National Cement pays $85m to take over Cimerwa

Sunday January 28 2024

Entrance to Cimerwa offices. PHOTO | NMG


National Cement Holdings Ltd, which is part of the Devki Group, has completed acquisition of 99.94 shares in Cimerwa, paying up to $85 million for the shares, at $0.12 each. The deal was concluded on the January 25.

PPC International Holdings Proprietary Ltd, owned a 51 percent stake, while the remaining 49 percent was distributed among minority shareholders, including Rwanda Social Security Board (RSSB), Agaciro Development Fund, Rwanda Investment Group and Sonarwa General Insurance Company Holdings Ltd.

Narendra Raval, Devki Group chairman, pledged to plough up to $60 million into Cimerwa, Rwanda’s oldest cement maker, in a bid to revamp and scale operations, as well as increasing efficiencies.

Read: Cimerwa to be de-listed in the Rwandan bourse

“But more important is to reduce the price of cement, so that every Rwandan can afford to build houses,” Mr Raval said.

He said the overarching target is to offset importation of cement from the region, with plans of exporting the surplus.


He said beyond investments, they want to improve efficiencies, and spruce up production to satisfy the local market.

National Cement, one of the largest cement manufacturers in East Africa, will use its experience, distribution channels and clinker to complement what Cimerwa has, in order to cut costs and make cement affordable.

Cimerwa has for years struggled to produce enough cement to satisfy the Rwandan market, as demand continued to grow against the backdrop of robust construction projects in the country.

It has been producing only 75 percent of its 600,000 tonnes annual installed capacity, while Prime cement, another local cement maker, produces a paltry 37 percent of its 600,000 tonnes per year.

This opened up the market to regional cement products, such as Twiga, Simba, Bamburi, Dangote and Hima, which took up a significant portion of the market share.

Read: Rwanda cement maker Cimerwa doubles net profit to $3.9m

Rwanda’s annual cement demand is in excess of one million metric tonnes, as the country races against time to complete mega projects, such as the Bigesera International Airport, Amahoro stadium, Inzovu Mall and other public infrastructure.

The cement market in Rwanda is highly price-sensitive, and that’s why many consumers warmed up to cheaper imports like Twiga from Tanzania, as many found Cimerwa cement expensive, something National Cement pledges to correct.

The market saw the entry of a new cement maker last year, Anjia Prefabricated, a Chinese company which set up a $100 million plant in Muhanga, with plans to produce amillion tonnes per year.

Anjia’s Cheeter brand is currently the cheapest on the market. Its 32.5 grade bag goes for Rwf1,700 ($1.33) while the 42.5 bag goes for Rwf1,200 ($0.94) at a time Cimerwa sells the 42.5 bag at Rwf13,500 ($10.60).

“We no longer buy the 42.5 cimerwa cement because it is very expensive, these days they no longer also bring it for that reason,” said Gilbert Rukazambuga, a cement retailer in Kigali.

The Twiga 42.5 bag is sold at Rwf12800 ($10.05) while Prime cement sells the same bag at Rwf13500 ($10.60), and the 32.5 bag at Rwf11200 ($8.79).

Speaking to the The East African, Jean Chrysostome Ngabitsinze, the Rwandan minister of trade and industry, said any investment in the cement industry that attempts to reduce the 51 percent gap filled by cement imports, is a welcome development.

Because the government critically wants to shave the country’s soaring cement import bill.

“We want local cement production to expand, to a point where the country doesn’t import any cement” he said.

The high cost involved in buying and transporting clinker and other raw materials from as far as Tanzania, has always been the deal-breaker for local companies like Cimerwa and Prime cement.

Read: Rwanda seeks new bidders for Cimerwa stake

The high cost meant that they had to price their cement expensively, hence being out competed by cheaper options.

Anjia prefabricated managed to secure Clinker in DRC, not far from the Rwandan border.

They have been going through Burundi and transport clinker using boats, which proved cheaper, hence out competing the rest in terms of price.

However, since Burundi closed its borders with Rwanda a few weeks ago, the cement maker cannot use to nearer route, and it is pondering going through Tanzania.

Which is expected to drive up the cost of transport, and eventually lead to increase in their cement prices, but this is expected to be minimal.

The coming in of National cement, which like Cimerwa, also operates an integrated cement plant, a clinker plant, and multiple grinding plants in Kenya.

While also operating a cement grinding plant in Eastern Uganda, will come handy for Cimerwa, as it seeks to shave its overhead costs, and come up with the lowest cement price possible.

According to latest figures, Cimerwa recorded Rwf103 billion ($81million) in revenues in December 2023, reflecting a 11.9 percent increase in revenues from the previous year.

And also earned Rwf15billion ($11.9 million) in profit after tax.

Among the biggest infrastructure ptojects on the horizon, that will provide market for cement makers, includes the 5 international football stadiums that government is set to construct by 2028.

With the first already under construction in Muhanga.