A year old Chinese glass factory, Ethiopia Hansom International, has had to suspend production due to a lack of demand, according to sources.
The factory established by CGC Group and the China-Africa Development Fund at a cost of 35 million dollars was inaugurated on May 17, 2009 in the presence of Prime Minister Meles Zenawi.
Sources from the Ministry of Trade and Industry and the factory said the operation, which is the biggest in the region, suspended production due to an excess of stock.
Tadesse Haile, industry sector state minister within the Ministry of Trade and Industry (MoTI), told Capital the government knows about problems, but that he had not heard about the production cessation.
He said the company’s production capacity is higher than the demand and the owners planned to export their product to neighbouring countries. “If they don’t have a market link with international customers, the stock increment is to be expected,” Tadesse explained. The minister added that the government will look for ways to help Hansom.
An official from the Chemical and Pharmaceutical Department at MoTI, who demanded anonymity, told Capital the company has written a letter to the Ministry of Finance and Economic Development, which was copied to MoTI, about the situation.
The official said the factory is unable to sell the products at an attractive price locally as it is using expensive imported materials, and it is also struggling to compete regionally with cheap glass imports from China and India. “The increased production cost due to an unexpected increase in the price of furnace fuel internationally is one of the factors the company has complained about,” added the official.
One reason for the lack of local demand is the variety of glass products demanded. According to experts, customers such as real estate developers are demanding coloured and value-added products, which the factory does not currently produce.
He pointed out the factory will not only meet the demand of the local housing construction industry, but will also introduce advanced production and management technologies to Ethiopia.
Ethiopia Hansom International’s annual production capacity is 42,000 metric tons of quality sheet glass. The factory covers 12,000 square metres, and has created 300 jobs.
The feasibility study indicated that Ethiopia is the country most suited to glass production in East Africa. This is because of the seven raw materials needed, four are available here.
CGC Group is an international company co-funded by Chinese organisations that works in the fields of petrochemicals, mineral exploitation, and civil engineering.
The China-Africa Development Fund is one of the eight measures announced by the Chinese president Hu Jintao at the Beijing Summit at the forum on China-Africa cooperation in November, 2006. Its mission is to promote and support Chinese enterprises to make direct investment in African countries.
The CAD-Fund opened its second representative office in Addis Ababa in March, following its outlet in Johannesburg, South Africa. The newly-opened office will help to facilitate Chinese investment activities in 10 countries: Burundi, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Seychelles, Somalia, Tanzania and Uganda.
In Ethiopia in the past three years, the fund invested in four projects, including the glass factory, a leather processing factory, a cement plant, and a four-star hotel.
Capital’s ongoing efforts to speak to the managers of the factory have been unsuccessful so far, although they have promised to answer questions next week.