Displaying items by tag: Lafarge Cement Zimbabwe

Zimbabwe: Lafarge Cement Zimbabwe has rebranded to Khayah Cement amidst its on-going corporate restructuring. The Sunday News has reported that Khayah Cement is in the process of reconstituting its board of directors and board committees.

Zimbabwe: Lafarge Cement Zimbabwe has secured a suspension on trading in its shares on the Zimbabwe Stock Exchange until April 2023. Chronicle News has reported that the Holcim subsidiary requested the suspension, in which to 'address in-house challenges.'

The producer assured the market that this latest development 'will not in any way affect business, amid consideration of various courses of action, with a view to protecting the business and the interests of all stakeholders.'

Zimbabwe: Companies registered in Zimbabwe are now subject to a new penalty framework under which they will face a US$14,200 fine for failure to publish audited full-year accounts within 90 days of the end of the year. Additional fines will accrue at a rate of US$100/day for the subsequent 30 days or less, whereupon the regulator will take further action. Business Weekly News has reported that the Securities and Exchange Commission of Zimbabwe (SecZim) enacted the new rules after Lafarge Cement Zimbabwe failed to fully disclose its acquisition by Fossil Mines in December 2022.

Lafarge Cement Zimbabwe (LCZ) received an unwelcome present before Christmas when the US Office of Foreign Asset Control (OFAC) placed the company buying it on its economic sanctions list. OFAC made its announcement on 12 December 2022. However, the cement producer said that its parent company, Associated International Cement, had concluded its sale of a 76% stake in LCZ to Fossil Mines on 6 December 2022. Local press reports that the Zimbabwe Stock Exchange halted trading in the cement company on 23 December 2022. Then, LCZ said on 29 December 2022 that the OFAC sanctions had “impacted some processes” within it. It added that it was considering various courses of action to protect the business and the interests of all stakeholders.

OFAC took action against Fossil Agro, Fossil Contracting and the group’s chief executive officer, Obey Chimuka, due to alleged links to a previously sanctioned individual, Kudakwashe Tagwirei, and his company, Sakunda Holdings. OFAC said that Tagwirei had “materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of, the Government of Zimbabwe.” It accused him of using his relationships with government officials to gain state contracts, to receive access to currencies, including the US Dollar, and of supplying luxury items such as cars to ministers. It added that Chimuka was a “longtime business partner” of Tagwirei. Fossil Agro was also linked to a mismanaged agricultural subsidy scheme.

When a company says it has concluded a divestment or acquisition the expectation is that everything has finished. However, LCZ has admitted that the OFAC action has caused it some problems. We’ll have to wait for more information to be released to appreciate the full extent of these ‘problems.’ However, it is worth noting that government capital controls caused delays for the handover of a new vertical cement mill ordered from China-based CBMI to LCZ in mid-2022. At the time it was reported that the cement producer still owed the supplier around US$5m but was unable to make the payment due to economic measures the government had taken to avoid depreciation of the local currency. Other potential issues could also lie in any continuing services or materials that Associated International Cement and its parent company Holcim might have agreed to supply to Fossil Mines in the future as part of the divestment deal.

Looking at LCZ’s business more generally, in its third quarter trading update it said that revenue was down by 43% year-on-year due to suppressed cement and mortar sales volumes. Yet, this was due, in part, to a roof collapse at the company’s plant in late 2021 and the commissioning and ramp-up of that new mill in the fourth quarter of 2022. So the company expects ‘significant’ recovery in its sales volumes in 2023. In a sobering aside illustrating the realities of doing business in Zimbabwe, it also mentioned that the local interest rate jumped to above 200% in July 2022! Despite all of this though, it noted that both residential and government-based infrastructure markets were driving market demand.

South Africa’s PPC reported a fall in its cement sales volumes from its subsidiary PPC Zimbabwe in the six months to September 2022 with knock-on declines to revenue and earnings. It blamed this on a planned kiln shutdown, noted the negative role of hyperinflation and forecast that volumes would improve subsequently due to ‘robust’ cement demand. It pointed out that its earnings were hit during the maintenance period because it had to import clinker from South Africa and Zambia and that this was more expensive than locally manufactured clinker. The other thing that both LCZ and PPC raised were power cuts, although LCZ reported that unscheduled outages had decreased in the third quarter of 2022.

