Habesha Cement S.C., has taken one of its first concrete steps towards starting operations by floating an international competitive bid for the purchase of 28 million cement bags.
During its latest shareholders’ meeting in February 2015, the company declared October 2016 the month for trial production; and preparations are underway for that.
The bid for the bags will close in April, and Habesha expects to receive its first shipment of bags by July, Mesfin Abadi, founding CEO explained, in time for trial rounds.
“Four months after that,“ he continued, “we’ll start production at full capacity.”
When it was first established in September 2008 with 30 founding members, Habesha had grander plans. It shareholder base has since risen astronomically to 16,300.
Buoyed by its success in raising over 150 million Br in equity from the public, when initial public offerings (IPOs) were closed in 2010, it had promised its shareholders a return on investment of 122pc a share in two years. This was when the company had projected to become operational.
The forecast for the domestic construction industry at that time, projected for was an annual expansion of 25pc. Promoters of Habesha Cement kept saying that the need for an additional cement plant could not be overemphasized. Their shareholders’ faith was bolstered by a bubble period, where the price of cement hit the roof at above 500 Br per quintal.
Eight years down the line, however, not a single quintal had been manufactured and, consequently, not a dime of dividend paid. Several other shareholders Fortune talked to, expressed discontent with the progress of the company.
While delays are not unique to cement producers, companies such as Derba and National were able to reach their goals in three years or under. Habesha is late by six years.
Mesfin had reportedly blamed the shareholders for not raising the 30pc required to get the 1.5 billion Br loan it was counting on from the Development Bank of Ethiopia (DBE).
Things began to look up only in late 2013, when the factory was able to secure a 50 million dollar loan from the Preferential Trade Area (PTA) Bank, the financial arm of the Common Market for Eastern & Southern Africa (COMESA) that was supported by the DBE.
It then sold 46pc of its shares to two South African companies: Pretoria Portland Cement Company (PPC) and Industrial Development Corporation (IDC).
The company’s latest General Assembly held at the plant’s site in the town of Holeta, 35Km west of Addis Abeba, ended with these two shareholders more empowered than ever.
Habesha is also in the process of preparing bids for the procurement of explosives with which it will commence its mining operations.
It will source its raw materials from the 112ha of land in West Shoa, Oromia Region, for which it had a acquired a 60 year mining licence in May, 2014. A few sites in Meta Robe, Ejere and Ada’a Bergag weredas will provide the plant with the limestone, gypsum, clay and sandstone it needs to produce 1.4 million tonnes of cement annually.
The factory’s recent activity also includes the tender floated for the rent of a hundred trucks for the transport of raw materials. Bid offers have been received, and the technical evaluation is underway.
“As we are a public company,” Mesfin said, “we will do all our procurements in a transparent manner.”
He was, however, unwilling to tell Fortune which companies, or even how many, had placed their bid offers.
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