There has been talk in the last few months that Zimbabwe was facing serious cement shortages to the extent that some customers were hoarding the product. To find out what was really happening on the ground, Senior business reporter Mthandazo Nyoni (MN) sat down with PPC Zimbabwe managing director Kelibone Masiyane (KM).
MN: Firstly, kindly give us an overview of the business’ performance in the last quarter?
KM: As PPC Zimbabwe, we have experienced a phenomenal surge in terms of sales volumes in the country despite the challenging operating environment. And most of the demand has been driven by retail demand, concrete product manufacturers and a whole lot of government funded projects. So those have been the main drivers of this cement demand.
MN: Can you put some figures there?
KM: Well, at the moment we are in a closed period, I cannot then divulge figures per se but what I can add onto that as well is that we had a good agricultural season that’s being instrumental as we have seen surge, especially in the areas that proseen surge, especially in the areas that produce tobacco and we have also managed to dispatch, I would say, in terms of figures, roughly 5% above target in the first quarter of 2021 and we also anticipate further surge continuing as we see that maize harvest is looking great. So obviously, in the areas that did a lot of farming around maize, we expect to see that surge in demand as well.
MN: What has PPC done to manage their operations to mitigate the COVID-19 pandemic?
KM: PPC has actively educated its employees and the customers on the pandemic and we continue to provide personal protective clothing (PPEs) to all employees, this includes hand sanitisers as well. In addition to that, all our main entrances have been upgraded to have automated sanitization facilities. Team members, depending on where they work, have been rotated and put into groups; some are actually working from home remotely depending on what they do. We continue holding meetings till this day remotely using Microsoft Teams. The other one that we are really proud of is that most of our employees now are vaccinated against Covid-19. Obviously, this is a voluntary exercise, we are not forcing anybody but look, there has been a huge uptake in terms of vaccination.
MN: How did you contribute to the country towards the fight against Covid-19?
KM: We did quite a lot of donations in areas that we operate from. I would say like in Gwanda (Town Council), we did lend them a water bowser from Colleen Bawn operations. I think they wanted to disinfect the Gwanda town and we also helped refurbish one of the wards there, turning it into an isolation centre at Gwanda Hospital. In Bulawayo, we donated quite a huge chunk of cement to Mater Dei Hospital where they were setting up a Covid isolation unit which is separate from the main hospital. We have donated a lot of PPEs as well in the Bulawayo region. We have done the same in Harare. Look, as a national player we couldn’t sit back and we wanted to complement the efforts of the government. That is exactly what we did as PPC.
MN: How much impact did the pandemic and lock downs have on PPC’s strategy, projects and operations over the last 15 months?
KM: Look, PPC operations have remained on course as the government recognised that we are an essential service and they granted us permission to operate. I think the only time where we were hit hard was last year in April because that was the hard lockdown. In that month obviously our sales were impacted heavily.
But after being granted permission to operate by the government, we have continued to a point that we have ended up doing even better than the original budget that we had despite the interruptions of Covid. But, however, we have had to refresh our strategies in terms of the value chain to ensure that the pandemic did not, obviously, affect our operations. So, we continued argely unaffected by the pandemic.
MN: Could you quantify your losses due to Covid-19 disruptions?
KM: I would say we sold roughly a quarter of what we would normally sell. That was in April last year. So that’s where we were hard hit but otherwise the rest of the months after that hard lockdown, we had basically normal sales.
MN: There have been rumors during the last few months that the country was facing cement shortages?
KM: Well, the perceived cement shortage may have been triggered by the recent import ban that is Statutory Instrument 89 of 2021 as gazetted by the government. Obviously, government realised that in order to protect the jobs in our economy and also protect the industry we had to reduce the number of imports that were coming through into the country and obviously, try and promote the buy Zimbabwe sort of initiative and sourcing locally, obviously is imperative especially if one looks at the current environment where there are lot of challenges and where the industry is investing quite a lot into the economy.
Obviously, there is an expectation of returns and that’s why it is important that we try and reduce imports coming into the country. But again also because of the shutdown that then happened in Colleen Bawn I think a lot of people then went into panic buying and hoarding and that really created artificial shortages. But I must say that the Colleen Bawn is up and running as we speak. So, I expect that in the next week or so, cement shortages should be a thing of the past. The only challenge after our shutdown in Colleen Bawn that we see is on the power issue.
So, we have spoken to the Zimbabwe Electricity Supply Authority (ZESA), the power utility, because what is happening currently is that we are experiencing daily power dips at our Colleen Bawn plant and that’s our key operations which ideally should be running continuously, 24/7 without any interruption but unfortunately since the shutdown, we failed to reach full potential of our plan because of these daily interruptions. But I must say we have engaged ZESA and together we are trying to find a solution and they are quite cooperative.
MN: You had a plan to invest into solar energy to avert power challenges. Where are you with that plan?
KM: In terms of that plan, we are now in the advanced stages where we have identified a partner that we are going to work with. We will actually do the investment at our Colleen Bawn and Bulawayo plants. So,it is something that we will be making an announcement pretty soon. We are just finishing one or two issues around that before we can announce. But we are quite excited and we can’t wait for the commencement of that project and it is obviously going to help us in terms of these sort of current challenges but it’s going to take time to get to a stage like implementation, and finally commissioning and all that. But we are excited going forward, to say look, these power issues will be a problem of the past.
MN: As local players in the cement industry, are you able to meet national demand?
