Government backs embattled cement company

Government backs embattled cement company
Published: 25 October 2005

The Namibian Ministry of Trade and Industry says it will see to it that the new Cheetah Cement Company is not squeezed out of business by South African suppliers and their local distributors. Trade and Industry Minister Immanuel Ngatjizeko last week said the government would not tolerate those who were bent on preventing local players from entering the construction business.

Cheetah Cement – a partnership between a Brazilian (Mizu) and Namibian company – was launched recently and is working towards building a cement plant in Otjiwarongo. Cheetah Cement is facing stiff competition from a South African cement producer, Holcim, which has been in business for 40 years. Currently there are no cement factories in Namibia - the only plant collapsed some years ago.

Ngatjizeko’s remarks came after Cheetah complained that Holcim and some local distributors were trying to force it out of the market by undercutting its prices and refusing to sell its product. The ’price war’ started when Cheetah entered the market selling imported cement at a lower price than Holcim’s product.

A couple of months ago, a 50 kg bag of Holcim cement was going for N$54, but the price has now drastically dropped to N$26 per bag, while 50 kg of Cheetah cement is now going for N$30. Cheetah Cement’s Managing Director, Zedekias Gowaseb, said his company expected stiff competition from Holcim when it entered the market, it, but did not expect anything as drastic as it turned out to be.

He claimed that letters had been circulated to stop distributors from accepting and selling Cheetah Cement, but added that the situation was now under control and that Cheetah Cement was being sold around the country. Gowaseb said, however, that his company could not drop its price to below N$30 a bag, as this would not be viable for business.

However, in an advertisement placed in local newspapers last week, Holcim Namibia said it was not against competition and welcomed free enterprise. Wandile Zote of Holcim admitted that the ’price war’ - although a common practice in the business world - was proving to be expensive to both suppliers and was "not sustainable".

Ngatjizeko said the Government had been promoting the development of a local cement factory since Independence with a view to providing affordable housing. "The Government, and in particular my Ministry, shall work closely and in support of those who want to add value to our mineral resources such as clay, iron, coal reserves and limestone to develop a cement factory in the country.

"Within the existing national laws, regional treaties and international conventions, we shall not accept any unfair trade practices and especially from those who do not want to see our country industrialised," he said.

Construction of the Cheetah cement plant is to start in March next year and the total project investment is between N$450 million and N$500 million. The project is to be carried out in three phases and the factory should be complete and ready to deliver after three years. The output of the factory is expected to be between 500,000t and 600,000t of cement a year for the next 45 years. Gowaseb said his company had submitted its feasibility study to the Ministry of Trade and Industry.