Central African Cement Company Limited (CAC) has signed a financing agreement with CBMI Sinoma worth US$480 million to finance the construction of a two million tonnes per annum cement grinding plant in Lusaka, the biggest ever in Zambia.
Speaking during the signing ceremony, ZCCM-IH chief executive officer Dr Pius Kasolo said the project exposes ZCCM-IH to the cyclical nature of the commodities market and diversifies their investment portfolio from the mining industry to reduce risk exposure.
In August, ZCCM-IH announced that it has signed a shareholders’ agreement with China Machinery Construction Group Ltd, also known as SinoConst, for the development of a cement plant.
The joint-venture project, called Central African Cement Ltd (CAC), initially saw ZCCM-IH holding 35 per cent of the shares in CAC, while SinoConst was to hold the remaining 65 per cent.
This followed President Edgar Lungu’s launching of a US $548 million cement plant project to be built in Ndola by the government and China’s SinoConst last year.
“It is gratifying to witness the signing of the financing agreement contract between CBMI Sinoma and Central African Cement Company Limited (CAC). As you know, this year, we signed the Engineering, Procurement and Construction (EPC) Contract in July with CBMI SINOMA. So, today’s event is a milestone in advancing the development of our cement plant project whose ground-breaking was done in July last year by President of the Republic of Zambia, Mr. Edgar Chagwa Lungu. The project construction is now expected to commence in April next year, subsequent to the underlying financier completing the fund mobilization process. This process is anticipated to take about 90 days. As ZCCM-IH, we are eager to get the project underway, and the execution of the financing agreement is a clear signal of the imminence of the project. We are very pleased to have made such progress on this cement plant, which will be the biggest in Zambia. As you may know, our portfolio is largely made up of copper mining and this exposes ZCCM-IH to the cyclical nature of the commodities market,” Dr Kasolo said.
Dr Kasolo announced that ZCCM-IH has also increased its shareholding in CAC from the current 35 per cent to 49 per cent in a bid to increase its dividends.
“As such, for us, this project is an addition in diversifying our investment portfolio to reduce this risk exposure. We believe that not only will it add value to our company, but it will contribute to industrialising Zambia. ZCCM-IH currently holds 35 per cent shareholding in CAC, and will increase this to 49 per cent, with the remainder to be held by SINOCONST. Allow me to express gratitude for the support we have received from the government, without which, this project would not have gone ahead.”
And CAC chairperson Willie Sweta said the project will also see the developing of the 5,000 tonnes per day (TPD) clinker lime, with 7.5 megawatts waste heat recovery.
“Chairman and your team, you are sincerely welcome! Your presence is indeed a demonstration of the importance and seriousness that CBMI has attached to this CAC project at hand, that involves the developing of the 5,000 tonnes per day (TPD) clinker lime, with 7.5 megawatts waste heat recovery (WHR); two million tonnes per annum (TPA) cement grinding plant; and 2X25MW captive thermal power plant project. The total cost of the project before adding interest and other financing cost is United States dollars 480 million (US $480m). May I also thank Dr Kasolo, the CEO of the ZCCM-IH and his management team, for their presence and tireless effort that they have employed to assist CAC to reach this stage of the project. Kindly accept my sincere appreciation,” said Sweta.
“The financing agreement we are executing this morning follows the Engineering Procurement and Construction (EPC) contract that was signed on July 30, 2018, between CAC and CBMI, and it is for a total sum of US $480 million to be procured by CBMI following the successful proposal that CBMI submitted to CAC pertaining to the provision of financing up to 85 per cent of the contract price of the EPC contract due on sellers credit basis (EPC+F) with the condition of the deferral of payment agreements by the CAC in accordance with the terms and conditions as set forth in the set financing agreement.”