Displaying items by tag: Nigeria
Staying on track in Nigeria
10 October 2012"We believe that Nigeria has arrived as a cement manufacturing country," said Joseph Makoju, Chairman of the Cement Manufacturing Association of Nigeria (CMAN), to mark yet another 'moment' when Nigeria's ability to produce cement has overtaken its demand.
One of Makoju's reasons for Nigeria's 'arrival' was the fact that the Nigerian government hasn't issued any import licenses since the start of 2012.
As Global Cement Weekly #46 noted in April 2012 this is strange given that domestic consumption is up to 18Mt/yr: a figure 4Mt below modest estimates of national capacity which start at 22Mt/yr. According to Global Cement monthly price reviews the cost per bag has risen by 20% since 2010 despite presidential orders to keep it down. However much cement Nigeria seems to produce the price still keeps on rising.
The prices aren't the only figures that are rising year-on-year. Dangote, Nigeria's leading-producer, reported an increase in operating profit of 14% to US$745m in 2011 from US$654m in 2010. Lafarge WAPCO, the country's second largest producer, reported an increased operating profit of 41.7% to US$74.1m from US$52.3m.
Prices continue to rise but this could be due to cartel-like behaviour. President Goodluck Jonathan seemed to suggest as much in 2011 when he ordered prices down. Then again Nigeria's poor transport infrastructure and distribution chains could be to blame for rising prices instead. CMAN has announced plans to promote the use of concrete road construction with the government and Dangote announced plans in August 2012 to widen its distribution by opening more 'mega-depots' and signing on new distributors.
It's unclear exactly how much cement the Nigerian market actually wants. Its per capita consumption is 110kg, compared to 280kg in South Africa and over 600kg in Egypt. This is way down the consumption/GDP curve compared to Europe and North America. Its population has reportedly risen by 30m from 2006 to 2012. This implies massive total demand and demand potential.
So - past massive transport infrastructure projects, improved distribution and possible price inflation - how does Nigeria keep momentum? Ironically, given Nigeria's protectionist stance against imports, one of the measures CMAN is exploring is how to export cement to other countries. Recent news reports about local producers in Namibia and South Africa fighting foreign imports suggest that other African countries are starting to 'arrive' too. Even building the roads may not be enough to keep Nigeria's cement express-train on track.
CMAN declares Nigeria self-sufficient in cement
08 October 2012Nigeria: Chairman of the Cement Manufacturing Association of Nigeria (CMAN), Joseph Makoju, has announced that Nigeria is producing more cement than it consumes, at a meeting held in Calabar, Cross River State.
Makoju said that the Nigerian cement industry was recording success at a time when the manufacturing sector as a whole in the country was shrinking. He attributed the slide in the price of cement to a surplus in the market, a feat he described as a first in the country.
"We believe that Nigeria has arrived as a cement manufacturing country. We are out to encourage local production against importation. The government has been very faithful as local production rose from 2Mt in 2002 to 13Mt in 2011 and so far this year to 17Mt," said Makoju. He added that for the first time in the country's history it had gone nine months without the government issuing licenses for cement imports. CMAN is now working out ways to export cement to other countries in the west African sub-region. Yet despite the surplus CMAN is still encouraging investors to build more cement plants.
Other issues raised at the meeting included the effect the poor state of Nigeria's roads has on the price of cement. Makoju estimated that 30% of the price comes from haulage fees which CMAN has no control over. CMAN has taken up the issue with the government and recommended the use of concrete road construction.
Dangote aims to grow market share in Nigeria
15 August 2012Nigeria: Dangote Cement has said that it is widening the distribution of its cement in Nigeria by opening more depots and signing on new distributors. It says it is doing this so that domestic consumers can reap the full benefit of the increased local production.
A statement from the company said that there have been growing concerns over the price of cement even with continuous efforts at increasing production. Dangote, which accounts for over 70% per cent of domestic production, has continued to invest in local production by expanding its production lines and establishing new plants. The statement added that the Dangote management believe that only a 'liberalised distribution system' can convert increased local production to cheaper cement.
