CIMERWA lays plans for cement shortfall

Construction industry is a major boom in Rwanda and CIMERWA the local cement manufacturer is unable to meet the growing demand for cement in the country. Business Time’s GERTRUDE MAJYAMBERE, talked to JEAN CLAUDE BARIHUTA, the Director General of CIMERWA, and gave an insight on plans aimed at meeting the growing demand. Below are the excerpts. What it is the company’s current production capacity? The production capacity of CIMERWA is 100,000 tonnes per annum. This capacity has been there since 2001 when it was doubled from its original capacity of 50,000 tonnes per annum in1984. As a reminder, CIMERWA was established in 1974 as a result of the cooperation with the government of the People’s Republic of China and the government of Rwanda. It took ten years for quarry exploration, designing and commissioning the plant. The government decided to privatize the company and Rwanda Investment Group (RIG) S.A. acquired the assets of CIMERWA with a controlling majority of 90 percent of shares while the government of Rwanda retained 10 percent of shares. What about the demand for the local market? The capacity of production of the company of 50,000 tonnes per annum was enough for the country in 1984. The reconstruction of the country, after the devastating Genocide in 1994 which destroyed not only the life of innocent human beings but also the existing socio-economic infrastructures, has boosted the demand of cement. It is in this path of reconstruction and high demand of cement that the capacity of the factory was brought from 50,000 to 100,000 tonnes in 2001. However, just two years later in 2003, the demand over-passed the supply of cement in Rwanda. Until the time when the company was privatized (2006), the capacity had not changed and the country had started to import cement from outside and especially from Uganda. On the sub-question on where does CIMERWA import the deficit, I would say that the importation of cement is a free business where every Rwandan is free from importing cement on the condition that they fulfil required legal practices to do so. Just for your information, 116,000 tonnes of imported cement was recorded in 2008. Any plans for the company to meet the domestic demand? There are numerous plans but in the meantime, the country will unfortunately continue importing cement. This is being done at the expense of CIMERWA’s business. CIMERWA tried it last year when it imported nearly 5,000 tonnes. Our plans were to import up to 12,000 tonnes per month which should have been enough for the market. Numerous problems halted the importation including logistics in Mombasa / Dar es Salaam to bring the cement home. We needed 444 trucks a month to lift 12,000 tonnes that we couldn’t find on the local market. We had to pay what is called reversed charges on VAT (18 percent) for using outside transporters and 15 percent of withholding tax when we transferred payment to our transporters. That was almost 33 percent of charges that we paid because we couldn’t find local transporters. I should also emphasize the high transport costs, from Mombasa or Dar es Salaam up to Kigali. On average, one can find cement from anywhere in world at $ 80 per tonnes when it lands in Dar or Mombasa then the transport from the port to Kigali would cost up to $220 per tonnes. The second plan is the use of peat which is going to replace fuel oil in the clinkerisation. The project which is costing CIMERWA $3 million is at an advanced stage. Someone visiting the factory can notice that the project is underway. We are expecting the launching of the process by the end of September this year. How far with the plans to establish new cement plant? The process of establishing a new plant is going well. It may take, however, sometime to commence its operations. As the management and through my parent company and my Board, we are tightly following up the project as all Rwandans are doing. Tremendous steps have been taken. One is the decision on which type and capacity is going to be the next plant. It will be a dry process technology as compared to wet process currently in use. Dry process is more environmental friendly technology-wise than is the wet process. The company has also decided that it is going to build a factory with a capacity of 600,000 tonnes, six times the current capacity of 100,000 tonnes. That is a major step that the company has taken. The new capacity would be enough for both the domestic and the regional markets of Burundi and Eastern Congo. Another step taken is that we have identified and signed a contract with the supplier of the equipments. An advanced payment of $10.2 million was paid last year in June. We are having with us the preliminary design of the next plant and we are waiting for the final design to be submitted end of July. It is from this moment that we are going to start with the civil works procedures and alike. In the mean time, the company is looking for the financing. The project is going to cost nearly $70 million. With the global crisis, it has been difficult to secure such amount not only on the local financial market but also in the region. Nevertheless, we are having good signs and hopefully something will come up very soon. Ends

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CIMERWA lays plans for cement shortfall