Displaying items by tag: Habesha

Ethiopia: Electricity rationing has been restricting the production of cement companies since it started in April 2019. Under a program implemented by Ethiopian Electric and the Ministry of Water and Energy, cement producers are only allowed to operate for 15 days per month, according to the Reporter newspaper. They say this has increased their production costs because cement production is a continuous process that requires start up and stoppage time. The Ministry of Trade has asked that cement producers do raise the price of cement despite the increase in production cost. Input and transport costs have also risen.

“There is a huge waste of resources when we start up and stop running our plant. Continuous production has cost benefits. We spend 24 hours warming up the plant. There is wastage of coal and electric power,” said Mesfine Abi, the chief executive officer (CEO) of Habesha Cement. He added that the company is facing growing maintenance costs as its machines fail to cope with repeated power cuts.

The national electricity power restrictions have been caused by water shortages at hydroelectric dams. Rainwater has started flowing back in the dam reservoirs but power rationing is not expected to be rescinded until early July 2019.

Ethiopia: Cement producers have faced disruption due to security concerns in Oromia state. Habesha Cement suspended production at its Holeta plant on 24 October 2017 due to youth protestors who occupied the site, according to the Reporter newspaper. The protestors took over the unit and demanded to be given jobs. The cement producer says that has been active in community development projects and has recruitment policy that gives priority to local communities.

In two separate incidents, five trucks belonging to Dangote Cement were set on fire over the last week in other parts of the state. In one of the incidents, at Ambo, 10 people also died during clashes between protestors and the government.

Ethiopia: Prime Minister Hailemariam Dessalegn has inaugurated Habesha Cement’s 1.4Mt/yr plant at Holeta in Oromia. The US$140m unit was built by Chinese contractor Northern Heavy Industry, according to the Ethiopian Herald newspaper. Dessalegn said that the new plant is part of the national plan to surpass local cement production of 27Mt/yr by the end of the Second Growth and Transformation Plan (GTP II) that will end in 2020. The plant is now expected to create 600 jobs in its operational phase.

The subsidiary of PPC is the third international project the South African cement producer has completed over the last year. On 17 April 2017 PPC Barnet in the Democratic Republic of the Congo (DRC) despatched its first truckload of saleable cement from the plant near Kimpese in the Kongo Central. The 1Mt/yr cement plant was commissioned in February 2017.

"With the completion of the plants in the DRC and Ethiopia we have achieved two significant milestones in our quest to become a major player in the cement industry across Africa" said Njombo Lekula, Managing Director, International operations, PPC. “Both plants have been built using the latest technologies, in line with international standards.”

Ethiopia: After some delay and with construction of its original project still ongoing, Habesha Cement is reported to be considering an additional expansion project. The firm hired Waas international Consulting Firm (WICF) in June 2015 to conduct a study to change its market strategy and establish the need for further expansion projects even though the construction of its 1.3Mt/yr cement plant is not yet complete.

WICF, which previously worked on the feasibility study for the overall company, will decide on the need for expansion by looking at the current demand for cement in the country and will restructure Habesha's market strategy accordingly. "We found it necessary to conduct the study because we expect to launch production and join the market in the coming year," said Mesfin Abadi, chief executive director of Habesha Cement, who added that the company's initial market strategy dated from 2013 and did not provide adequate information on market trends past 2015.

Just one week after Dangote started trial production at its new Mugher cement plant in Ethiopia it announced that it would be doubling capacity at the site. Upgrade work is slated to begin before the end of 2015, according to Nigerian media.

The move shows how much potential Ethiopia is seen to have for the cement industry. With a population of around 90m, it had a cement production capacity of 9.7Mt/yr before the new 2.5Mt/yr Dangote plant comes on line, according to Global Cement Directory 2015 figures. Including the new Dangote plant and even at 100% capacity utilisation this would place cement consumption in the country at 135kg/capita. This is a low figure internationally and hence the continued interest in new capacity. Subsequently, a large number of projects have been rumoured and mooted in Ethiopia over the years. However, many of these publicised projects then fail to make it to construction.

Mebrahtu Meles, the Minister of Industry, said that there were 18 companies engaged in cement production at the 7th Africa Cement Trade Summit that took place in Addis Ababa in April 2015. Meles placed the installed production capacity at 11.2Mt/yr (including the Dangote plant) with the expectation that this will increase to 17.15Mt. However, these cement plants are only producing 5.47Mt/yr, giving the country a capacity utilisation rate of below 50%. This too is low by international standards (60% or more). Cement consumption was placed at just 62kg/capita in 2014.

At the same event, the Ministry of Industry revealed that it was working on a national Cement Industry Development Strategy from 2015 to 2025. The strategy will tackle local industry issues such as unavailability of locally-produced packaging materials, poor transport links, high costs of production and a limited market. Key targets include stimulating cement demand to 12.22Mt/yr by 2020 by moving to concrete road construction and raising capacity utilisation rate to 75% by 2017 and to 80% to 2025.

Despite the publicity Dangote isn't the only player creating new capacity in Ethiopia. Habesha Cement is set to open its 1.4Mt/yr cement plant near to Addis Ababa in 2016. Habesha also has an international angle, given that South African cement producer PPC purchased the majority stake in Habesha Cement in the autumn of 2014 following the project's difficult financial history.

