…makes headway in Malawi, Zambia
Lafarge Cement Zimbabwe is very optimistic about the export market after making headway in Malawi.
Late last year, the country was experiencing a cement shortage, which was made worse by Lafarge Cement’s plant malfunction, in which a cement mill’s roof fell. In order to maintain its market access, the business decided to import cement from its sister facility in Zambia.
In February 2022, it completed the restoration of the cement mill.
Chief executive officer Geoffrey Ndugwa told shareholders attending the company’s annual general meeting that volumes will recover when compared to the previous period.
The commissioning of the installation of the Vertical Cement Mill (VCM) by the end of this month is earmarked to double cement milling capacity. A US$15 million investment program that was started in 2019 includes the new mill. A $2.8 million automated dry-mortar facility and alternative energy infrastructure were also included in the venture.
“Because of our significant capacity which is first of all oversized for the domestic market, growing demand in the region for this type of products we are looking at especially markets like Zambia and Malawi,” said Ndugwa.
“We just made our first exports to Malawi a few weeks ago, so we’re feeling pretty good about the trend.”
Commenting on the operating environment, he said the rising commodity prices due to the Russia-Ukraine conflict and rising local inflation all together continue to undermine the Post Covid-19 gains.
On sales mix, he said the company’s sales are significantly in local currency while USD sales constitute about 10-15%.
“This is very much constrained by the limitations we have with the authorities in terms of meeting all the pricing requirements of the various statutory instruments,” he said.
The company admittedly said it got some funding from the auction. However, the USD sales combined with funds it got from the auction are not enough to finance some of its big projects.
“I would say capital expenditure is much bigger as there is more expansion, but we are engaging the government around that.”
Zimbabwe’s cement sector has been stretched and relies on Lafarge Cement (Holcim Group) and PPC.
An analyst asked about an update of the shareholder exchange that is going to happen. This comes as Fossil Mines entered into a binding agreement with the Holcim Group to take over Lafarge Zimbabwe.
“That is a shareholder issue and we will wait for the development as we have made these public,” group chairman Kumbirai Katsande replied to the question raised.
Currently, PPC and Lafarge Zimbabwe jointly own 70% of the local market. When Dangote Group moves on with its plan to construct a 1.5Mta integrated cement factory in Harare in 2023, this market dominance is anticipated to be challenged.
The AGM endorsed ZWL$7.24 million paid as directors fees for the past year, as well as the remuneration of US$72 000 to Deloitte & Touche for the past audit. Shareholders also approved the resignation of Deloitte & Touche as auditors of the company after 5 years of service.
They are now being replaced by Ernst & Young (Zimbabwe) as auditors for the ensuing year – Harare