Hima Cement has just opened a new plant in Tororo, increasing their capacity. Eronie Kamukama caught up with Mr Nicolas George, the country chief executive officer of Hima Cement Limited.
Hima Cement is now in Tororo District. What does this new investment mean for the market?
We invested in a new plant in Tororo to follow the market growth. To do this, we had to increase our capacity because the Kasese plant was sold out – we have now increased our capacity to 1.7 million metric tonnes.
The choice of Tororo was simple because Kasese is in the far South West and we wanted to have a presence nationwide while remaining close to our customers.
Tororo is also near our raw material sources like pozzolana from Kapchorwa which we need for production. With a wider footprint, we are able to supply all Ugandan customers with better service.
Tororo is home to two other cement producers. Why set up in Tororo over other regions?
The presence of other cement producers in Tororo means more competition which is good for the market and consumers.
Will the new production have any impact on the cement prices in Uganda?
The country was faced with rising cement prices for about one month. But it is over. It was an accumulation of different parameters, all arriving at the wrong time. But with the new capacities in the market, the prices have already come down and we shall see how it goes in the coming months.
You are having challenges with raw material royalties. Has it been resolved?
This has not been resolved. We had some promises from the highest authorities that the increase in royalties would be reversed. But it has never been enforced. The taxes favour importers who are only grinding cement in the country and not those producing clinker locally. Clinker production is the real value addition when it comes to the cement production process and it should be protected.
You talked about Uganda having an oversupply of capacity. But we have so many projects coming up including the Standard Gauge Railway and Oil pipeline. Won’t these utilise the cement?
It is true we have many projects happening. But when you look at the actual cement consumption of these mega projects, it represents less than 15 per cent of the total demand in Uganda.
Majority of the consumption is from locals who are building homes and businesses. The many government projects coming in will not change the dynamics in the market.
You have just stepped into your new role as CEO at Hima Cement. What is your verdict about the current cement industry and the outlook?
We are confident the Uganda market will continue being dynamic and experience significant growth. We shall not have a crisis on demand.
Cement prices in Uganda still remain relatively high compared to Kenya and Tanzania due to many factors.
First, Uganda has a relative scarcity of some raw materials entering in the production process of cement. This forces most of the producers to rely on costly imports.
Secondly, Uganda is a land locked country where cement grinders need to transport most raw materials over 1,200 kilometres to reach their plants. In addition, the roads remain congested and the border crossing has some challenges.