South African giant PPC breathes life into Cimerwa

Friday December 14 2012

From right: South African High Commissioner to Rwanda George Nkosinati Twala, acting CEO of Rwanda Development Board Clare Akamanzi and Paul Stuiver, the CEO of Pretoria Portland Cement Company Ltd, leave Serena Hotel, Kigali. Photo/Cyril Ndegeya

The struggling cement company, Cimerwa, has finally received a new lease of life following the acquisition of 51 per cent of its shares by a leading South African company.

Cimerwa has been struggling to stay afloat and remain competitive and the acquisition by Pretoria Portland Cement (PPC), one of the leading cement companies in South Africa, is seen as a major boost.

The acquisition by PPC makes it the biggest shareholder of Cimerwa with shares worth $69.4 million.

Cimerwa has a current production capacity of 100,000 tonnes of cement per annum but the current demand in Rwanda is 350,000 tonnes per annum three times higher than what is produced.

However, with a new investor coming on board, ongoing plans for construction of a new plant with a production capacity of 600,000 tonnes per annum to be commissioned in two years will be fostered.

READ: Rwandan banks to raise funds to renovate cement firm


“Due to the old machines our production process keeps breaking down and the technology that we are using is an old technology that is not cost efficient. One of the things we use is HA4 (heavy fuel) whose cost has been on the rise, affecting our profits,” said Ramba Afrique, Cimerwa’s chairman.

However, Mr Afrique is optimistic that with the new investors and Cimerwa’s reorganisation, the company is headed for a brighter future.

Experts predict that with Rwanda and Great Lakes region’s positive economic outlook, cement demand will increase to one million tonnes in the next decade.

Previously, major shareholders included Rwanda Social Security Board (RSSB), with over 37 per cent shares, followed by the government with 30 per cent and Rwanda Investment Group with 21 per cent. The rest was divided among other investors.

However, after the takeover by PPC, RSSB will hold 18 per cent stake while the government will control between 12 and 15 per cent and the remaining 16 per cent will be distributed among other shareholders like Sonorwa and others.

The government had planned to sell its stake in Cimerwa but but the sale delayed following earlier proposals to allow locals to acquire stakes.

Previously, the cement company suffered a setback when the African Development Bank withdrew a financial pledge of up to Rwf18.9 billion.

However, to bridge the gap, the country’s sole cement company is seeking to borrow Rwf65.6 billion from a consortium of local commercial banks, which it will use for expansion and production operations.

“Cimerwa has been struggling because of its small production capacity, but with the takeover we are optimistic the new modern technology will help us produce at a lower cost,” said Ketso Gordhan, PPC chief executive officer.

In two years, when the local market is satisfied Cimerwa expects to export its products to Burundi and the Democratic Republic of the Congo.

“The takeover will solve Rwanda’s cement shortage where the country has been importing most of its cement at a high cost from neighbouring countries,” said Mr Gordhan.

"The main impact on the construction will be getting quality cement at a better price,” added Gordhan.