Chilanga Cement Plc Raises Concerns Over Increased Production Costs Amid Economic Pressures

Chilanga Cement Plc has voiced growing concerns over the rising cost of doing business, with the company highlighting challenges brought about by economic pressures and escalating production costs. According to the company’s Corporate Affairs and Communications Manager, Gift Danga, the cement manufacturer is grappling with significant financial strain due to increased fuel prices and extended periods of load shedding, which have dramatically impacted its operations.

Danga stated that the company is now spending four times more on electricity due to the prolonged hours of load shedding, which has disrupted production and increased reliance on alternative power sources. These power outages, coupled with the rising costs of fuel, have significantly contributed to higher production expenses, ultimately leading to an increase in the price of cement in the market. This development has had a cascading effect on the construction industry, where cement is a critical component for ongoing projects across Zambia.

Zambia, like many other countries, has been facing a series of economic challenges over the past year, which have adversely affected various sectors, including manufacturing. One of the most prominent issues has been the persistent load shedding, driven by power generation constraints. While Zambia’s electricity generation relies heavily on hydroelectric power, low water levels in reservoirs have worsened the energy deficit, forcing industries like Chilanga Cement to seek alternative, more expensive energy sources such as diesel-powered generators.

Danga revealed that the rising costs associated with generating power independently have eaten into the company’s profits and raised concerns about the long-term viability of such measures. He explained, “Chilanga Cement is now spending more than four times what it used to on electricity, with the prolonged load shedding hours being the main culprit behind these increased costs.” He added that despite efforts to mitigate the impact, the company has had to pass on some of these costs to consumers, which has contributed to the rise in cement prices across the country.

The construction sector, one of Zambia’s most vibrant industries, has not been immune to the consequences of these economic pressures. Cement is an essential material in construction, and the surge in prices has led to increased project costs, delays, and cancellations. Contractors and developers have expressed concern that the continued rise in cement prices may hinder the completion of key infrastructure projects, which are vital for national development.

Additionally, the rising cost of cement is likely to exacerbate the housing deficit in the country. According to recent statistics, Zambia faces a shortfall of affordable housing units, and the price hike in construction materials is expected to further widen this gap. The cost of housing and construction is expected to rise as developers adjust their budgets to accommodate the increased expenses of building materials, primarily cement.

In addition to the challenges posed by load shedding, Chilanga Cement has also been hit by the rising fuel prices. Over the past year, fuel pump prices in Zambia have steadily climbed, driven by external factors such as global oil price fluctuations and the depreciation of the Zambian Kwacha. The increase in fuel prices has had a direct impact on the company’s logistical and transportation costs, further inflating production expenses.

Danga pointed out that fuel is an integral component of the company’s supply chain, used not only for transportation of raw materials to the factory but also for distributing cement to various parts of the country. The sharp rise in fuel costs has pushed up operating expenses, affecting the overall cost structure of the company and contributing to the increase in cement prices.

With the rising production costs showing no signs of slowing down, Chilanga Cement has called on the government to take swift action in addressing the energy and fuel crises. Danga urged the authorities to prioritize investments in alternative energy sources to stabilize electricity supply and reduce the need for extended load shedding. He also recommended that the government consider offering incentives or subsidies to manufacturers to help cushion the effects of rising fuel and energy costs.

Additionally, industry players have called for a review of the country’s energy policies, particularly in terms of diversifying the energy mix to reduce reliance on hydroelectric power. Such measures, they argue, would help alleviate the challenges facing industries like cement manufacturing and ultimately lead to more stable prices in the market.

As Chilanga Cement Plc navigates these challenging times, the impact of rising production costs is being felt not only within the company but also throughout Zambia’s construction sector. The situation underscores the urgent need for both industry and government to work together in addressing the economic pressures that continue to threaten growth and development. Without intervention, the rising cost of doing business is likely to have far-reaching consequences on Zambia’s broader economic stability.