tonnes. The demand today is only 1,3 million, so there is excess capacity . . . so, and why are we currently having the shortage.

"Today what we are experiencing are issues to do with forex in relation to our ability to maintain and keep our production running at optimum capacity," she said.

At present, Ms Matekaire said her organisation was sitting on excess of $2 million backlog of forex required by the cement producer to maintain its plant.

"What this therefore means is that we have delays in kiln shutdowns. Normally these have to happen at specific time otherwise if they happen during the peak period this is when we will begin to experience the shortage that we have.

"And if the forex is available, the delays in the forex allocations result in critical shut downs, which today you can see have impacted on the supply of cement," she said.

The sector is dominated by three major players, PPC Zimbabwe, Lafarge Cement Zimbabwe and Sino-Zimbabwe Cement.

Ms Matekaire said in light of the micro and macro-economic challenges facing the cement industry, beyond 2020 the local cement industry would begin to run out of capacity.

"I have no doubt that it is time to act now.

"We can see that our (cement industry) projections in real demand will need additional capacity," she said.

The depressed supply of cement has seen institutional and individual projects being delayed as projects owners spend time looking for cement at official prices, which is however, not available.

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