Derba Cement, one of MIDROC Ethiopia’s subsidiaries, is planning to expand its cement plant at a cost of300 million USD. The expansion project is expected to take from 18 – 24 months.

Derba Cement’s CEO, Haile Assegide, explained Derba was preparing to build a second plant in Chancho City. Upon completion, the plant would have the capacity of producing 25 million quintals of cement in a year, he furthered.

The company’s first plant was built at a cost of 351 million USD and has a capacity of producing 25 million quintals cement per annum. However, the company is producing 5 million quintals less than its capacity, Haile explained.

“We do not produce for six hours every day because of power interruption. But since Gilgel Gibe III started generation, we believe that the problem will be resolved,” the CEO furthered.

Currently Derba is having talks with the Chinese contractors that built its first plant, China National Building Materials Company.

For its first Derba Cement project, Ethiopian-born Saudi billionaire, Mohammed Al Amoudi, invested his own 100 million USD. The remaining 251 million USD was covered by a loan secured from Development Bank of Ethiopia, International Financial Corp (IFC), the World Bank Group investment arm, the African Development Bank (AfDB) and the European Investment Bank.

According to the CEO, Derba is negotiating with the same institutions for the finance of the second plant.

Commenting on Derba’s decision to build another plant when there is an excess production capacity, Haile said Derba would be cost cefficient if it used the existing infrastructur. “We have to be cost leaders. If we are cost leaders then we will be price leaders,” he added.

The CEO also noted situations would change if Ethiopia implemented the Second Growth and Transformation Plan (GTP II). He speculated the demand for cement will increase the market situation will change for the better.

Source: The Reporter