‘Influx of cheap imports threatens PPC viability’

Recently, President Emmerson Mnangagwa toured Zimbabwe’s largest cement maker, PPC Zimbabwe’s Harare plant, which was commissioned three years ago. PPC management took advantage of the visit and expressed qualms about a plethora of challenges confronting the listed cement maker, which are threatening its viability. PPC Zimbabwe managing director, Kelibone Masiyane, (KM) spoke to our News Editor, Phillimon Mhlanga (PM) about these and other burning issues.

Below are excerpts of the interview.

PM: Is PPC here (in Zimbabwe) for the long haul, given the serious challenges threatening the viability of the company?

KM: We have been in Zimbabwe for over a century now. We are still committed to be in this country for many years to come. As PPC Zimbabwe, we have confidence in the development and success of the Zimbabwean economy.

Through significant investments, PPC we have cemented our role in the growth of the economy. This (Harare) plant is one such project that has played a part in showing our belief in Zimbabwe’s potential. The Harare plant incorporates bulk-handling and palletising technology which can pack 40 cement bags per minute.

However, we are facing serious challenges which are threatening our viability.

PM: What are the issues that are currently threatening PPC Zimbabwe?

KM: The nature of some of the concerns at this stage is confidential such that it’s difficult to divulge at this moment in time. But I guess probably the right time will be once we get the positive feedback from the ministers themselves and only then are we able to announce. We do not want to pre-empt, that’s why we discussed the issues with him (President Emmerson Mnangagwa) in a closed door session. Some of them are also under a closed period as PPC Limited, so they are quite sensitive in terms of the market such that we don’t want to be talking about them during this sort of closed trading period.

PM: But, President Mnangagwa almost lifted off the lid on some of the discussions you did with him in that closed door meeting.

KM: Now that you are pushing, yes definitely the influx of imports is part of what we discussed with the President in the closed door session.

Remember, as an investor putting money into the country with an objective of getting a return, we are concerned that cheap imports are just finding their way in, because the playing field is not playable at all.

Also, manufacturing costs are very high compared to other countries in the region like Zambia. I think what is needed is a consented effort between the government and the private sector. Government should appreciate our challenges and come up with a solution as a partner.

That is what we are really trying to work out with the government.

This is the other critical thing we discussed with the President and the ministers in that meeting. The issue of power is another one.

Let me give a bit of background. You know in Zimbabwe, in an industry like ours we pay probably about US$0.12 per kilowatt hour (kWh). But in Zambia, the cement industry is paying about US$0.06/kWh. So, when you look at these machines (the plant), they are heavy consumers of power. So, you can understand, power is a major cost driver for us.

So, just looking at that alone, you can already see that some other countries like Zambia have got an advantage. So, those are the things we need to understand and ask ourselves why power is more expensive in Zimbabwe compared to Zambia. Yes, we are aware that they use mostly hydro power compared to us where we just have Kariba Power Station that is hydroelectric and the rest are thermal.

But, power is quite expensive and an area of concern.

Also, we need to understand why coal being sold to power plants is that expensive particularly if you look at how many coal mines we have here in Zimbabwe?

So, the issues have been affecting us in a big way. That is why e have been talking to the ministers (of Industry and Commerce and Energy and Power Development). I think they have been slowly coming to the party.

So, we had an opportunity to speak to the President who promised to deal with our issues. These are some of the challenges that are confronting us.

PM: Six years ago, PPC Zimbabwe had plans to construct a clinker plant in Mt Darwin in Mashonaland Central Province. Is that plan still on the table?

KM: Obviously, it was one of our strategies that we have it (the Mt Darwin plant).

But, it’s market driven, so it depends. Just now, I was telling you that our installed capacity is much higher than the current demand, so there wouldn’t be any justification to go and start building another plant. So, all that will be demand driven as we go into the future. I think at that stage things were pointing to the need of having another plant. But, well, if we see ourselves running out of capacity we will then be back at that stage to consider it.

PM: There are quite a number of major construction projects going on in Zimbabwe at the moment.

How dominant are you in that space?

KM: We are quite dominant, I think for us we are probably sitting at about 80% space for mega projects happening in the country.

PM: Are you involved at the proposed Beitbridge Border post expansion project?

KM: It is one of those projects that have been on and off for quite a while, sometimes because of funding issues. But, as PPC, we stand ready to support all that. Like I indicated in terms of our installed capacity, it’s much higher than the demand that is available. Just PPC Zimbabwe alone, we are sitting at 1.4m tonnes per annum. If you bring in competition, we are sitting at 2.6m tonnes installed capacity against a national demand of about 1.3m tonnes.

PM: We understand that PPC Zimbabwe signed a cement supply deal with one of South Africa’s leading contractors, Robex S.A (Pvt) Limited, for the expansion of Beitbridge Border Post, may you shed more light on the deal?

KM: With the confidentiality that is there, obviously, these are some of the information or numbers that can only be released by them not by PPC.

Yes, we are dealing directly with Robex. But, without going into much detail, it’s about the expansion of the border post, also involving staff housing, offices as well just to facilitate easier movement between

the two countries (South Africa and Zimbabwe). I can’t talk much about it because we are normally dependent on information that they are giving us.