The Ohorongo Cement plant stand in a limestone-rich region Otjozondjupa in Namibia. The Schwenk subsidiary produces five types of cement...
This week, ICR learned that the Namibian cement market was in the process of change with Schwenk Zement's 0.7Mta Ohorongo plant now expected to come under control of International Cement Group (ICG), a Singapore-based company owned by Compact Metal Industrial Plc. ICG aims to acquire 69.83 per cent in Ohorongo Cement, subject to approval by the competition authorities. The remaining 30.17 per cent of shares are held by the Development Bank of Namibia and other South African shareholders. The acquisition could be approved as soon as 31 July 2019.
The German company's decision to leave the Namibian market may seem surprising at first, but the start-up of the 1.2Mta Chinese-backed Whale Rock Cement plant (Cheetah Cement brand), commissioned by Sinoma Tianjin Cement Industry Design & Research Institute Co Ltd of China last April, has changed the dynamics of Namibia's cement market. Namibia's oversupply problem Namibia's 0.6Mta cement market is hugely oversupplied since the entry of Whale Rock Cement, which together with imports have seen cement supply rise to around 2.5Mta.
According to Ohorongo Cement's Managing Director, Hans-Wilhelm Schütte. Meanwhile, demand has been under pressure: "Ohorongo sales volumes have been under pressure by the current state of the construction industry in Namibia since 2017," said Frankleen Alberts, Ohorongo Cement's customer relations and public affairs official. "Also for 2019, a continued downward trend of the industry is expected, mainly driven by the lack of construction projects in the public and private sectors." Building a local industry for Namibians.
Ohorongo Cement also appointed Estelle Alberts as plant manager in 2017, the first Namibian to hold the post. "It has always been the Schwenk family's intention to one day hand over the plant operations to Namibians," said Gerhard Hirth, who heads the Ohorongo Cement company board. Schwenk Zement has tried to protect its workforce against foreign imports. It has provided local jobs and produced its own clinker as well as ground cement at its Ohorongo plant rather than import. However, Schwenk Zement's Infancy Industry Protection (IIP) period was challenged in the High Court by cement importers and the company's cement volumes have been gradually falling ever since. Commenting on the entry of Whale Rock Cement, last July, Mr Schütte also expressed concern about what this could mean for Namibia's cement sector with job losses. "We have a 100 per cent Namibian workforce here. We also have a lot of downstream and upstream activities.
Beumer installed a fillpac and paletpac line at Ohorongo Cement Beumer supplied the third packaging line at Ohorongo Cement New owners to inherit state-of-the-art facility Inspite of market conditions, ICG will inherit a world class facility, built by ThyssenKrupp in 2010 with finance from the European Investment Bank, which lent EUR82m towards the EUR250m project. The Ohorongo plant is renowned for its use of biofuel and RDF, which provide 80 per cent of the plant's energy needs. It also operates a 5MW solar power plant, which opened in 2018.
Schwenk Zement looks to Europe Meanwhile, last month Schwenk Group signed an agreement to acquire Cemex's Broceni cement plant in Latvia, along with the Akmenes Cementas plant in Lithuania, plus four aggregate quarries, six ready-mix plants and a land distribution terminal in the Nordic/Baltic region of Europe. The group's core emphasis is being placed in Europe, with its headquarters in Germany.