Domestic production capacity in Nigeria is believed to have reached about 27Mt/yr , whilst demand hovers at between 17Mt/yr and 18Mt/yr.
Nigeria: The government of Lagos State has unveiled a new deal with Dangote Cement and Lafarge Cement WAPCO. The collaboration will help to ensure undisrupted supplies of cement products to construction firms that have been contracted to handle various infrastructure projects that are to be carried out by the state in the coming years.
Commissioner for Works and Infrastructure, Dr Obafemi Hamzat, revealed the details and explained that Governor Babatunde Fashola had engaged both Dangote and Lafarge Cement WAPCO to guarantee stable supplies. "We are looking into the use of concrete now that we have a lot of cement in the country. We have met with Dangote and Lafarge to see how they can assist us with our contractors."
Hamzat lamented the high cost of cement imports as one of the reasons responsible for the high cost of road construction and urged the Federal Government to restore railways so that they can be used as an alternative route.
Dangote talks up US$40bn LSE launch
19 June 2012Nigeria: Nigerian billionaire Aliko Dangote has announced that his cement company is aiming for a valuation of up to US$40bn on the London Stock Exchange (LSE) when it is floated in 2013. If realised, the company would be valued at several times the size of France's Lafarge.
Dangote's cement empire stretches from Senegal to South Africa, benefiting from a construction boom across one of the world's fastest growing continents. In a difficult global environment for share offerings, Dangote said he was not discouraged by the tumble in Facebook's shares since they listed in May 2012.
"Whereas the assets of Facebook were hype, we have real assets," said Dangote, setting out the market capitalisation he expected for his firm at the listing planned for late 2013. "It depends on the market, but it should be something like
US$35-40bn," said Dangote.
Despite Dangote's desire to present the company as larger than Lafarge, its revenue was in the order of 13 times lower than its French rival in 2011. Dangote highlighted, however, that the company's rapid expansion would make it considerably larger than it is now by the time of the listing, with new plants due to be completed in 13 other African countries by then. Alongside its expansion, he noted that Lafarge is in the midst of a cost-cutting programme in an effort to offset the impact of stagnation in its main markets and to cut its debt.
Obajana line 3 launched
12 June 2012Nigeria: The cement sub-sector of the Nigerian economy received a further boost on 11 June 2012 when President Goodluck Jonathan inaugurated the new 5.25Mt/yr Dangote Cement Obajana Plant Line 3. The plant launch is part of the nation's drive to 'free itself' from foreign cement imports.
With the commissioning of the new line, the production capacity of the Obajana Plant will be raised to 10.25Mt/yr. In 2015 a fourth line will be completed, giving a combined production capacity of 13.25Mt/yr. This would make it the largest cement plant in the global cement industry.
The line 3 launch follows the commissioning of Dangote's 6Mt/yr Ibese plant. The company aims to lead the way in the Nigerian cement market and have sufficient material left over for export.
With the continuous expansion of the existing plants in the country and its operations across 14 other African countries, Dangote Cement will remain one of the largest producers in Africa and the world. The company said that the inauguration marked a milestone not only for the company but also for Nigeria, pointing out that the Obajana project will make Dangote Cement the 'power house of cement in Africa.'
Group President Alhaji Aliko Dangote has previously said that Dangote Cement would soon start to convert its import terminals for export terminals in readiness for exportation of its excess capacity to neighbouring countries.
Dangote 6Mt Calabar plant ready by July 2012
30 May 2012Nigeria: Dangote Cement's new 6Mt/yr Calabar plant, in the Cross-River State, will be ready by the end of July 2012. Chairman Aliko Dangote made the announcement at the company's annual general meeting in Lagos.
