adminMartin Kadzere Senior Business Reporter
A CHINESE backed company, Zimbabwe Zhongxin, intends to build a cement plant in Masvingo at an estimated cost of US$50 million, a source familiar with the deal said.
The company initially wanted to construct the plant in Chimanimani but had to relocate to Masvingo where “substantial” limestone deposits were found.
Zhongxin Coking is the controlling shareholder in Zim Zhongxin with 70 percent shareholding while a local consortium, Qualisave Minerals Investments owns a 30 percent stake.
The source said the project may commence during the first half of the year once the company obtained all regulatory permits. The project has potential to create 400 jobs.
In terms of complying with the indigenisation and empowerment laws, the source said “the foreign partner will gradually release some of the shares to the locals until they are compliant”.
“The Chinese are bringing in capital of close to US$49,5 million and the contribution from the locals is quite insignificant for them to have a controlling interest,” said the source.
“As such, negotiations are ongoing with the relevant authorities. The proposal is that the Chinese investors will gradually release some of the shares to the local partners in coming years.”
Zimbabwe’s cement market is looking bright with demand expected to increase thanks to various infrastructural projects on the cards and some already underway. With an infrastructure backlog of US$14 billion, the cement demand is expected to significantly rise in the medium to long term.
Under Zimbabwe’s new economic blueprint, Zimbabwe Agenda for Sustainable Socio-Economic Transformation, Government has come up with an infrastructure cluster focused on the rehabilitation of infrastructural assets and the recovery of utility services.
These services relate to water and sanitation infrastructure, public amenities, information communication technology, energy and power supply, transport (road, rail, marine and air).
Local cement companies are also poised to benefit from the growing demand in residential and non-residential construction. Pretoria Portland Cement, Zimbabwe’s largest company said it will start constructing a US$200 million cement plant in the north-eastern part of the country this year.
The construction, expected to begin during the second or third quarter of this year, will be completed at the end of 2016, Mr Gavin Stephens, PPC Zimbabwe’s director of business development told this paper in November last year.
The combined cement output would be 1,2 million tonnes per annum, adding about 250 direct jobs.
While analysts have pointed out that the primary risk to the construction sector was the shortage of international finance and foreign direct investments, PPC Zimbabwe chairman Mr Bhekokuhle Sibiya said last year prospects in Zimbabwe were bright.
“With elections in Zimbabwe concluded, we expect continued growth in cement demand.
“The market has been dominated by retail clients and we look forward to increased infrastructure investment,” said Mr Sibiya.
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