via Chemplex targets $200m turnover by 2019 | The Herald February 23, 2015 by Happiness Zengeni and Tinashe Makichi
Chemplex Corporation says it requires $72 million over the next five years to ramp up fertiliser production to enable it to meet the country’s demand.
At present, Chemplex’s companies such as Zimphos, Dorowa Minerals and Sable Chemical are operating at around 8-10 percent capacity.
Chief executive Mr Misheck Kachere told the Minister of Industry and Commerce Mike Bimha during a familiarisation tour of Dorowa Minerals in Buhera last week that Zimbabwe should not be importing fertiliser except for Ammonia adding that the country has enough capacity to service the local market.
Mr Kachere said the group had identified strategic revenue streams for 2015-2019 which could potentially turn over $200 million by year five.
Under the plan, $5,6 million is required for this year which will be used to refurbish the existing Zimphos and Dorowa plants (at a cost of $1 million) while the remainder will go towards the other operating units including $2,3 million for the refurbishment of Zimbabwe Fertiliser Company.
He said Chemplex is searching for investors to inject fresh capital to replace antiquated plant equipment within the group.
The company is currently negotiating moratoriums with entities like ZIMRA and NSSA over a $13 million debt where out of the $7 million about $3 million has been converted from short term to long-term.
Mr Kachere said they are expecting to reverse the technical insolvency of $22 million to about $1 million by the end of this year.
He said the current technical insolvency is affecting the going concern status of the company and creditors balance is currently sitting at $34 million including payroll arrears.
“One of our biggest challenges are imports and they have taken advantage of the introduction of the United States dollar in the country. The influx of cheap imports especially for Compound D has rendered the local industry uncompetitive.
“We don’t have a problem on top dressing imports (AN) because generally we don’t have enough capacity to meet the local demand,” said Mr Kachere.
Sable Chemicals for example from a capacity of 240 000 tonnes per year it only produced 75 000 tonnes last year.
“We have about one million tonnes of NPK capacity, 600 000 is the proper compounds and the 400 000 is blends.
“For AN we admit we have a problem for example last year there was 175 000 tonnes of AN used but Sable only produced 75 000 and ZFC and Windmill ended up importing to supplement the existing stock,” he said.
Mr Kachere said the fertiliser industry must run at capacity for the fertiliser prices to go down and currently Chemplex controls about 70 percent of the fertiliser industry and the whole phosphate chain as well.
Minister Bimha, however, said capital investments in new equipment and technology is the way forward in implementing the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset).
Minister Bimha said companies should target efficiencies in bid to reduce costs of production.