South Africans squeeze new entrant

South Africans squeeze new entrant
13 October 2005

South African cement suppliers and local distributors have reportedly conspired to drive out newly introduced Cheetah Cement to maintain their monopoly in Namibia.  New Era investigations have revealed that the suppliers have offered local distributors a N$5 a bag rebate to stop them from selling Cheetah Cement.  Cheetah Cement is a product of Ardea Investment, a consortium of Namibian and Brazilian business persons. 

Cement prices have over the past two months plummeted to record levels, falling by 50 per cent from a high of around N$60 a bag to about N$30 and market sources suggest that prices display a cyclical trend, dropping as much as 50 per cent when a new shipment of  18,000t arrives from Brazil and then slowly rising until dropping again when the next shipment arrives!

In an effort to sustain the price, cartels that many say have been ripping off Namibians for decades, old guards in the country’s cement industry have drastically slashed the main building ingredient to force the new Cheetah to fold up.  A senior official at building material giant distributor Cashbuild yesterday could neither confirm nor deny having sealed the incentive deal from their SA suppliers (thought to be Holcim) which disallows them from selling Cheetah. 

Refusing to disclose his name and position after saying his managing director was in South Africa, the Cashbuild official said firms should face cut-throat competition in the global trading village.  "All we care about is providing the best products and services to our customers at the lowest cost and if one supplier is offering better incentives, why not utilise them?" said the official. 

Cheetah Cement managing director Agab Gowaseb confirmed in an interview yesterday that he was aware of the plot to squeeze his firm out of business.  "We know they are fighting us out of the market so that we close down. We are already making losses since we also have to cut the prices in order to remain in the market," said Gowaseb. 

He said SA cement manufacturers do not want Namibia to have its own plant so that they can continue to monopolise the country’s cement industry.  Gowaseb described the unfair trade practice as unforunate because his company will not only import cement from Brazil but start production in Namibia as well. 

Ardea Investment, is in the process of constructing a modern cement plant in Otjiwarongo to produce Cheetah cement at lower prices.  Such a plant will not only create employment and boost Government revenue, but also save foreign currency. 

The project is poised to create up to 350 jobs, not to mention the multiplier effects of such a project on the Namibian economy.  The plant under construction is situated at a government-resettled farm in Cleveland, five km northwest of Otjiwarongo. The plant, which will have the capacity to produce 600,000t of cement annually, is projected to attract N$360 million worth of investment.  Most of the money is expected to come from the Brazilian partners but Namibian shareholders hope to pump in more resources to attain a 50 per cent shareholding.  Gowaseb said his company would present the issue to the Ministry of Trade and Industry in order to chart the way forward. 

Published under Cement News