Fossil Mining, which has won the bid to buy Lafarge Zimbabwe, says it plans to keep the company on the stock exchange and recapitalise it when it completes the takeover of the country’s number two cement maker.
Holcim, Lafarge’s holding company, picked Fossil as its preferred bidder for Lafarge. Holcim announced its exit from Zimbabwe in January, as part of a global selloff from several other markets.
“Should Fossil takeover Lafarge, the planned strategy is to maintain the company as a listed business and also recapitalise the cement maker, leading to an increase in the cement output from the plant. Currently, 40% of Zimbabwe’s cement requirements are imported, an opportunity that Fossil wants to capitalise on by providing the market with readily available cement,” a spokesperson for Fossil said.
Zimbabwe consumes 1.4 million tonnes of cement each year, from under one million tonnes in 2017, according to PPC, the biggest cement producer. But producers say illegal cement imports are eating into their sales.
Fossil Mining is run by Obey Chimuka, an associate of businessman Kuda Tagwirei. It has no prior experience in manufacturing. But the company says it beat other bidders – which reportedly included Chinese cement giant Huaxin – because it went in with the backing of local banks and pension funds.
“Fossil’s offer is backed by support from local banks, pension funds and wealth managers. Fossil engaged local financial advisors, and commercial attorneys to act on its behalf on the bid as well as Cliff, Decker and Hofmeyer of South Africa to act as its transaction advisory team,” Fossil says.
Fossil’s contracting unit is one of five contractors working on the Beitbridge Highway, and is part of a consortium building the Mbudzi interchange in Harare.
Lafarge is currently on a US$25 million expansion programme meant to meet rising cement. Last April, Lafarge commissioned a new US$2.8m dry mortar plant, which increased output of dry mortar products – such as adhesives and agricultural lime – from just 7,000 tonnes per year to 100,000 tonnes annually, equal to national demand.
The company is close to commissioning a new Vertical Cement Mill plant, which will more than double Lafarge’s annual cement milling capacity to one million tonnes.
But Lafarge is currently facing a serious liquidity shortage after a roof collapse at one of its mills halted production between October and February.
Holcim has recently sold its businesses in Zambia and Malawi, part of its Ghana business, and its Brazil unit for US$1 billion. Holcim in May exited India after selling its business there for US$6.4 billion.