Cement prices slashed by 21%

The Competition and Consumer Protection Commission – CCPC has ordered the slashing of cement prices from the current average prices of K140 per 50kg bag to K110 per 50kg bag, a reduction by 21%.

According to a statement made available to the Zambian Business Times – ZBT by CCPC Senior Public Relations Officer Namukolo Kasumpa, the CCPC Board has ordered publicly listed Lafarge Zambia and privately held Dangote Cement and Mpande Limestone (Commonly known as Sinoma) to revert the cement market prices to pre-cartel prices.

“The CCPC Board has ordered Larfage Zambia Plc, Mpande Limestone and Dangote Cement to revert to the pre-cartel prices ranging between US$4.5 – U$5 for a period of upto 1 year effective [31 March 2021] date of receipt of the board decision”, stated Kasumpa

A quick conversion of the announced upper bound US dollar reference price of US$5 means that the market prices of cement are expected to be K110 at an average exchange rate of K22 per 1US$. This effectively means that cement market prices have been slashed from the current average prices of K140 to K110 per 50kg bag, a reduction of 21%.

The bureaucrats at CCPC seems to have this time around done their homework by using the very explanation by the cement companies who have previously justified the price increases on the depreciation of the Kwacha. The top cement producers have for all the previous two upward adjustment prices sited having a US dollar denominated cost structure as the main reason behind the price hikes.

The Zambian Business Times – ZBT had extensively followed through customer complaints and received whistle blower information via ZBT Facebook inbox and official email address editor@zambianbusinesstimes.com which was followed through with a series of articles and engagement with the regulator CCPC, cement industry experts and other stakeholders that has finally led to this price cut.

CCPC further stated that the decision to fine Lafarge Zambia Plc and Mpande Limestone Limited was made during the 49th Board of Commissioners Meeting for the Adjudication of Cases held in Lusaka on 30th March 2021.

Namukolo stated that after an exhaustive investigation by the Commission initiated in January 2020, following the Commission’s observations of a sustained increment of cement prices from an average of K55 to K100 per 50Kg bag between July 2019 and January 2020. The continuous price increment of cement by the parties led the Commission to suspect that there was possible collusion and an agreement to fix the prices of cement.

She said that the investigation which lasted for over one (1) year revealed that the parties shared price adjustment proposals seeking approval for price changes before the implementation date and in some cases before they were approved by their respective management. The exchange of commercially sensitive information on future prices and rebates demonstrated that there was a ‘meeting of minds’ among the Respondents to pursue an agreed objective.

The CCPC investigation established that company representatives from Mpande Limestone Limited, Dangote Cement Zambia Limited and Lafarge Zambia Plc held discussions and meetings which resulted in the development of a pricing philosophy to stop cement price reductions. The investigations also established that the Cement Companies had agreed on a flat rebate of ZMW3 sometime in December 2019.

The Board of CCPC determined that the sharing or exchange of commercially sensitive information relating to future prices and rebates by Mpande Limestone Limited, Dangote Cement Zambia Limited and Lafarge Zambia Plc amounted to an agreement. The Board of Commissioners further determined that this agreement was anti-competitive as it was used to fix the price of cement and share markets contrary to Section 9(1) (a) and (b) of the Act respectively.

The statement stated that CCPC Board notes that infrastructure development is the backbone of social- economic development and one of the Government’s key priority areas in the Seventh National Development Plan. The construction industry is very important for Zambia’s economic growth, infrastructural development and employment generation and the cement industry plays a vital part of this infrastructure development. The fixing of cement prices by the three Companies and setting of trade conditions therefore undermined a competitive market and was detrimental to consumers.

While the Board of Commissioners takes cognisance of the role Mpande Limestone Limited, Dangote Cement Zambia Limited and Lafarge Zambia Plc, play in the economy in general and their contribution to employment creation, their conduct had the serious effect of undermining infrastructure development both private and public especially with Government’s continued thrust on infrastructure development projects from roads, schools, clinics and development of district centres among others.

Based on these facts, the Board decided to fine Lafarge Zambia Plc and Mpande Limestone Limited the maximum fine of 10% of their annual turnovers for the two (2) years of 2019 and 2020 for price fixing and market sharing. The Board noted that Dangote Cement Zambia Limited was granted leniency as they were the only Leniency applicant and assisted with investigations.

Efforts to get comments from cement producers on what actions they intend to take and whether the cut in cement prices will be effected immediately are still underway by the time of publishing this article. See other articles done by ZBT on the cement industry Zambia Cement industry dysfunctional

See other articles by ZBT on the cement industry Cement companies accused of collusion., CCPC mute over cement price increase, Gypsum accounts for 5% in cement prices

The Competition and Consumer Protection Commission -

Dr. Beene is new Chamber of Mines President

Newly appointed Zambia Chamber of Mines – ZCM president Dr. Godwin Beene has said Zambia must regard capital flows into less endowed and even into more operationally challenging jurisdictions as lost investment.

