New policy on limestone to attract investment in cement sector

Business Writer

A new Government policy document has suggested consolidation of limestone deposits under either the Industrial Development Corporation of Zimbabwe (IDCZ) or the Ministry of Mines and Mining Development as part of a broader perspective to attract investment into clinker production, a key component in cement manufacturing.

The consolidation of limestone deposits would open up the sector to new investments and boost production capacity, according to the Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP), a short-term blueprint designed to revive the manufacturing sector.

Currently, most cement producers in Zimbabwe import clinker, which has contributed to higher production costs and reduced competitiveness. By increasing domestic clinker production, proposed measures would reduce the country’s reliance on imports and lower the price of cement for consumers.

The consolidation of limestone deposits would also provide a more stable and reliable supply of raw materials for the cement industry, helping to ensure that cement producers have access to the necessary resources to meet increasing demand and avoid production disruptions.

Currently, the industry has four players with an installed capacity of 2,6 million tonne per year, while national demand is estimated at 1,8 million tonnes.

Local production is 1,65 million tonnes, with imports exceeding US$59 million in 2023. The sector faces a number of challenges such as high electricity tariffs, shortage of raw materials and antiquated equipment.

This has seen locally produced cement retailing at between 80 and 120 percent higher than the regional average prices.

Government has witnessed immense pressure from citizens wishing to import. There is therefore need to put in place measures to enhance competitiveness of the sector.

The policy document also recommends the increase cement import licence fee from the current US$100 to US$500 per 30 tonne to discourage the importation of cement, ring-fencing of the electricity tariff from the current US$0,16 to US$0.10 per KWh.

This will result in reduction of the prices of cement by between 5 percent and 7 percent.

The proceeds from licence fees will be used to subsidise electricity tariffs, and stringent measures to be taken against sector collusion and profiteering which is rampant.