PPC - August 2019

South Africa’s PPC has failed to submit a bid for the Rwandan government’s 46 per cent stake in cement producer Cimerwa, forcing the government to seek an alternative investor. PPC had indicated it would be making a bid and was given until 5 July 2019 to do so.

Cimerwa has been persistently underperforming for a number of years now, manufacturing just 364,864t of cement in 2018, despite its production capacity of 0.6Mta. Meanwhile, cement demand in Rwanda has grown steadily on the back of large infrastructure projects, leaving the government no choice but to rely on imports from countries such as Uganda and Tanzania. However, these imports have not only been lower in price than domestic cement, they have also been in much higher volumes, thereby eroding Cimerwa’s market share.

Cimerwa is currently owned by PPC (51 per cent), the Rwandan government (49 per cent), the Rwanda Social Security Board (20.24 per cent), Rwanda Investment Group (11.45 per cent) and Sonarwa Group (0.76 per cent). When PPC acquired a majority stake in Cimerwa back in 2012 it was hoped this would turn Cimerwa’s fortunes around, but this has not been the case, despite the growth in domestic cement demand.

The Rwandan government is now not only seeking a new buyer for its 49 per cent share in Cimerwa but also giving its support to a new cement plant under construction by Prime Cement in Musanze. The 1.2Mta works will hopefully help Rwanda meet local demand, reducing its reliance on imports. The first phase of the works was due to complete this month with a second phase set to begin in August 2020.