Birla Corp mulls cement plant in Ethiopia

In what would be its maiden overseas venture, Birla Corp plans to set up a cement plant in Ethiopia.

The MP Birla group company has recently formed a wholly-owned subsidiary, Birla Corp Cement Manufacturing Plc, in the sub-Saharan African country.

“We plan to go there for exploration of mainly limestone, for setting up a cement plant. We would also explore opportunities of setting up power plants there,” said a Birla Corp official, requesting anonymity.

Ethiopia is endowed with significant limestone deposits, a key raw material for cement making. Companies have started eyeing this economically poor country after the government started facilitating import of coal, necessary to run the plants.

Ethiopia currently imports cement as local demand far outstrips supply and acute power shortage keeps new investments away.
Birla Corp had, in fact, tried to enter the east African nation in 2010 by bidding for a contract for construction of a cement plant at Habesha. But it lost out to Chinese competitors.

Chinese mining companies have turned aggressive in lapping up limestone mining contracts in Ethiopia in recent years, firming up long-term off-take contracts.

Birla Corp’s move to venture outside India in search of raw material follows a ban on limestone mining at its Chanderia unit in Rajasthan since August last year. Effort to vacate an order putting a stay on the operations failed last month as the Jodhpur High Court cancelled all mining leases granted within 10 km of the Chittorgarh fort and also stopped all mining and blasting activities.

“Our Chanderia cement plant has been kept operational by sourcing clinker from other sources, besides the clinker procured from our Satna plant,” the Birla Corp official said, adding that this has increased the cost of operations.

The ban notwithstanding, the company expanded the Chanderia unit’s capacity by 1.2 million tonne (mt) in March and plans to commission a 0.7 mt grinding capacity addition at Durgapur this month. Once the expansion projects are over, its annual capacity will touch 9.3 mt. A coal washery is also likely to be operational at Satna by the end of December.