Value chain is being bypassed in Namibia's cement sector

Value chain is being bypassed in Namibia's cement sector
02 March 2018

Namibia's cement industry is suffering from oversupply and low protection for the existing domestic producers. Infant Industry Protection (IIP) is afforded to an infant industry for a period of eight years with the rationale being that while protection is afforded to a newly-established industry during the start-up years. However, the IIP granted players have seen new entrants set-up without having to comply with all the provisions, according to the Southern Times.

Ohorongo Cement's Managing Director, Hans-Wilhelm Schütte, said, "We have a huge challenge and it’s not good," adding that Namibia seems to be going in the same direction as South Africa in terms of oversupply of cement.

"We have our own people producing (cement). By importing, we don't achieve the objective,” he maintained. 

Mr Schütte said they want to support the government but argued that there was an oversupply of 2.5Mt of cement in Namibia, while local consumption is only between 500,000t and 600,000t of cement.

The latest entrant making a return to the local market is Whale Rock Cement, which through the Cheetah Cement brand, reportedly imported 40,000t of cement clinker last month.

The company, a joint venture between Chinese and Namibian businessmen, operates a plant situated near Otjiwarongo in the northern part of Namibia.

The Southern Times newspaper claims the manufacturer has bypassed the value chain requirement, which stipulates that a company that sets up a cement plant in the country must adhere to the IIP policy by going through the full production chain of manufacturing cement in order to add value and protect domestic capacity.

The paper reports that the government has received the complaints made against Cheetah and the situation was apparently being discussed at Cabinet level, after which it would then be forwarded to the Ministry of Mines, for an investigation on whether the cement company is adhering to its mining licence conditions.

"The company  [Whale Rock Cement] has a mining licence to mine limestone in order to create clinker. What must be investigated is whether the company is bypassing the value chain," said an official, adding that it is unfair in terms of levelling the playing field that other cement companies are going through the full production process, while others are bypassing the process.

Published under Cement News