Ethiopia: Derba plans US$300m expansion

Derba Cement, a MIDROC Ethiopia subsidiary, is planning to expand its cement plant at a cost of US$300m. The expansion project is expected to take from 18 to 24 months.

Derba Cements CEO, Haile Assegide, explained Derba was preparing to build a second plant in Chancho City. Upon completion, the plant would have the capacity of producing 2.5Mta of cement, he furthered.

The company’s first plant, which also has a 2.5Mta capacity, was built at a cost of US$351m. However, the company is producing 0.5Mta less than its nominal capacity, Haile explained.

However, power interruptions shorten production days by six hours currently. However, the commissioning of the Gilgel Gibe III power station is expected to resolve this issue, Mr Assegide said.

Currently Derba is having talks with the Chinese contractors that built its first plant, China National Building Materials Co.

Commenting on Derba's decision to build another plant when there is an excess production capacity, Haile said Derba would be cost efficient if it used the existing infrastructure. "We have to be cost leaders. If we are cost leaders then we will be price leaders," he added.