DR Congo: new plants to fight imports

DR Congo: new plants to fight imports
07 October 2016

This week it was announced that the Cementerie Kongo (CIMKO) greenfield cement plant project, a joint venture between Lucky Cement Ltd and the local Groupe Rawji, would be completed this October. While it will take a short while for the plant to be optimised, its targeted cement capacity of 1.2Mta is expected to be pressed into action as soon as possible to serve the country's 3Mta cement demand.

While GDP in the Democratic Republic of Congo has slipped, with the government forecasting 4.3 per cent growth in 2016, the prices of cement have held high until recently. A 50kg bag of retail cement reached as much as US$17.9/bag this year in Kinshasa, and while prices fell to US$13.18 in September a further drop is anticipated with the start-up of new capacity.

PPC of South Africa is also due to commission its 1.25Mta Cimenterie de Zamba plant in DR Congo by the end of the year, which will be operated by Barnet PPC. It is situated 20km west of Kimpese, between the villages of Zamba and Malanga.

Dangote is building a plant in bordering country Zambia, from where it will seek to export. A smaller 400tpd plant has also been rumoured to be under construction for Jaguar Overseas Ltd, a New Delhi-based group.

Moreover, the government stated last month that it would relaunch production at the former Province-Orientale (CIPOR) Cimenterie de Maiko (CIMAIKO) works at a cost of US$250m. Earlier in July there were reports that the Cimenterie deu Katanga (Cimentkat) plant in Lubudi could also be relaunched by South African investors.

The image of two greenfield cement plants and some restored plants operating in the country though is far removed from the situation last of December, when Cementerie de Lukala (HeidelbergCement Group - CILU) was forced to close its doors due to what its management cited as unfair competition. Cheap imports were eating away at the cement price and the 0.5Mt of cement produced by CILU was being swamped in the market by illegal imports. The company was forced to shelve its plans for an US$80m expansion and in December last year its CEO announced that it would be closing production.

A similar story unfolded at Cement Nationale (CINAT) in Kimpese, 53 per cent owned by Nova Cimangola, where company agents have not been paid for seven years and there are no solutions for the 0.3Mta plant that has been mothballed since 2010.

CIMKO and PPC are also calling on the government to protect local output by continuing to block or regulate cement imports. The fear is that even though these plants will have modern production equipment, the influx of imports could undermine their strategy to establish themselves like their predecessors. While the government has said it will offer protection, taxes on grey cement imports were cut by half in August 2016.

Published under Cement News