Sep. 24, 2021


Pedro Pinto

Angola

Pedro Pinto

CEO, Cimangola

“As an oil-producing country, fuel prices here are the third cheapest in the world.”

BIO

Pedro Mariano Campos Pinto has had a professional career as a manager in multinational companies in the automotive industry (Volkswagen and Continental), in the pharmaceutical and cement industries, being responsible for defining the strategic lines of action of the manufacturing units and for the annual execution of budgetary and operational objectives. He has extensive experience in organizing and managing strategic projects for the rationalization of productive resources, implemented through the coordination and direction of multidisciplinary work groups, always in a highly competitive and multicultural environment. He has been responsible for financial management, information technology, purchasing and storage and security at Nova Cimangola for about eight years. He currently holds the role of CEO/PCA of the Company, responsible for the global management of the leading cement production company in Angola.


Cimangola has been present in the Angolan construction sector for over 60 years. Can you elaborate on the company's trajectory?

The company was launched 10 years prior to independence. With the transition to the new state of Angola, it was managed by the Angolan state and international companies until 2007, when the new shareholder composition was established. The major shareholder is Isabel dos Santos, with the other shareholders being the Angolan state (30%) and Banco BAI (11%). Since 2007, the company has experienced major transformations. We have increased our manufacturing capacity with the construction of two large modern mills. A few years later, we built a new factory, and we changed the paradigm of how this company operates. We began to produce the main component of cement production—clinker—which no longer necessitated Angola having to import it, and we began to follow the economic plan designed by the state: substituting imports, producing internally, and still having the capacity to export. After the companies present in the oil and diamond sectors, Cimangola is the largest exporter in the country.

Cement and clinker constitute the two main business lines of Cimangola. What is the economic performance of the different business lines and future perspectives?

The company's highest performance, despite the adverse circumstances, was in 2015, during the national crisis. Cimangola was the only company in the cement sector that did not lose sales volume or market share. In 2015, we had an estimated local market share between 25% and 30%. Particularly from 2017, with the new management, we raised our market share to 50%. We could take internal competition to the point of jeopardizing the survival of the other cement companies. We have, however, limited our commercial aggressiveness in the market. In particular, since 2015 demand for cement has fallen by 50%, due to the drop in the price of oil and given that the Angolan state—previously the largest construction promoter in the country—no longer has the financial capacity for so many projects. Cimangola has another particular characteristic. It is located in Luanda, the country's main market. Luanda has an import-export port for bulk materials, which gives Cimangola greater competitive capacity and the ability to export the surplus production that is not allocated for the Angolan market.

Cimangola is today the third-largest national exporter in Angola. How did Cimangola boost its international activities?

One of the characteristics of the international market is that the selling price is set by the supply-and-demand mechanisms of the market. The international clinker market is extremely aggressive. In order to compete in that market, Cimangola must keep its production capacity at an international level. Up until 2019, we did not have a cost structure capable of producing clinker at competitive prices. Although we had the capacity to export, we did not do so because of the economic impossibilities. Subsequently, we introduced some changes in the production process, and today we are highly competitive in the international market. The currency devaluation of the kwanza also played a role, allowing the company to naturally become more competitive in the international market. Since then, we have become a major player in West Africa, all the way to Ghana, and now, Brazil. We are now exporting 50% of the company's industrial capacity.

Amidst the chaos caused by the fall in oil prices and then COVID-19, Cimangola emerged from this crisis stronger. What measures have you implemented to mitigate the effects of the pandemic?

We decided to make a larger investment in this period and took a stand for hiring. Last year, we internalized many operations that were, until that moment, carried out by third-party service companies. We started to integrate all these operations into the company structure. From a social point of view, we hired 250 people, an increase of almost 50% in Cimangola's workforce. We invested in a fleet of trucks, we improved logistics, and we became extremely competitive in the distribution of cement in the country. Our increase in market share was channeled into strategic investments to gain competitiveness in relation to other operators. In addition, we decided to produce different cements suitable for each type of project. We are the only company in Angola able to produce specialized cements for projects with greater structural requirements, such as dams, bridges, and ports. These investments will pay off in the future, since Angolan has another important characteristic: demographic growth. There are currently 30 million Angolans, 50% of whom are under 18. Over the next 10 years, they will reach 40 million, and, consequently, the domestic market for informal cement consumption will grow progressively. Beyond that, we have a competitive export capacity, especially to Angola's neighboring countries.

Cimangola has recently decided to substitute diesel for fuels derived from waste to generate electricity in its production units. What benefits can this change bring to the organization?

As an oil-producing country, fuel prices here are the third cheapest in the world. A dependency on fuel at state-subsidized prices has been created. The government's concern is that a change in fuel prices will create a change in the sustainability of families. Furthermore, any increase in fuel prices will have repercussions on the price of cement. When constructing its new factory, Cimangola designed it to consume coal imported from South Africa. With the currency devaluation, coal is no longer viable. Cimangola was forced to make changes to the factory in order to produce with heavy fuel oil (HFO). All it takes, however, is an increase of a few cents in the price of fuel to make it profitable and viable to produce with coal again. From then on, we will no longer be exposed to fuel price variations in Angola. Beyond this, the factory was constructed and well prepared to consume fuels derived from waste. This is truly the great advantage of Cimangola. Nevertheless, it appears that there is a great deal of waste left unutilized for two reasons. Firstly, the government assigns contracts for waste collection, and it also does so for the delivery of waste to landfills. Therefore, if we were to utilize waste, we would be forced to buy it from the companies that collect it. This is more expensive than fuel. Secondly, waste in Angola is contaminated with sand and needs to be cleaned and prepared for industry. The process is feasible, though it does not yet exist with the same type of industrial development seen in Europe. However, there are companies that continue to innovate and see a business opportunity in this area. We have already set up agreements with companies in Europe to supply fuel derived from bundled waste at zero cost in Angola. This will be the cheapest fuel possible and will guarantee the energy independence of Cimangola for the future.

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