KM: Zimbabwe currently has about 2,6 million tonnes of installed capacity and of that 2,6 million, as PPC we contribute about 1,4 million tonnes. The current demand in Zimbabwe is about 1,4 million tonnes. So, as you can see from the figures that I have just shared, Zimbabwe has more than adequate installed capacity to supply the country. So, I would like to urge the government, the public including our customers that there is no need to panic, we have got adequate capacity together with our competitors. There are many players and together we are able to supply the current demands without any need for imports.
MN: What measures are you putting in place to ensure that shortages in the cement industry do not disrupt/impact national projects like the road rehabilitation being spearheaded by the government?
KM: Let me start by talking about plant maintenance which is something that we do annually to ensure that our machinery and equipment continue operating at the right levels. I must also stress again that power plays a critical role in terms of those production processes. Like I said, we did suffer from the national grid; we are collaborating with the power supply utility to find a solution to that. Now, every year as PPC we have an annual sales and production plan.
Now these plans are obviously informed by the anticipated demand in the following years and we look at the national projects and all that because they are part of all hose volumes. Now, as a business we are not new to national projects. We supplied the Kariba extension with all of their cement requirements. We also supplied the Tokwe-Mukose Dam, Victoria Falls and JMN Nkomo Airport and these projects were completed.
We are currently supplying the road project (Beitbridge-Harare) and proud to have been part of the successful completion of phase one. Now we are in phase 2 of the project is ongoing with over 32% of the phase is completed. We are working with our local contractors to ensure that there is adequate supply for completion of these projects. We are also working with Sino Hydro, this time in Hwange for the thermal project. We are also supplying Gwayi Shangani dam which is also coming on
board as well as the Beitbridge Border post project. So, we have ensured that all these projects are of national significance, while we had slight challenges in terms of supply but all those projects have been insulated. So we have continued to supply them. They haven’t suffered any disruption in terms of supply and I just want to assure our government and our citizens that these projects are always prioritised and are in good hands. There is no need for anybody to be panicking. PPC understands that we have a huge load placed on our shoulders. So as a responsible corporate we will play our part to ensure the success of all these projects.
MN: Let’s go back a bit and talk about Colleen Bawn which was recently closed for maintenance work, how often do you carry out maintenance work on your factories and what is the nature of this work?
KM: It is normal business practice when you are dealing with machinery of this type to have a maintenance schedule. Normally it’s done annually, we usually have two shutdowns in a year, one would be roughly seven days and the second one roughly 21 days, obviously depending also on the nature of work that you want to carry out.
This can be likened to either servicing your car, after a certain mileage. So, it is quite normal and just a few weeks ago we are coming out of that similar shutdown from Colleen Bawn. So it is normal practice to have that. Failure to service would normally result in break downs which are more costly than the actual service.
MN: What measures have you put in place that ensures supply is not disrupted during factory maintenance work?
KM: Normally, before you get into that shutdown, you ensure that there is an adequate stock of raw materials and cement, adequate volumes to a point that customers should not really feel that the plants are actually on maintenance. So, customers should ideally be insulated. Since 1913, we have been a constant presence in Zimbabwe while the same annual maintenance works were being carried out without affecting the market in terms of supply. So, this is something that we have done over many years and we have continued to perfect it. In this instance due to a surge in demand, panic buying and hoarding, that’s why there was a bit of a temporary shortage.
But like I said, we are over that and we had also plan B in place in the sense that if the demand went beyond what we had projected, we are able to import from PPC South Africa adequate quantities of clinker so that we can continue supplying. So, this is just to ensure the market that there are always plans in place to ensure that should there be an issue with the maintenance sort of challenges from a power supply point of view, we are able to bring products from South Africa temporarily to continue supplying the market.
MN: What would you say are your priorities as a business given the changes that have been caused by COVID-19 and lockdown restrictions?
KM: Mostly our priorities remain unchanged. We will fulfill our mandate as a business to play our part in the infrastructural development of our country. I mean right now, you can see that Zimbabwe is on a growth trajectory and usually cement demand is a good indicator of that growth or even gross domestic product. So, in that we have ensured that we want to protect the cement industry by ensuring that supplies are there. But to be able to do that, also ensure safety for our customers and our citizens. We believe that we don’t just sell a bag of cement, but we sell a home, a bridge, a school, a dam, etc. and that is what we call in PPC terms, strength beyond.
We are cognisant of the effects of Covid 19 and obviously try to stick to the guidelines as stipulated by WHO and our Ministry of Health in our day-to-day operations.
MN: What does your year-end outlook look like?
KM: Without really divulging the numbers because we are still in a closed period but we have got a very positive outlook in terms of the Zimbabwe economy. So, we see our volumes growing compared to last year due to obvious issues I have mentioned earlier. We have a good harvest when one looks at tobacco, maize and so on. So, generally when we have a good harvest, it also translates into good cement sales as well. So, we are quite positive about growth. Obviously again in line with what the minister of Finance (Mthuli Ncube) said in terms of growth.
MN: Lastly, since dollarisation in 2009 to date, how much have you invested into Zimbabwe?
KM: Obviously, excluding the Harare plant where we invested US$82 million, if you look at Colleen Bawn, the quarrying operations, the kiln itself where we added a state-of-the art cooler, we have done quite a lot of improvements as well at our Bulawayo operations. So taking out the US$82 million, we have also invested about US$35 million on those other projects which is basically a CAPEX where we are really investing into our plants to make sure that they remain operating at the highest levels.
- This story was taken from the Weekly Digest, an AMH publication