Derba Midroc Cement and East Africa Holdings have signed a Memorandum of Understanding to establish a US$60m joint venture company that will be exploring and developing coal.
Recent studies proved the availability of a more than 20 million coal deposit at Moye area located at a 70km distance from Jimma.
The agreement provides for establishment at Moye area of a coal manufacturing plant, which is expected to supply the power required in the country’s cement production, thereby sparing the copious expenditures on oil.
It has been proven that up to 20 Mega Watt can be generated by using coal, which will offer other industries an alternative for power consumption.
Speaking at the signing ceremony here yesterday, Midroc chains owner Sheikh Mohammed Husein Al-Amoudi said exploiting the coal resource would be of high value to meeting the huge demand for cement due to fast-paced construction sector growth.
He said through the exploitation of the coal resource, the energy supply demand of cement factories can be met and the copious foreign currency expenditures on imports can be spared.
Signing the agreement, East Africa Holdings Managing Director Bezuayehu Tadele said investors were making use of the enabling investment environment created by the government to play significant roles in the country’s economic development.
Bezuayehu said implementation of the agreement would ultimately lead to a considerable reduction in the cost of cement, which is currently highly demanded owing to the growth in leaps and bounds of the construction sector in Ethiopia.
At full capacity production, Derba Cement Factory will be producing 8,000 tons per day. The East Africa Holdings is also constructing a 3,000 ton per day capacity factory near Dire Dawa.
There is plan to increase the joint venture’s share to US$200m in the future.