Displaying items by tag: Zimbabwe

Zimbabwe: South Africa-based PPC is reportedly considering selling PPC Zimbabwe for US$200m. The Zimbabwe Independent newspaper has reported that the group received an unsolicited offer from a local company.

PPC said “PPC’s board has a duty to assess any such approaches on their respective merits.”

Zimbabwe: Livetouch Investments plans to build a new 200,000t/yr cement plant in Zvishavane, Midlands Province. The first phase of construction will reach completion in mid-2024 and cost US$20m. When subsequently commissioned, the plant will create 300 new jobs. The Chronicle newspaper has reported that the upcoming plant is situated close to Livetouch Investments' existing limestone resources.

Livetouch Investments' mananging director Kyle Wang said that the company is building the plant in order to reduce Zimbabwe's reliance on imports of cement, notably via Zambia. Zimbabwe already has a cement capacity of 2.6Mt/yr, but a cement demand of just 1.6Mt/yr.

Zimbabwe: Three boys aged 11, 12 and 14 were injured at PPC Zimbabwe integrated Colleen Bawn cement plant on 13 January 2023. Two of children reportedly jumped into a dump site at the plant and sustained second-degree burns from hot material, according to News24. The third child suffered burns whilst trying to help the other two. The children are in a stable condition. The dump is reportedly quarantined from the local community. An investigation is ongoing.

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 deal by Fossil Mines to buy a 76% stake in Lafarge Zimbabwe has been stalled by the introduction of economic sanctions by the US Office of Foreign Asset Control (OFAC). In mid-December 2022 OFAC added Fossil Agro, Fossil Contracting and the group’s chief executive officer, Obey Chimuka, to its Specially Designated Nationals (SDN) list 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.

In a statement Lafarge Zimbabwe said that it was “considering various courses of action with a view to protecting the business and the interests of all stakeholders.” The deal to sell a majority stake in the subsidiary of Switzerland-based Holcim was originally finalised in early December 2022.

Zimbabwe: Fossils Mines has appointed Innocent Zulu Chikwata as the acting chief executive officer (CEO) of Lafarge Zimbabwe. Willcort Dzuda has become the acting chief finance officer (CFO), according to the Business Times newspaper. The appointments follow the departure of Geoffrey Ndugwa and Amry El Moufay, as CEO and CFO respectively, following the acquisition of a majority stake in the cement producer by Fossils Mines in December 2022.

Chikwata worked previously as the sales manager and then the commercial director of Lafarge Zimbabwe since joining the company in 2017. He holds over 15 years of experience in the construction materials and consumer packaged goods sectors. Dzuda is a chartered accountant and registered public auditor. He holds 25 years of experience in auditing, consultancy and financial management.

Zimbabwe: Lafarge Zimbabwe has finalised a deal to sell a 76% stake in the company to Fossil Mines. The transaction is now set to conclude once the shares are transferred in exchange for the agreed price. The divestment by the subsidiary of Switzerland-based Holcim was first announced in June 2022. No amount for the transaction has been disclosed publicly.