Sino-Zim ropes in new in­vestor for brick, tile plant

Chronicle (Zimbabwe) - - Business Chronicle - Love­more Zi­gara

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.

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