Cimerwa seeks Rwf63b for new plant

The shareholders of Rwanda’s largest cement-producing factory, Cimerwa, are negotiating a loan worth $93.7million (about Rwf63 billion) with Bank of Kigali and the Eastern and Southern African Trade and Development Bank, commonly known as the PTA Bank, to scale productionThe loan will be channelled toward the construction of a new Cimerwa plant that is expected to produce 600,000 tonnes of cement per year once completed in 2014.Production Currently, the old factory produces 100,000 tonnes of cement annually with a market share of 30 per cent in Rwanda.Cimerwa, operational in the country for almost 30 years, is jointly owned by government and a consortium of local investors, including the Rwanda Social Security Board (RSSB), Rwanda Investment Group (RIG) and South Africa’s Pretoria Portland Cement (PPC).In December, last year, PPC, South Africa’s largest cement firm, bought 51 per cent of Cimerwa’s equity at a tune of $69.4 million and the remaining shareholding is split between RSSB (formerly the majority shareholder), government, RIG and Sonarwa, an insurance firm.“We are building a new plant to increase on our cement production capacity in Rwanda and to achieve this we are negotiating a bank loan worth $93.7 million from Bank of Kigali and PTA. We will sign,” Dr Daniel Ufitikirezi, the Cimerwa board chairperson said.He said the new plant will produce 600,000 tonnes of cement to meet the ever increasing demand of cement in the country.“We hope by late 2014 we shall have a new plant in place. We shall test it for three months before its formal operational.”Gradual increaseHowever, the new facility will not produce 100 per cent as expected. Ufitikirezi said the production capacity will gradually increase over the years.He said since PPC bought Cimerwa shares, the old plant’s operations have been streamlined in terms of technical support.“Our market share is very low, it’s about 30 per cent, but we hope to increase it to 50 per cent after producing 600,000 tonnes annually. As shareholders, we are borrowing a loan and it will be enough for us to complete the new plant. We shall also use the loan to sustain our operations,” Ufitikirezi said.PPC Managing Director Klaas Meijer said they are looking forward to make Cimerwa produce cement at a required capacity.“We want to see the new plant producing at a level that satisfies the Rwandan market demand,” Meijer said.The increased production will help bring down the cost of cement and Rwanda’s reliance on imported cement, analysts say.A bag of cement currently goes for between Rwf8,300 and Rwf9,200, depending on the brand. Charles Haba, the head of the Real Estate Association of Rwanda, said limited supply of cement in the country is still a challenge to developers.“Many big projects heavily rely on imported cement. Developers get cement from all over the world. If Cimerwa is going to increase production capacity its good news for construction projects and I hope the prices will be competitive,” he said.Haba said there is no single developer who prefers to import cement, it’s just because the demand for local cement is higher than supply.

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Cimerwa seeks Rwf63b for new plant