Windhoek — The battle to control the cement industry in Namibia has taken a new twist, with the new kid on the block, Ohorongo Cement, saying they are the ones intending to take over AfriSam Namibia and not the other way round.
The two companies are currently discussing an agreement for a single cement entity instead of competing against each other for the local market.
However, the two cement companies appear to have different outlooks - with each vying for the control of the market.
"It is us taking over AfriSam operations, after which AfriSam Namibia would no longer exist," says Ohorongo Cement.
AfriSam had earlier explained the deal as an agreement "under which AfriSam organisation will sell and distribute [Ohorongo] cement under the management and brand of Ohorongo Cement in Namibia and neighbouring countries".
It is not yet clear whether Ohorongo Cement would seek infant industry protection from the Ministry of Trade and Industry, despite early indications by senior executives that the company could do so. The trade ministry earlier indicated its willingness to grant infant industry protection to any Namibian companies involved in the production of cement in the country.
According to AfriSam's earlier statement, the agreement would also bind Namibian cement market to AfriSam - meaning that, if need be and for whatever reasons, Ohorongo Cement can only import from AfriSam in South Africa.
"Under the agreement Ohorongo will, until production at its local factory commences, import cement from South Africa," says the joint statement on the matter.
Ohorongo Cement spokesperson, Kirsten Gunzel, says Ohorongo intends to take over 100 percent of AfriSam Namibia's operations, including the distribution, sales and marketing of cement in Namibia.
"If the agreement goes through, the entity AfriSam Namibia will be completely absorbed by Ohorongo. AfriSam Namibia will not be operational anymore," says Gunzel.
Ohorongo says the reason to work with AfriSam Namibia is to use the existing distribution network, which would grant Ohorongo Cement immediate access to the market.
"There is no question that Ohorongo would have taken the Namibian and regional market by storm but, it would have taken longer than it will with the AfriSam agreement," says Gunzel.
Ohorongo Cement is about to bring to production the N$2.5 billion cement plant at Otavi. The plant will have capacity to produce 4 400 bags of cement per hour.
AfriSam is a conglomerate of various companies, including the world's second largest cement producing company Holcim. This makes AfriSam Africa's biggest cement producer with an annual cement production capacity of 4.6 million tonnes, which is produced from six production facilities and distributed through nine strategically located cement depots in sub-Saharan Africa.
Swiss-based Holcim, which has since reduced its controlling stake in AfriSam, countered muffling competition from a Namibian company through a price war. Holcim entered into a price war with Cheetah Cement, a Namibian start-up company with Brazilian partners that wanted to go into cement production in early 2007. The war resulted in Holcim lowering the prices to as low as N$27 per bag of cement, at which stage Cheetah Cement was selling its product below cost.
No comments:
Post a Comment