Zimbabwe: firms face closure

Zimbabwe: firms face closure
13 May 2016

Due to an influx of cheap imported products in Zimbabwe, local cement producers have warned of a possible scaling down of operations and closures, saying protectionist measures are needed to save the industry.

In a recent position paper presented to the Ministry of Industry and Commerce by the Cement and Concrete Institute of Zimbabwe, local cement manufacturers have called for the government to ban imported cement, among other interventions, saying the market is oversupplied. Some measures suggested in the paper include: a protection tariff to equate the landed price of imported cement to the cost of local manufactures (US$50/t cement), granting of import licences to local producers and lowering duty on raw materials.

The granting of import permits comes at a time where the region is in oversupply of cement. A surplus of 8Mta against an installed capacity of 24.8Mta has resulted in some countries, such as South Africa and Zambia, exporting to Zimbabwe.

Zimbabwe’s main producers – Lafarge, PPC and Sino Cement – currently have an installed capacity of 1.85Mta against a demand of 1.17Mt in 2016. Official figures show that all three players invested nearly US$185m in the last five years in kiln upgrades, packing, grinding and other cement processes to improve efficiency to the existing equipment and reduce the cost of manufacturing.

Local cement producers fear the influx of cheap imports into the market could affect their plans to recoup their investments. The paper states that, “The local industry cannot compete with imports leading to potential closure of business. Local prices and sales have been negatively impacted by the cheap imported cement leading to operating losses for local industry.”

Industry and Commerce Minister, Mike Bimha, said government had removed cement from the general import licence to protect domestic industry.

Published under Cement News