Lovemore Zigara, Midlands Correspondent
CEMENT manufacturer Sino Zimbabwe Cement Company (SZCC) has been forced to rope in a new investor to kick start the construction of its $50 million brick and tile plant after its shareholders failed to avail funds for the project.
SZCC is a joint venture between the Industrial Development Corporation (IDC) and the Chinese government through China Building Materials Corporation (CBMC).
SZCC had been mandated to oversee the brick and tile plant whose groundbreaking ceremony was done last year when the Chinese government through its parastatals, China National Materials Group Corporation (Sinoma) and CBMC committed to fund the project.
However, the slowdown of the Chinese economy coupled with the global financial crisis has resulted in some joint venture projects, which the Asian giant had pledged to undertake being stalled.
China recorded a pronounced deceleration in growth last year, affirming that a multiyear slowdown biting the world’s second-largest economy harder and shows little sign of abating.
The growth rate decelerated to 6,9 percent for 2015 the weakest in 25 years.
Mr Wang Yong, SZCC managing director told Business Chronicle that the new deal with the new investor is expected to be finalised before the end of the month to pave way for the construction of the brick and tile plant.
He said: “We had projected that our Chinese shareholders would inject funds for the (brick and tile) project but the conditions in China could not give room for funds to be injected into the project. So the board gave us the greenlight to look for a partner to come on board and fund the project and we’ve already identified a Chinese investor with a company registered in Mauritius who is interested in the project.”
“We’ve a board meeting soon and if they give us the greenlight, then the final agreement with the new investor, which I cannot disclose at the moment because of a non disclosure agreement will be finalised at the end of this month and construction of the project will begin,” he said.
Mr Wang said should the deal sail through the shareholding structure of the brick and tile plant is expected to be diluted as the new investor comes on board.
Currently, the shareholding arrangement for the brick and tile plant has Sinoma with a 50 percent controlling stake while CBMC has 20 percent while the balance is controlled by IDC on behalf of the Zimbabwean government.
Mr Wang said the new investor is likely to take the controlling stake of the project.
“Subject to finalisation of the transaction they’re likely to take at least 50 percent of the stake in the new plant.
“We’ve spoken to the Minister of Industry and Commerce (Mike Bimha) about the deal and he has given it the greenlight for such an arrangement since it does not infringe on the indigenisation and empowerment laws since this is a non resource driven project,” explained the SZCC boss.
The brick and tile project should have kicked off early this year after Sinoma had committed to injecting $20 million under the first phase of the project of a three phased project in which production is expected to peak 100 million of bricks and tiles per year.
Completion had been earmarked for the end of this year.
Five hundred people are expected to be employed during the construction stage.
The plant will rely on quarry shell and coal ash for raw materials which are by-products of SZCC operations and is targeting to export the bricks, some of which are used to line blast furnaces into the region especially South Africa.