Boom in cement marketing throughout the SADC region
African Review of Business and Technology • July, 2007
Demand cements business prospects: Humphrey Nkonde reports on the boom in cement marketing throughout the SADC region. It's not just stadium construction in South Africa that is attracting new developments in Lusaka and Ndola.
Shortly after the Katima Mulilo Bridge has been completed across the Zambezi River to connect Zambia to Namibia, attention has shifted downstream to Kazungula, where a proposed bridge would link Zambia to Botswana. Although the bridge will connect the two countries, its construction will cover a portion of land in Zimbabwe. To this end, Presidents Levy Mwanawasa, Festus Mogae and Robert Mugabe of Zambia, Botswana and Zimbabwe respectively have signed a Memorandum of Understanding (MoU) regarding construction of the bridge at Kazungula.
On the other hand, the Zambian government has engaged China Henan, a Chinese construction company, to erect a bridge across the Luapula River at Chembe. The Luapula River forms part of the boundary between Zambia and the Democratic Republic of Congo (DRC). Chembe is on the Pedicle Road, a shorter route through the DRC linking Zambia's Copperbelt and Luapula Province. Like at Kazungula, crossing of the Luapula River is done using a ferry.
Cement plant in Lusaka
It could have been these cross-border infrastructure developments that inspired Chilanga Cement Plc in Zambia to embark on a US$120mn project in which it is constructing a new cement plant in the capital Lusaka. The new plant is being constructed adjacent to the almost obsolete one that has been in existence since 1948. The old plant would be dismantled and the site on which it stands turned into a golf course. It is estimated that the new plant would produce 2,000 tonnes of cement per day--double the current production--when it is commissioned next year. During laying of the foundation stone at the site of the new plant on 22 November last year President Mwanawasa said there was a growing demand for cement in Zambia and other countries in the SADC region. President Mwanawasa gave an example of South Africa that would require 600,000 tonnes per annum in the next three years for construction projects as it prepares to host the soccer World Cup in 2010.
For instance, second and third multi-storey parking spaces are being developed at the Johannesburg International Airport. These are some of the fast-track projects earmarked for completion next year. On the other hand, by the end of this year Durban Airport will have an additional 4,000 parking bays. The South African government has reserved R5.2bn for infrastructure development next year.
And describing the multi-billion rand project regarding the football event in Traders African Business Journal, David Jackson wrote: "Projects include building of new soccer stadiums as well as the upgrading and enlarging of a number of others to meet the minimum requirements of FIFA, the world's governing body. One of these criteria is that soccer stadiums must be able to seat a minimum of 50,000 spectators."
Outside South Africa, the other project in relation to sports that would require a lot of cement is the construction of the 70,000-seater Dag Hammarskjold Stadium in Ndola, Zambia's third city. The Chinese government has pledged to construct a modern stadium in Ndola on behalf of the Zambian government. The earlier Dag Hammarskjold Stadium was rased in 1988 purposefully to allow for the construction of a modern stadium so that Zambia could host that year's Africa Cup of Nations. But Zambia was disqualified due to lack of adequate sporting facilities and other supporting infrastructure such as hotels. The stadium was named after Dag Hammarskjold, the second UN Secretary General and prominent Swedish civil servant who died in a plane crash in 1961 some 13km west of Ndola. He was to be in Ndola to broker peace between Congolese government officials and Moise Tshombe, the governor of Katanga Province after the mineral-rich region seceded from the rest of the Congo.
Sports infrastructure
German sports expert Markus Mulfinger from the Germany Sports Development Cooperation Athletics Association who visited Botswana in November last year said there was need for the SADC-member country to construct sports infrastructure. It has been suggested that the gold mining town of Francistown on the border with Zimbabwe should have a modern stadium. Botswana Athletics Association development officer Bobby Gaseitsiwe is reported in the local Mmegi newspaper of 24 November 2006 as saying that there were no sporting events in the northern part of Botswana due to lack of sports infrastructure.
Besides, construction projects contained in Zambia's Fifth National Development Plan would increase the requirement for cement. The Plan, released early this year, seeks to transform Zambia from a low-income country into a middle one by 2030. In terms of construction, the Plan is aiming at increasing the number of hostels at institutions of learning.
Addressing University of Zambia (UNZA) students on 19 January President Mwanawasa said his government was committed to constructing students' hostels as contained in the Fifth National Development Plan. About USS 525,000 (K2.1bn) from the donor community would be spent on constructing a students' hostel within the UNZA campus. Development plans were instituted by first President Dr Kenneth Kaunda's government during which time most of the country's buildings were constructed. These plans were dropped after the government of second President Dr Frederick Chiluba took office in 1991. Today, about 59 per cent of the students at UNZA are not accommodated.
Cement not only contributes to the construction industry but other sectors of the economy as well. As a result of increased local demand for cement in Zambia exports to the Great Lakes countries of Burundi, DRC and Rwanda have gone down. This has affected operations of Mpulungu Habour Management Ltd in Mpulungu, Zambia's only port at the southern tip of Lake Tanganyika. Operations manager Whiteson Mubanga is reported in the Business Post of 23 January as saying that the high demand for cement in Zambia has led to the reduced amount of the building material passing through Mpulungu Port.
Mr Mubanga said this has affected operations of Mpulungu Habour Management whose 65 per cent cargo when operations are normal is cement. Previously the harbour handled 14 to 20 trucks a day but now a truck comes after several days. It therefore means that the road transport sector has also been affected by the reduced cement exports to the Great Lakes region.
Increased production of cement by Chilanga Cement would not only stimulate the road transport but the railway transport as well. Coal for firing limestone and phyllite in kilns would be sourced from a coal mine in Hwange, Zimbabwe to supplement the local supply by Maamba Collieries. Trains will deliver the coal from Hwange to Lusaka using the railway line linking Zambia and Zimbabwe.
Although Chilanga Cement has decided to construct a state-of-the-art plant, it would not satisfy the growing demand for cement in Zambia. With the economic growth projected at seven per cent, there is need for cement for airport development, house construction, food storage sheds, hydro power stations and infrastructure at the newly-opened mines in the North Western Province dubbed as the "New Copperbelt"
As a result, a new entrant Portland Cement has decided to construct a cement plant in Ndola where Chilanga Cement constructed its second plant in 1968. Commerce and Industry Minister Ken Konga said on the Zambia National Broadcasting Corporation television station recently that Portland will spend US$150mn to construct the plant in Ndola. The city lies on the plateau of rocks and minerals stretching from Katanga Province to the gold and diamond mines of South Africa. Outcrops of limestone, one of the raw materials for making cement, could be seen on the outskirts of the city near where Chilanga Cement and Ndola Lime Co have established their plants.
Unlike the old plant that uses the wet process to produce cement from limestone, phyllite and gypsum, Chilanga's new plant would use a more dry process, a technology that it has acquired from CBMI of China. LaFarge, a French multinational company has a controlling share of 50.1 per cent in Chilanga Cement.
Even after Portland starts producing cement, there will still need for more cement in Zambia and surrounding countries. However, investors need to have enough capital as cement production is capital intensive. Chilanga Cement has raised part of the capital through the Lusaka Stock Exchange (LuSE). The cement-producing company has not only shown that some companies that have been in existence for a long time need new technology, it was the first company to be listed on the LuSE, established in 1994.
