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Share offer in new finishing plant

1st Jun 2008 , Ed

An Ethiopian/Italian consortium is trying to raise 100 million Birr (€ 6.7m) through the sale of shares in a proposed finishing tannery in Ethiopia. They say the facility, Crystal Tannery, will open “shortly”.

Crystal is unusual in Ethiopia in that other tanneries buy in raw hides and skins and most have not progressed much past semi-processing – wet blue, and sometimes crust. However, the imposition of a 15% duty on the export of semi-processed hides and skins - and what they say has been the subsequent reduction of exports of wet blue and pickled hides and skins - will give a finishing tannery a ready source of material, at protected prices. The consortium behind the project is headed by Solomon Getu, a former president of the Ethiopian Leather Industries Association (ELIA), owner of Hepsom Foreign Trade Auxiliary, and a 20-year veteran of the tanning sector in Ethiopia. He said the consortium was selling shares to prospective investors starting from April 1, 2008. Crystal Tannery was founded in April by seven investors from the leather sector – five Ethiopians and two Italians. Machinery that will be installed in the factory has been sourced from Italy and is expected to be imported duty free. Currently in the country, more than 20 tanneries produce only semi finished leathers, which Crystal can use as an input. The surcharge on semi-processed - wet blue and pickled - hides and skins announced late last year, has decreased the export volume, “making the input for Crystal available”, he said. “The pre-feasibility study for establishing Crystal has taken more than seven months. The study was undertaken by Hepsom Foreign Trade Auxiliary at a cost of 300 thousand birr. “The study projected that out of the three phases Crystal applies for its implementation, the first phase costing 30 million birr, will be commenced after seven months and start producing finished leather for shoes. “At this time, more than 1500 factories are producing shoes in the country. These factories have a shortage of finished leather inputs to produce at full capacity. As a result of the shortage these factories are importing leather from Italy. The establishment of a company like Crystal will resolve this shortage and save foreign currency. “When the remaining two phases costing 70 million birr launch, Crystal will produce finished leather for garments and gloves. “Our study is based on the experience of other countries such as India and Brazil, which have been successful in the industry for the last ten years. In order to make strong investments, factories in these countries are based on investing by shares,” explained Solomon. Crystal has three locations proposed by the government for its setting. According to the management staff, they are assessing the appropriate location for their investment. Currently, Ethiopia has less than one percent share in the international leather market, valued at 92 billion Birr. But it possesses large livestock populations with 40.8 million heads of cattle, 25 million heads of sheep and lambs and 23 million goats. - [Crystal Tannery s.c., Hashim Ibrahim, Main Promoter.




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