The new Dangote plant predates the country's new cement industry strategy but the upgrade plans demonstrate confidence in both the market and the government's plans. To meet its targets though the country is going to need to increase both its capacity utilisation and build more production capacity. Although muted from previous pronouncements the current target relies on Habesha Cement building its plant and the capacity utilisation rate rising from 50% to at least 75%.

South African weekly newspaper, M&G Africa, has described how Africa faces an infrastructure 'apartheid' whereby 44 of the continent's 58 countries share just 25% of the continent's infrastructure. Building things in Africa costs more because of this infrastructure deficit and it hits cement capacity utilisation rates as well. Ethiopia is one of the region's richer countries in terms of gross domestic product (GDP) but the same issues apply. Hitting its targets for the cement industry may be hard.

Ethiopia: South African cement producer PPC has acquired Industrial Development Corporation's 20% stake in Ethiopian-based Habesha Cement for a purchase consideration of US$13m. PPC's initial 27% stake in Habesha, acquired in July 2012, now rises to 51%, while the balance of the shareholding in Habesha is held by around 16,000 local shareholders.

"We are very excited about our increased investment in Ethiopia; a country with a population of 91 million people that is set to reach 100 million by 2018 and having a growth rate that is expected to remain above 8% in the medium term," said Bheki Sibiya, Executive Chairman of PPC.

Habesha has begun the construction of a 1.4Mt/yr cement plant 35 km north-west of Addis Ababa. The project has cost approximately US$135m and commissioning is planned for 2016. In addition to the Habesha project, PPC has started building projects in Rwanda, the Democratic Republic of Congo and Zimbabwe.

Financial closure of this acquisition is expected in December 2014 once all conditions have been satisfied.

Ethiopia: The Ministry of Mines (MoM) has granted a mining license to Habesha Cement for the excavation of minerals for the company's cement production.

The contract allows Habesha to mine limestone, gypsum, clay and sandstone from 1.12km² of land in the West Shoa Zone, Oromia Region, at four different locations. The mining operations will be undertaken with a capital of US$1.38m. The land that Habesha requested for pumice is reserved for forestation and wildlife development and it has asked for a replacement.

The mines will provide raw materials for the Habesha cement plant, which will have a production capacity of 1.4Mt/yr of cement. The company is expected to begin production in November 2015.

The mining contract will be valid for 60 years, until the minerals are fully excavated. Habesha is expected to produce over 100Mt of limestone in that time. When the company starts cement production, it is expected to use 1.1Mt/yr of limestone, 70,000t/yr of gypsum, 288,000t/yr of clay, 72,000t/yr of sandstone and 450,000t/yr of pumice.

"To get the approval, we conducted a feasibility study and environmental assessment on the areas and paid US$1.55m as compensation to the former owners of the land," said Mesfin Abi, CEO of Habesha.

Habesha Cement was established in September 2008 by 30 shareholders with an initial capital of US$30,671. Construction of the cement plant, which will cost US$120m, is underway in Beketa and Koro Odo Kebele, Oromia Region, Ethiopia.

Ethiopia: The Development Bank of Ethiopia (DBE) has signed a loan agreement with Habesha Cement for US$33m to build a 1.4Mt/yr cement plant at Holeta in Oromia State. Additional loan agreements were also signed in late November 2013 between Habesha, the DBE and the Preferential Trade Area (PTA) Bank, the financial arm of the Common Market for Eastern & Southern Africa (COMESA). The PTA Bank is co-financing the Habesha project by lending US$50m.

According to Addis Fortune, Habesha is now seeking a letter of credit to allow equipment for the cement plant to be imported. Chinese engineering firm Northern Heavy Machinery Industries have been hired to import and erect machinery for US$80m.

Previously the DBE approved a loan for US$83m to cover 70% of the project costs but it withdrew the offer in early 2013. The current DBE loan only covers 30% of the project costs. Other investors, including PPC and South Africa's Industrial Development Corporation (SAIDC) paid US$21m for nearly half of Habesha Cement in 2012. The plant was originally scheduled to start production by 2012.

Ethiopia: Tamiru Wondimagegn has been appointed as board chairman of Habesha Cement. He is a prominent lawyer and board member of Habesha Cement. He succeeds Gizaw Teklemariam, who previously worked in the oldest state owned cement factory, Mugher.

Habesha held elections for its board in late January 2013, following a reduction in board places from 12 to nine. The Ethiopian cement producer has also given three board of directors seats to two South African companies, International Development Corporation and Pretoria Portland Cement, which are credited for bringing in 49% equity to Habesha.

Ethiopia: The Development Bank of Ethiopia has withdrawn from a US$82.8m loan agreement made with Habesha Cement. In September 2011 the bank approved the loan which was expected to cover over 70% of the financing of the proposed cement factory.

The bank withdrew from the arrangement on the basis of its inability to disburse money at this time. In addition, it also pulled out of the loan commitments to five other companies citing similar reasons. According to sources, the bank has pledged to help the companies in their search for foreign financing.

In July 2012 PPC (Pretoria Portland Cement) and South Africa's Industrial Development Corporation (SAIDC) paid US$21m for nearly half of Habesha Cement. PPC acquired 27% of the Ethiopian cement factory by paying US$12m in cash and the state owned SAIDC paid US$9m for an additional 20%.