Source: PPC feels the heat from imports | The Herald March 20, 2019
The country’s largest cement producer, Pretoria Portland Cement (PPC) Zimbabwe, is feeling the heat from imports and has called on Government to promulgate protectionist laws to promote competitiveness of local producers.
Government lifted a two-year import ban on some basic commodities, including cement, last October as a measure to deal with rampant shortages that drove the public into panic buying.
Cement was among top products in short supply despite insistence of adequate capacity by local producers.
PPC Zimbabwe managing director, Mr Kelibone Masiyane, has said their competitiveness has largely been affected by the opening of borders.
“What really has rendered us uncompetitive initially was the opening of the flood-gates and then pricing became another issue.
“Definitely the price of imported cement is much lower than us and we cannot compete because of high cost of manufacturing that we are experiencing in Zimbabwe,” he said.
At the PPC Zimbabwe factory in Bulawayo, a minimum of 100 bags of cement are being sold at RTGS$30 each and US$7,50 per 50 kilogramme bag of cement. A snap survey carried out by Business Chronicle in Bulawayo has shown that most of the hardware shops did not have imported cement but locally produced cement, which was selling at between RTGS$28 and RTGS$36 per 50kg.
In foreign currency terms a 50 kg bag was being sold at a price range of between US6,50 and US$8 while in South African rand a bag of cement was going for R120. In the past, Mr Masiyane had appealed to the Ministry of Industry and Commerce for $100 per tonne levy on imported cement, which levy still existed.
“We are coming from a point where we aren’t looking for a complete ban, but what we are saying is we want to get to a level playing field so that people can choose cement type depending on quality. We believe we have got the best quality and we believe that is how will should be competing,” he said.
Mr Masiyane briefed Industry and Commerce Minister Mangaliso Ndlovu about the issue during a recent tour of the company’s factory in Bulawayo. He told the minister that his organisation has more than enough stocks of cement at its warehouses.
In his response Minister Ndlovu said: “I want to agree with you and leave a challenge, which I left with you the other time and at this point it won’t make much sense for me to push the level of protection unless we are satisfied that you can supply the market.
“I’m still not convinced and am told by people they can’t get cement and yet they love it. I am sure you know it.”
Minister Ndlovu said he was concerned about the cement sector and wanted it protected because the country was moving towards infrastructure development. Against this background, he said protection of the cement sector has to lead to tangible results and, thus, Government and manufacturers needed to agree on strategies that need to be adopted to improve on competitiveness by the local manufacturing sector.
Minister Ndlovu said he was pleased to note that PPC Zimbabwe as a leading cement manufacturer has dealt with issues of packaging and also clinker, which was being transported from Collen Bawn in Matabeleland South province to the Bulawayo plant.
“All these issues and power supply are tangible programmes meant to improve competitiveness and also as Government you need to tell us where we should consider adjustments,” he said.
On the pricing issue, he said this would not be addressed unless and until the supply constraint in the market was addressed, adding that there were people who wanted to take advantage the situation and benefit from arbitrage opportunities.
Minister Ndlovu said in Plumtree where he hails from, people were not able to buy cement in local currency.
Mr Masiyane said this was a strategy his company has adopted to discourage imports by locals in the border towns.
“We have applied what we call a ‘border strategy’ for Plumtree and Beitbridge and I think now we are moving to Victoria Falls.
“The idea is to discourage people who live especially around the border towns from going across to buy cement. So you find that even in terms of pricing, it’s attractive and if you take into account the troubles of crossing the border and then transporting it back, in some instances you have to pay duty and all that.
“And thus we are trying to discourage imports and we have done it for quite a long time,” he said.