The Business Year

Jorge Reis

CEO, Cimentos de Moçambique

Piyush Kumar Bharadwaj

General Manager, GS Cimentos

TBY talks to two leading figures from the cement industry about the conditions of doing business and current production activities.

How would you describe the current nature of the Mozambican market?

Jorge Reis One of the challenges of cement commercialization in Mozambique is that the client only focuses on price, whereby it is difficult to explain the need to focus on quality. We are working with our clients and holding workshops precisely to inculcate a sense of the importance of testing the quality of cement before it is purchased. Here we produce two types of cement: 32.5 and 42.5, and we need to teach companies precisely what they should buy. If you need a 32, why buy a 42 that is more expensive? Or indeed, vice versa, as where strong cement needing grade 42 should be specified.

PIYUSH KUMAR It is impossible not to note the rapid growth of infrastructure in the country, and I anticipate many more construction projects being realized by both the government and the private sector. Many new roads, bridges, and industries will be constructed in the near future and the real estate business is set to boom fueled by economic growth. In this light, we anticipate no serious challenges to selling cement locally.

As a long-established company, how would you describe the local business environment?

JR Doing business here is not as easy as in other markets because of the prevailing constraints to be found in the country, notably logistics and a reliable electricity supply. Moreover, there is also a measure of unfair competition detrimental to Mozambique, which can seriously damage local industries. And meanwhile, the informal economy, too, remains problematic.

What is the current status of your cement plant?

PKB We will commence the construction of our 1,500 ton-per-day cement production unit in June 2015, and the plant will be implemented in two phases. The first phase involves the construction of our grinding unit and will take from 12 to 16 months. The second phase, which involves the clinker production unit, will be implemented two years later. Thereafter, we will manufacture cement mainly for the local market, which we can readily cater to, although we might also consider exports to South Africa, Swaziland, and nearby areas. Once we establish ourselves in the market, we will enter the next phase of clinker production on an investment of around $50 million.

What is the installed production capacity of Cimentos de Moçambique, and to which markets is your output destined?

JR We have a capacity of 2.9 million tons in total, but in 2013 we only produced 1.1 million tons. In 2014, by September we had already sold 1.1 million tons, whereby we expect to have surpassed the 2013 figure. Meanwhile, the unused available capacity is accounted for by certain bottlenecks that we are currently addressing, and which we expect to overcome in the near future. Mozambique’s Mutirao, or “collective effort” project is focused on the two main pillars of industry and the people. Accordingly, our production is currently geared solely toward satisfying the local market, although given the right margins, we could also export.

What could the government do to ensure that projects become a reality?

PKB The government should have a time-bound program for each clearance. This should encompass the allotment of land, clearance, access to mines, and a connection to power and other utilities. The allotment of land should be decided on within three months, without compromise, and there should certainly not be any re-examination or review of the terms of business.



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