Tuesday, May 21, 2024
BusinessMessebo signs USD 70 mln investment project with Singaporean company

Messebo signs USD 70 mln investment project with Singaporean company

  • To establish gypsum, paint factories

One of the subsidiary companies of the Endowment Fund for the Rehabilitation of Tigray (EFFORT), Messebo Cement PLC, on Thursday signed a major investment agreement with a Singaporean conglomerate, KUSTO Group, and Fairfax Africa Fund, a US company, to establish a consortium company called MKF Building Materials Production PLC that will be engaged in the production of construction materials in Ethiopia with an investment cost of USD 70 million USD.

The agreement was signed by Azeb Mesfin, CEO of EFFORT, Hyder Gulam, general counsel, KUSTO Group, and Zemedeneh Negatu, global chairman of Fairfax Africa Fund, in Addis Ababa.

According to the agreement, the newly-established consortium company MKF, which is 60 percent owned by Messebo and 40 percent by KUSOT and Fairfax, would build roof tiles factory. A press release issued by the companies during the signing ceremony states, “MKF’s world class products such as roofing materials will be used in residential housing as well as commercial real estate and industrial buildings and will be sold in the domestic and regional African export markets. The products will utilize the latest technology in corrosion prevention, thermal conductivity and sound reduction and will have useful lives of more than 50 years.”      

Azeb Mesfin said that Messebo is more than just a cement factory. “It is a broader investment. The project is designed for local and export market.” Azeb told The Reporter that the roof tiles factory will be built near Mekelle town, Abiadi locality where the resource is located. She said construction of the factory will be completed in a year time.  

Kibreab Tewelde, general manager of Messebo Cement, said that the planned factory will produce high-quality roofing materials. According to Kibreab, the factory will have an annual production capacity of 3.6 million sq.m roof tiles. “Kusto has international expertise and technology in building materials and Fairfax has extensive emerging markets experience. Hence, these factors combined with Messebo’s expertise in quality manufacturing, sales and distribution will differentiate MKF and enhance its success factor,” Kibreab said. 

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KUSTO is a leading building materials producing company in Vietnam, Israel and Kazakhstan. The company has an annual turnover of three billion dollars and employs 50,000 people.

“Ethiopia is a very exciting and dynamic economy with significant growth opportunities especially in the infrastructure sector such as housing,” Kanat Kopbaye, board member of Kusto Construction Materials Division at Kusto Group, said. “We’re confident MKF will be successful and deliver the results expected by the country and all other stakeholders.”

Zemedeneh said investments in infrastructure are rapidly transforming the economic landscapes across Africa, especially in Ethiopia, one of the fastest growing economies in the world. “That’s why we decided to invest in MKF together with Messebo and Kusto. MKF will introduce global best-practices in manufacturing and distribution and positively enhance the country’s economic transformation by creating hundreds of jobs, generating exports and saving hard currency through quality import substitutions.”

Zemedeneh said that Messebo’s team worked very hard with KUSTO and Fairfax for almost two years to hammer out the deal. “We initially looked at many other companies and we ultimately selected Messebo to work with as they are market leaders.” According to Zemedeneh MKF will produce high quality roofing materials to be supplied to the local market and exported to East African region.

Messebo Cement has been supplying special cement products for Gilgel Gibe III and the Grand Ethiopian Renaissance Dam (GERD) construction projects. The company was established in 1997 with a paid up capital of 240 million birr. The factory annually produces two million tons of cement and has 2,000 permanent employees.    

EFFORT is planning to venture into other major investments with KUSTO and Fairfax Africa Fund. Messebo Cement, KUSTO and Fairfax are already discussing the establishment of a second consortium company that will build a gypsum manufacturing plant.

Kibreab told The Reporter that Messebo has already started the discussion with the KUSTO Group. “They have already sent the technical and physical specifications. We have a huge deposit around Mekelle which can serve for about 100 years. The gypsum is of high quality. We have already sent the samples to KUSTO Group and they have evaluated it. We are waiting for KUSTO to send some experts to inspect the quality of the reserve. We will proceed then after.”

“The agreements should be signed soon. We are waiting for the technical evaluations to be completed. Within the next two or three month we should finalise the gypsum company pre-establishment process,” Gulam said.

The other major investment in the pipeline is a paint factory. EFFORT is negotiating with a leading paint factory based in Tel Aviv, Israel, called Tambour. The international paint company, which is fully owned by KUSTO Group, is the biggest in Israel and amongst the 50 largest paint companies in the world.

“Tambour is one the biggest paint companies in the world that produces high end products. We are wishing to have it in Ethiopia. They are market leaders in Israel. It might take some time but for sure we will have it here,” she said.

All three partners – Messebo, Kusto and Fairfax – will jointly invest and own the Ethiopian paint company.

There are 14 companies operating under the umbrella company, EFFORT, which have 18,000 permanent employees.

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