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Ambuja Cements launches Ambuja Shipping Services 05 January 2023
India: Ambuja Cements has launched its new marine logistics subsidiary Ambuja Shipping Services. The Adani Group subsidiary has injected US$121,000 in paid up capital into the business. Ambuja Shipping Services’ headquarters are situated in Ahmedabad, Gujarat.
Update on Zimbabwe, January 2023
Written by David Perilli, Global Cement
04 January 2023
Lafarge Cement Zimbabwe (LCZ) received an unwelcome present before Christmas when the US Office of Foreign Asset Control (OFAC) placed the company buying it on its economic sanctions list. OFAC made its announcement on 12 December 2022. However, the cement producer said that its parent company, Associated International Cement, had concluded its sale of a 76% stake in LCZ to Fossil Mines on 6 December 2022. Local press reports that the Zimbabwe Stock Exchange halted trading in the cement company on 23 December 2022. Then, LCZ said on 29 December 2022 that the OFAC sanctions had “impacted some processes” within it. It added that it was considering various courses of action to protect the business and the interests of all stakeholders.
OFAC took action against Fossil Agro, Fossil Contracting and the group’s chief executive officer, Obey Chimuka, due to alleged links to a previously sanctioned individual, Kudakwashe Tagwirei, and his company, Sakunda Holdings. OFAC said that Tagwirei had “materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, the Government of Zimbabwe.” It accused him of using his relationships with government officials to gain state contracts, to receive access to currencies, including the US Dollar, and of supplying luxury items such as cars to ministers. It added that Chimuka was a “longtime business partner” of Tagwirei. Fossil Agro was also linked to a mismanaged agricultural subsidy scheme.
When a company says it has concluded a divestment or acquisition the expectation is that everything has finished. However, LCZ has admitted that the OFAC action has caused it some problems. We’ll have to wait for more information to be released to appreciate the full extent of these ‘problems.’ However, it is worth noting that government capital controls caused delays for the handover of a new vertical cement mill ordered from China-based CBMI to LCZ in mid-2022. At the time it was reported that the cement producer still owed the supplier around US$5m but was unable to make the payment due to economic measures the government had taken to avoid depreciation of the local currency. Other potential issues could also lie in any continuing services or materials that Associated International Cement and its parent company Holcim might have agreed to supply to Fossil Mines in the future as part of the divestment deal.
Looking at LCZ’s business more generally, in its third quarter trading update it said that revenue was down by 43% year-on-year due to suppressed cement and mortar sales volumes. Yet, this was due, in part, to a roof collapse at the company’s plant in late 2021 and the commissioning and ramp-up of that new mill in the fourth quarter of 2022. So the company expects ‘significant’ recovery in its sales volumes in 2023. In a sobering aside illustrating the realities of doing business in Zimbabwe, it also mentioned that the local interest rate jumped to above 200% in July 2022! Despite all of this though, it noted that both residential and government-based infrastructure markets were driving market demand.
South Africa’s PPC reported a fall in its cement sales volumes from its subsidiary PPC Zimbabwe in the six months to September 2022 with knock-on declines to revenue and earnings. It blamed this on a planned kiln shutdown, noted the negative role of hyperinflation and forecast that volumes would improve subsequently due to ‘robust’ cement demand. It pointed out that its earnings were hit during the maintenance period because it had to import clinker from South Africa and Zambia and that this was more expensive than locally manufactured clinker. The other thing that both LCZ and PPC raised were power cuts, although LCZ reported that unscheduled outages had decreased in the third quarter of 2022.
The growing demand for cement in Zimbabwe as reported by both LCZ and PPC helps to explain how Holcim was able to finalise a deal to sell its local subsidiary in 2022. Operational and financial hurdles such as coping with hyperinflation and power cuts show the problems these companies have also faced running a business in the country. Merger and acquisition deals in the cement sector often face travails as they are proposed, negotiated, made public and then put to the scrutiny of regulators. It seems unusual though for a divestment deal to run into problems after it has seemingly been closed.
Patrick Rutabanzibwa appointed as chair of Tanga Cement
Written by Global Cement staff
04 January 2023
Tanzania: Tanga Cement has appointed Patrick Rutabanzibwa as its chair. It follows the resignation of Lawrence Masha in mid-December 2022.
Rutabanzibwa previously worked as the company’s deputy chair. He is also the country chair of PanAfrican Energy and is a director of the National Housing Corporation. Other notable past appointments include work as a permanent secretary in government ministries, including the Ministry of Lands, Housing and Human Settlements Development, the Ministry of Home Affairs, Ministry of Water and Irrigation and the Ministry of Energy and Minerals. In the 1980s and 1990s he was a research officer at the state-owned Tanzania Petroleum Development Corporation and held positions at the Ministry of Water, Energy and Minerals. He holds a master’s degree in chemical engineering from Loughborough University in the UK.
Indonesia: State-owned Semen Indonesia has expanded its stake in subsidiary Solusi Bangun Indonesia to 84%. The group acquired the new Solusi Bangun Indonesia shares from another cement subsidiary, Semen Indonesia Industri Bangunan.
Solusi Bangun Indonesia’s four cement plants in Java and Aceh command 14.8Mt/yr-worth of production capacity and employ 2400 people.
Saudi Arabia: Southern Province Cement expects to sign a contract for construction of a planned 10,000t/day new line at its Jazan cement plant in early 2023. Mist News has reported that the company commenced tendering for technical and financial offers for the project in May 2022.
When commissioned, Southern Province Cement plans for the new line to replace the plant’s older existing lines.