The growing demand for cement in Zimbabwe as reported by both LCZ and PPC helps to explain how Holcim was able to finalise a deal to sell its local subsidiary in 2022. Operational and financial hurdles such as coping with hyperinflation and power cuts show the problems these companies have also faced running a business in the country. Merger and acquisition deals in the cement sector often face travails as they are proposed, negotiated, made public and then put to the scrutiny of regulators. It seems unusual though for a divestment deal to run into problems after it has seemingly been closed.

Zimbabwe: A court has ordered Lafarge Cement Zimbabwe to pay US$321,000 to supplier Rubtech Machinery and Spares, in addition to costs. The Standard newspaper has reported that the producer incurred a debt to Rubtech Machinery and Spares for its services in November 2020. Fossil Mines since acquired Lafarge Cement Zimbabwe from Switzerland-based Holcim in June 2022.

Zimbabwe: Lafarge Cement Zimbabwe appointed Geoffrey Ndugwa as chief executive officer (CEO) in mid-December 2021. He succeeds Precious Murena, who stepped down in September 2021.

Ndugwa was previously the CEO for Lafarge Malawi from late 2019. He brings experience in the cement industry spanning over 17 years working in various capacities across Africa. Some of his notable appointments include being the Commercial Director for Bamburi Group in Kenya, the General Manager Innovation and Marketing for Lafarge WAPCO Nigeria, the General Manager for Bamburi Special Products in Kenya, the Head of Business Support for Barclays Bank of Uganda and the Sales Manager for Hima Cement in Uganda.

Ndugwa holds a master’s degree in Business Administration from Heriot-Watt University in the UK, a post graduate diploma in marketing from the Chartered Institute of Marketing in the UK and a Civil Engineering degree from the University of East London.

Zimbabwe: Lafarge Cement Zimbabwe has appointed John Stull as a non-executive director. Previously he worked as the chief executive officer of Holcim Philippines from 2018 until 2021. He is currently the Area Manager - East, South Africa & Indian Ocean for Holcim.

Stull, an American national, holds over 29 years’ experience with Holcim Group having joined it in 1992 as the operations manager at the Alpena plant in Michigan, US. Since then he has worked in a variety of executive roles around the world. He holds a Bachelor of Science Degree in Chemical Engineering from the University of Akron and an Advanced Management Degree from Harvard University.

Zimbabwe: LafargeHolcim subsidiary Lafarge Cement Zimbabwe has said that cement demand has increased by 34% quarter-on-quarter in the third quarter of 2020 following the end of the national coronavirus lockdown. Business Weekly News has reported that the company said that cement demand in July 2020 was the highest in that month since July 2003 due to a 7% year-on-year sales rise.

Company chair Kumbirai Katsande said, “As business activity progressively continued to gain momentum into the third quarter of 2020, the demand for cement consequently outstripped supply, causing considerable supply backlog.” Katsande said that the shortage will ease as demand decreases “associated with rainfall” in the fourth quarter of 2020.

Zimbabwe: Work has begun on a 43,000t/yr dry mortar production line at Lafarge Cement Zimbabwe’s 0.5Mt/yr Manresa plant in Harare. The plant, supplied by Turkey-based Varlik Industries, will increase the company’s mortar production capacity by 710% to 50,000t/yr from 7000t/yr. Lafarge Cement Zimbabwe chair Kumbirai Katsande said “The expansion project is three-pronged and will include doubling of cement capacity and tripling agricultural lime capacity as well as automation of the dry mortars plant.”

Zimbabwe: LafargeHolcim subsidiary Lafarge Cement Zimbabwe has complained of implied year-on-year inflation of 350% in September 2019 having possible knock-on effects on its business. Company secretary Flora Chinhaire blamed a 19% year-on-year drop in domestic consumption on ‘declining demand from homeowners due to escalating mortgage financing costs’ and the effects of foreign currency constraints on payments to suppliers for capital expenditure projects. All Africa has reported that power supply issues and unplanned stoppages caused a 1% decline in productivity at Lafarge Cement Zimbabwe’s 0.5Mt/yr integrated cement plant, where it operates a single wet production line.

The International Monetary Fund (IMF) has forecasted a 5.3% contraction in Zimbabwe’s gross domestic product (GDP) in 2019.