According to Dangote the Calabar plant is almost completed, with a strategic location intended to supply both local consumers and those in Central African states like Cameroon and Gabon. Together with the planned expansion of the Ibese plant by 3Mt/yr, the June 2011 commissioning of the Obajana Plant and other operations in 14 other African countries, Dangote Cement aims to reach a capacity of 60Mt/yr by 2015. Of this total, 55% is intended to local consumption and 45% is intended for export to other sub-Saharan African countries.
Nigeria: The Cement Manufacturers Association of Nigeria (CMAN) has disclosed that the sector is poised to receive US$11.4bn in investment as national output reaches at least 45Mt/yr by 2015.
The managing director of Lafarge Cement WAPCO, Joe Hodson, said at a CMAN forum in Lagos that the consumption of cement in Nigeria was currently inconsistent with the existing economic realities in the country and would inevitably rise. He stressed that the per capita consumption of cement in Nigeria was a fraction of that in Egypt providing a lot of potential for development. Hudson noted that, having grown local cement output in Nigeria from less than 10Mt/yr in 2008 to about 28Mt/yr in 2012, the sector had made significant effort to save scarce foreign exchange and helped to create many jobs. However Hudson called on the Federal Government to address a lack of affordable power, lack of transportation infrastructure and dearth of skilled manpower.
The Federal Government responded by stating that it was now set to release the final result of the concession exercise it conducted for three major road construction projects in the country, which are to be handed over to the private sector. These projects included the Second Niger Bridge linking Delta State and Anambra State, the Bridge over River Niger at Nupeku in Niger State and the expansion and upgrade of the Apakun-Murtala Muhammed International Airport Road in Lagos.
Dangote Cement posts US$200m profit for Q1
16 May 2012Nigeria: Dangote Cement has reported a pre-tax profit of US$200m for the first quarter of 2012, an increase of 8.9% compared to the US$173m recorded for the same period in 2011.
Analysis of the Nigerian producer's unaudited financial results indicated that its operating profits rose by 13.7% to US$200m reflecting the higher proportion of locally manufactured cement compared to US$176m in 2011. Gross profit for the group was US$231m for the quarter compared to US$182m in 2011. The group achieved strong growth in revenue and profits in the first quarter, with revenues rising from US$345m to US$405m, an increase of 17.6%.
Too much cement in Nigeria?
25 April 2012Nigeria: This week has seen a major development in the Nigerian cement industry, with a call from domestic manufacturers to ban cement imports, three months ahead of the government's schedule for the ban. The call has been presented in some quarters as proof that the country, long blighted by high cement imports, has achieved President Goodluck Jonathan's bold target of making Nigeria a net exporter of cement before 2013. In the face of steadily diminishing oil revenues the government would like Nigeria to be known as the regional cement exporter, but what else might happen?
According to the Cement Manufacturers' Association of Nigeria (CMAN), the country's total cement capacity now stands at 22.5Mt/yr. Domestic consumption is estimated at 18.5Mt/yr, translating into a required capacity utilisation rate of 82%. It is bizarre, therefore, that cement producers feel the need to call for an import ban. Perhaps:
a) The producers know that they can't compete with the low cost of imports from outside Nigeria,
b) The producers want to recoup their plant investment costs as quickly as possible,
c) The producers know that they can't export if the country continues to import.
With notoriously poor transport links within Nigeria, option c may be a small factor. If road and rail links are poor, transport costs increase and exports become less desirable for both the supplier and the end-user. What is more likely however, is a combination of a and b. Producers need to recoup their investments but can't if China and India can undercut them from thousands of miles away. If the desire to recoup investments goes unchecked when the import ban comes in, there is a high potential for cartel-like behaviour to surface again in the country.
One does not have to look back far to the last major incident of apparent cement market cartelisation in Nigeria. In mid-2011 President Jonathan had to step in and personally call for a 25% price reduction. His target was hit within three months, but since then prices have slowly started to rise again, even with Dangote's Ibese 6Mt/yr plant coming online just three months ago! With four producers committed to setting up a 3Mt/yr plant each by 2015 in exchange for 2011 import licences, the supply of cement in Nigeria will continue to rise, making the temptation to collaborate even stronger.