Growing demand for cement is driving local and international companies to invest in the industry, sparking competition, and overall expansion.
“Concrete is the foundation (literally) for the massive expansion of urban areas of the past several decades, which has been a major factor in cutting the rate of extreme poverty in half since 1990,” states Bill Gates in his article Have You Hugged a Concrete Pillar Today? Czech-Canadian scientist and policy analyst Vaclav Smil argues a similar point in his book Making the Modern World. Gates, summarizing Smil, contends that, “the most important man-made material is concrete, both in terms of the amount we produce each year and the total mass we’ve laid down.” In Zambia, cement, used to produce concrete for buildings and infrastructure development, is experiencing increasing demand. According to the economic factsheet released by the Ministry of Finance of Zambia in January 2014, construction contributed up to 24% of the GDP in 2013.
As Dr. Anthony Mwanaumo, Director/CEO of the National Road Fund Agency (NRFA) explained to TBY, the Zambian government is developing several road projects including Link Zambia 8000, Pave Zambia 2000, and Lusaka 400 (L400); all three will need a large amount of cement. Not to mention that, in order to meet Vision 2030 targets, Chimuka Nyanga, Executive Secretary of Association of Building and Civil Engineering Contractors (ABCEC), estimates that “one house needs to be built every two minutes”.
To cope with this increasing demand, some of the most powerful local and international companies are entering the market with important investments that will completely modify the cement market in the country.
The best-performing company on the Lusaka Stock Exchange, ZCCM Investments Holdings Plc. (ZCCM-IH), is now investing in cement manufacturing. Historically, the company has mainly involved itself in mining. As Dr. Pius C. Kasolo, Chief Executive Officer of ZCCM-IH told TBY, cement is a very expensive commodity in Zambia compared to the neighboring countries, which makes major projects, including road building, costly. “Our intention is to see a reduction in prices as a result of the opening of new plants. Within 18 months we plan to open one with a daily capacity of 5,000 tons.”
Another giant, Nigeria’s Dangote Group, is building a $400 million plant in Ndola, in the north of the country. In July, when Dangote’s plant is expected to be fully operational, it will be able to add to the local market between one and 1.2 million tons of cement per annum, which will nearly double the national production currently estimated at 1.5 million tons. Besides Dangote and ZCCM-IH, Chinese firm West China Cement Ltd has also shown interest, and intends to build a new cement plant in the country. Brunelli, specializing in ready-mix, also expects plant growth of around 27% to 30% over the next two years.
Until now, most of the cement production in the country had been undertaken by Lafarge, a world leader in building materials, through its two integrated plants in Chilanga and Ndola with a capacity of 830,000 tons and 400,000 tons per annum. The French company, that will lose a big part of his market share once Dangote and ZCCM-IH’s plants are operational, will expand, despite the competition and is expected to invest $217 million in his Chilanga cement manufacturing plant beginning in 2H2015.