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15 May, 2007
North Holding Investment Inc (Ethiopia Branch), an American investment firm, is planning to construct a close to five billion Birr cement factory in the Dejen Zone of the Amhara Regional State.
The company received its license from the Amhara Regional Investment Commission almost nine months ago and will construct a factory with an annual production capacity of 7.8 million tonnes of cement.
Of the 451 investments made in the Amhara Regional State during the same period, this is by far the largest taking up the lion’s share of the 9.4 billion Br combined investment.
Once the factory becomes fully operational in 2009, Northern Holding Investment Inc will have the largest factory in the country, both in investment capital and production capacity. There are currently 18 existing and registered cement factories in Ethiopia.
Dejen Cement Factory, another large investment in the same area, is a subsidiary company of the MIDROC Group owned by Derba MIDROC Cement PLC. The Factory is expected to begin production next year and has an annual production capacity of 134,377tn of cement.
The existing cement factories, Mugher Cement Enterprise, Messobo Cement Factory and National Cement SC, formerly known as Dire Dawa Cement Factory, produce a combined 1.7 million tonnes of cement a year. This falls far short of the annual close to 4.7 million tonne demand in the country by the five major cement consumer groups, according to a survey done by the Ministry of Trade and Industry (MoTI).
“Cement is a good business to get into, particularly with the shortages that are prevalent in Addis Abeba and Ethiopia,” said a sector expert. “Granted it takes some time for the factories to become fully operational, but that is a short-term obstacle that will be far outweighed by the end benefits.”
With a boom in the construction sector, Addis Abeba saw a severe shortage and increase in the prices of cement last year, at which time the government intervened by permitting private companies to import and sell the commodity on the market to curb the price hikes.
Despte the intervention, the shortages have yet to be met fully. According to a survey conducted by Mugher Cement Enterprise, based on 1992-2000 historical growth rates demand for cement, the demand gap of cement in 2006/2007 is over 3.5 million tonnes.
By FEKADU BESHAH - FORTUNE STAFF WRITTER