Messebo Cement Factory Plc has hired Industrial Projects Service (IPS), a state-owned consultant, to conduct an assessment of market for cement around Addis Abeba. The company wants to explore the feasibility of opening a plant where semi-processed clinker from Tigray will be finally processed to produce cement.
“The project is mainly intended to minimise the transportation cost incurred from Mekelle to Addis Abeba, which is 80 Br to 110 Br per quintal, and hence to enable the factory to compete with existing cement factories in the city,” Kidane Tekelehaimanot, Messebo’s deputy project manager, told Fortune.
Mekelle is 770Km away from Addis Abeba. The Addis plant, if opened, therefore, will receive and crush the semi processed clinker by mixing them with additives, which account for 30pc of the total amount currently transported all the way from Mekelle. If that happens, the cement will also be packaged in Addis Abeba, said Kidane.
Currently, in Ethiopia there are 21 operating cement factories.
The factory produces 83pc of the 2.24 million tonnes per year production capacity. Its investment capital is 3.2 billion Br.
Messebo is the second company after newcomer Habesha Cement to undertake a market study. Habesha, which has a designed production capacity of 2.5 million tonnes a year, has hired Waas International Consulting firm assess current and future demand and supply of cement as well as to determine the need of for expansion. Dangote and Derba Midroc cement factories are also planning expansions, with Derba intending to double its 2.3 million tonnes production capacity.
“The increasing demand for cement and the spreading out of various construction projects both now and during their establishment is the reason behind the companies’ interest in expansion. Some of the factories had the plan when they entered into their first project, but they had no financial capacity to expand,” said an expert from the Cement & Related Industry Development Directorate at the Ministry of Industry.
He also added that despite the government’s expectation that the cement market will be saturated, demand continues to exceed supply.
Despite expansions and new factories joining the market, this expert complained, cement price is still not as reasonable as the price in other African countries. He accuses the cement companies of being profiteers. This calls for government’s systemic intervention, perhaps lifting its ban on the importation of cement, he added.
PPC [Portland Pozzolana cement] from Derba, Mugher and Messebo sells in Addis Abeba for 184Br, 225Br and 295 Br, respectively, Messebo’s reflecting the higher cost of transportation. Derba and Mugher sell OPC [Ordinary Portland cement] for 241 Br and 293 Br and Messebo 215 Br. The Kenyan prices range between 114 Br and 142 Br.
Messebo Cement Factory, which was established in February 1997 as one of the subsidiary companies of Endowment Fund for the Rehabilitation of Tigray (EFFORT), is located in Tigray Regional State. It employs more than 1,800 people.