In a bid to muffle competition, AfriSam, the world's second largest cement-producing company and Africa's biggest, wants to have exclusive rights to the marketing, distribution and selling of all cement produced by Ohorongo Cement - Namibia's first post-independent cement production outfit.
This is the second time that Africa's largest cement-producing consortium attempts to neutralise competition from a Namibian company intending to set up an independent cement plant. In 2006, the cement-producing consortium averted competition by having a cement price war with a relatively unknown Namibian company that at the time attempted to ship Brazilian produced cement, while setting up a cement production plant at Otjiwarongo.
AfriSam, a conglomerate of various companies including the world's largest cement producing company Holcim, is engaged in talks with Ohorongo Cement for an agreement to "sell and distribute cement under the management and brand of Ohorongo Cement in Namibia and neighbouring countries".
Ohorongo Cement has confirmed the discussions, so did the Namibian Competition Commission, which by law has to approve or disapprove the merger. "Nothing has been decided yet, it is still in discussion stage," Ohorongo Cement spokesperson, Kirsten Gunzel, told New Era.
AfriSam's ultimate intention is to control the marketing, distribution and selling of Ohorongo Cement products thereby exerting control over the overall channels within the cement industry.
The agreement also binds the Namibian cement market to AfriSam in that Ohorongo Cement can only import from AfriSam in South Africa in the event where it needs to import for whatever reasons.
"Under the agreement, Ohorongo will until production at its local factory commences, import cement from South Africa," says a joint statement on the matter.
The two parties, as well as all those interested, have until the end of this week to lodge their opinion on the matter with the Namibia Competition Commission.
"To continue to make a positive contribution through the sale and distribution of cement in Namibia and neighbouring countries and in light of Ohorongo's forthcoming start of production, it was important for AfriSam to enter into an agreement with Ohorongo and to take advantage of the synergies between the two companies. AfriSam's experienced personnel will make valuable contributions to the partnership between Ohorongo and AfriSam," said Johan Burger, AfriSam's Country Manager for Namibia.
AfriSam says it would build on its long history of involvement in the Namibian market and well-established network with long-standing relationships with customers.
In the joint statement, Ohorongo Cement only acknowledged AfriSam's "wealth of experience in the marketing and distribution of cement in Namibia".
"Ohorongo can only benefit from this expertise," was all that Ohorongo Cement Managing Director Hans-Willem Schutte said in the statement.
Swiss-based Holcim, which is second to the world's largest cement producer Lafarge, 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 dropping prices to as low as N$27 per bag of cement, at which stage Cheetah Cement was selling its product below costs.
Holcim has since reduced its shareholding in the sub-Saharan African company and the cement company re-named AfriSam. AfriSam has an annual cement production capacity of 4.6 million tonnes, produced from six production facilities and distributed through nine strategically located cement depots in sub-Saharan Africa.
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