According to information made available to the Zambian Business Times – ZBT, Dr. Beene said as long as tax measures such as the non-deductibility of mineral royalty persist, even at 50 per cent deductibility as suggested by some, Zambian mining will remain uncompetitive and unable to afford the cost of capital.

The incoming President said that the Chamber of Mines will continue to play its role in highlighting to Government and stakeholders impediments to growth in the sector, alerting the Ministry of Mines of the emerging opportunities and trends in the industry and fostering transparency under the Extractive Industry Transparency Initiative (EITI) umbrella.

“At an appropriate time, we hope that a national mining indaba with government could be held as the time for us to take the high road and gain acceleration is now,” he said.

Dr. Beene said his immediate priority will be being close engagement with all stakeholders. He said this engagement will aim at ensuring the mining sector becomes competitive again and attracts new investors while motivating expansion by existing investors who have boldly weathered local and international storms since 2000.

The Chamber of Mines President pointed to the perfect storm of Copper demand growing fundamentals driven by North American, Chinese and European governments’ resolve to stimulate their economies by ramping up green energy generation and rolling out supporting infrastructure that will accelerate the speed of uptake of electric vehicles.

“We need to maximize on this opportunity to change the fortunes of the industry from those of the last fifteen years that have seen production fluctuate below 1 million tons per annum,” he said.

Dr. Beene is taking over from Goodwell Mateyo, Company Secretary of Mopani Copper Mines who had successfully served the organization for two years. He is currently First Quantum Minerals Government Relations Specialist, a position he took on 5th March 2021, after the Council of the ZCM elected him.

He served as Permanent Secretary in the Ministry of Mines from 2009 to 2011. This period saw improved relations with new and existing investors and significant inflows of investment in the sector, which resulted in countrywide geological surveys and mineral exploration, including for oil and gas.

Consequently, groundbreaking of Kalumbila Mine, Lubambe Mine, the resumption of operations of Luanshya Copper Mines and development of the NFCA’s South Orebody took place.

In the same period, development of Maamba Coal Power Plant and the recommissioning of Munali (Mabiza) Nickel Mine followed.

With a heightened level of interest in the sector, the Zambian chapter of the EITI was launched in 2009.

Dr. Beene obtained an undergraduate degree in Chemical Engineering at University of Wales, University College Swansea in the United Kingdom in 1981 and joined Nchanga Tailings Leach plant.

In 1984, he won a Beit Trust scholarship and returned to his alma mater where in 1988 he was awarded a PhD in Chemical Engineering. He went on to hold several senior turnaround roles in the industry at Luanshya, Chingola and Kitwe.

He is credited as one of the influencers of change that saw birth of the modern Engineering Institution of Zambia and its Engineering Registration Board, having served as Secretary and President of the Professional Body.

Mateyo, the outgoing President has since congratulated Dr. Beene and echoed the unanimous confidence of the Chamber of Mines Council in his leadership as the industry comes to a most critical fork in the road of its development.

Newly appointed Zambia Chamber of Mines -

ZCCM-IH urged to seek ways to re-open Chambishi Metals

The Association of Mine Suppliers and Contractors (AMSC) has called on Government and ZCCM IH to quickly sort out the issues surrounding Chambishi Metals Plc to ensure that it resumes operations and avoid further asset deterioration.

In January 2020, Chambishi Metals Plc was placed under care and maintenance, sending 229 workers onto the streets.

Speaking in an interview with Zambian Business Times- ZBT on 23 March 2021, association president Augustine Mubanga said it was not right to put a processing plant on care and maintenance for over a year when there were enough materials in the country to be processed for both copper and cobalt.

He said Government should instruct the investor to reopen the plant or handover the plant to ZCCM-IH to ensure that the plant keeps operating.

Mubanga said at the current copper prices, it was expected that companies would be increasing production in an effort to take advantage of the rising copper prices on the London metal exchange.

“The issue of Chambishi metals needs to be sorted out as soon as possible. That is a processing plant. You cannot put a processing plant on care and maintenance when there is enough material around the country that can be channeled to the company to process both copper and Cobalt.

“Our appeal to government is that they instruct the investor to reopen the plant, if the investor doesn’t want to, it will be good for him to hand over the plant to ZCCM-IH or government to ensure that the plant is kept busy for the benefit of the country,” he said.

Mubanga said keeping a plant on care and maintenance for over a year may prove to be expensive when they want to reopen the plant either at once or in a phased manner because there would be need for more capital injection to make it active.

Chambishi Metals Plc was involved in the mining, refining and tolling of cobalt and copper in Chililabombwe District of the Copperbelt Province where ENRC Capital owns a 90 per cent stake, leaving the remaining 10 per cent shareholding with ZCCM-IH.

The Association of Mine Suppliers and Contractors