October 12, 2016 / 8:22 AM / a year ago

Uganda's Hima Cement eyes higher market share with new plant

KAMPALA (Reuters) - Uganda’s No. 2 cement maker Hima, a unit of LafargeHolcim Ltd, plans to raise its market share and increase exports to neighbouring markets by doubling production capacity in early 2018, its chief executive said.

Daniel Pettersson, the CEO of Hima, said the firm planned to commission a new $40 million production plant by early 2018, pushing annual cement production to 1.9 million tonnes from the current one million.

Rapid property development and government projects to build bridges and roads are driving up demand for cement in the East African nation.

“We are in a growth environment,” Pettersson said.

Hima Cement is ranked behind Tororo Cement and the industry has two other smaller domestic producers.

It is also looking to build a new clinker production unit in the country’s northeast in a the drive to raise capacity. Clinker is used in the production of cement.

The national statistics office said total cement production in the country increased to 2.1 million tonnes in 2014, from 2 million tonnes the previous year.

Hima said the country’s cement consumption grew by 15 percent in 2015, up from 9 percent the previous year.

Uganda accounts for about 70 percent of the firm’s annual cement sales, followed by Rwanda which takes 20 percent, with rest shared between South Sudan and eastern Congo.

South Sudan is one of Uganda’s key export markets but the outbreak of violence in July has made trade routes unsafe and curbed shipments.

“There is obviously an element of political risk linked to this type of environment,” the chief executive said.

Lack of a large limestone deposit in Uganda also presented a longer-term challenge to the company. Limestone is used in production of cement.

“If you are taking a 20-year perspective, there is not enough limestone,” he said.

Editing by Duncan Miriri, editing by Louise Heavens

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