PPC domestic sales decline

Published: 06 June 2014

CEMENT producer PPC Zimbabwe says domestic sales in the first five months of the year are down 5 percent compared to the same period last year. PPC managing director Njombo Lekula said domestic market sales have been flat compared to last year when growth in housing projects boosted demand for cement.

"For the past few years there has been significant growth in housing, which boosted cement demand. However the current economic situation is beginning to have an impact on home building activities," he said.

In the wake of slackening demand for cement, Zimbabwe's number one producer has been angling to start exploiting opportunities in the regional markets.

"Zimbabwe has cement capacity that exceeds current demand. I think it is good for the country if we are able to sell some of our excess production to the region and keep our plant capacity utilisation high," Lekula said.

This is however despite the fact that the regional markets were also suffering from unstable and depreciating currencies.

"Mozambique through Beira is prone to imports from the Far East and this renders the market very competitive," he said.

"The cost of logistics to reach this market is also an important factor in the profitability, however, exports contribute a fair percentage of our revenue," Lekula added.

The PPC Zimbabwe boss said they have also had enquiries from Zambia and have sold into that market, however, the logistics posed a significant challenge and the pricing was equally affected by the fluctuating Kwacha.

PPC is also looking to explore opportunities in the region as it will start constructing a $200 million cement plant in the north-eastern part of the country next year. The expansion would give PPC extra capacity.

PPC has started constructing a clinker production facility with a grinding plant near Harare and Tete in Mozambique. The main market area targeted is the Harare region while the milling plant in Mozambique will target Tete. Currently, PPC has capacity for 760, 000t annually.

The combined cement output of the plants would be 1,2 million tonnes annualised, PPC Zimbabwe's director of business development Garvin Stephens said recently.

This will create about 250 direct jobs with additional 100 supporting jobs, plus many more downstream.
- chronicle

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