Displaying items by tag: Dangote Cement
2014 in cement
17 December 2014For the last issue of Global Cement Weekly before the Christmas and New Year break we're following our tradition of reviewing some of the major industry news stories of the year. Remember this is just one view of the year's events. If you think we've missed anything important let us know via LinkedIn, Twitter or This email address is being protected from spambots. You need JavaScript enabled to view it..
Lafarge and Holcim merger
The year has been dominated by one story: the merger of the two largest European-based cement producers, Lafarge and Holcim. The implications are massive. At a stroke the new company can dispose of less profitable units, clear debts and benefit from new mega-economies of scale. As Europe emerges from the recession, LafargeHolcim will be ready. Worldwide it is a rebuff to the consolidating Chinese cement producers who are poised, if they wish, to emerge from China and dominate international markets. The process has appeared surprisingly smooth so far with considerable forward planning. This week the European Commission has approved the proposed merger.
Lafarge CEO Bruno Lafont described the deal as 'a merger of equals'. What he didn't say is that the merger will leave LafargeHolcim with no equal. However, one question remains. Once the merger is complete will the new company be profitable?
China heads abroad
State planners in Hebei Province revealed plans to move excess cement production capacity outside of China in their usual sparse style. The quiet tone of the announcement failed to match its intentions to move 30Mt of capacity abroad by 2023. It is the next step after becoming the world's biggest cement producer, capturing swathes of the equipment market and consolidating its many local producers. How Chinese cement producers will fare in the wider global market remains to be seen. Yet while its economy remains strong the gobbling up of European utilities by Chinese companies suggests that, if all else fails, money talks.
Coal for India
If you can't fire-up your kiln you can't make clinker. With Indian cement producers reporting falling profits in 2014 the squabbling over coal allocation in the country summed up some of the input cost and infrastructure problems facing the country's cement industry. The coal blocks are due to be auctioned off from January 2015. Meanwhile analysts predict that Indian cement demand is unlikely to grow until 2016.
Sub-Saharan scares and skirmishes
The creation of Lafarge Africa means that three producers are now in a skirmish in Sub-Saharan Africa: Lafarge, Dangote and PPC. All three companies are present in multiple countries and expanding fast. This week, for example, PPC announced proposed merger plans with AfriSam. Given the low cement consumption per capita in this region the benefits of getting in early are immense. Unfortunately, there are many speed bumps along this road to development. One is the on-going Ebola epidemic. Left unchecked it could cause untold economic damage.
ASEAN set to open up
The Association of Southeast Asian Nations (ASEAN) is set to drop import tariffs in 2015 as it establishes a common market. Already in preparation cement producers have started to change their strategies, thinking regionally instead of nationally. Holcim Philippines, for example, announced in February 2014 that it was considering delaying building a new plant as it analysed the situation. The region, including high-growth countries like Indonesia and Thailand, could see its cement industry go into overdrive. However, the benefits may not be uniform as countries like the Philippines may lose out.
The US, fracking and falling oil prices
Of the western economies recovering from the 2007 recession, the US cement industry has rebounded the fastest, due in part to fracking which has brought down the cost of energy. The Brent Crude price hit a low of US$60 per barrel this week and this has consequences for everybody in the cement industry as fuel procurement strategies adapt.
For starters, cement producers gain a fuel bill cut as the cost of fuels fall. Producers in Egypt who have been frenziedly converting kilns from gas to coal may suddenly find their margins improve. Low energy prices also take away financial motivation to co-process alternative fuels in cement kilns. Finally, what of the giant infrastructure projects in Organisation of the Petroleum Exporting Countries (OPEC) like Saudi Arabia? Take away the petrodollars propping up these builds and cement demand may evaporate.
For more a more detailed look at trends in the cement industry check out the Global Cement Top 100 Report.
Global Cement Weekly will return on 7 January 2015. Enjoy the festive break!
Tanzania cement output set to rise to 6Mt/yr
27 November 2014Tanzania: Tanzania expects to double its cement production to 6Mt/yr in the next few years as new plants are commissioned to meet demand from the construction sector, according to comments made in parliament by Deputy Minister for Industry and Trade, Janet Mbene. Tanzania's cement output rose by 18.9% in 2013 to slightly above 3Mt due to higher demand. Mbene said the rise in output would mean Tanzania would produce a surplus to be exported.
Cement producers currently operating in the country include Tanzania Portland Cement - a subsidiary of Heidelberg Cement, Tanga Cement – a subsidiary of Afrisam Mauritius Investment Holdings and Mbeya Cement – a subsidiary of Lafarge. Lake Cement and Lee Cement Factory are the two newest entrants in Tanzania's cement manufacturing and marketing sector with their core products under brand names of Nyati cement and Kilwa cement respectively. Dangote is also building a 3Mt/yr cement plant in Mtwara Region.
Dangote Cement launches 32.5 grade cement
11 November 2014Nigeria: Dangote Cement has introduced 32.5 grade cement, intended only for plastering, into the Nigerian market. Dangote's managing director, Devakumar V G Edwin, said that Dangote has ventured into the production of 32.5 grade of the product because the regulatory agency, the Standards Organisation of Nigeria (SON), has clearly spelt out the different uses of the various grades of cement which must be complied with by the cement manufacturing companies.
Edwin said that Dangote had resisted requests from its customers to produce 32.5 grade cement and sell at a cheaper price because it didn't want the product to be misapplied. "Now the SON has stepped in. SON has taken controlling measures and they have re-emphasised that anybody producing the 32.5 grade cement must design their bags in a specific manner and the bags should carry clearly that this cement is meant for plastering only and not for any other application," said Edwin. "With these regulations in place, we have the confidence that we can now go into the production of 32.5 for plastering only."
According to Edwin, about 80% of cement produced by Dangote will still be 42.5R grade, which will remain Dangote's flagship product because of its 'superiority' and varied uses.
Dangote Cement seeks licence for 75MW power plant in Tanzania
05 November 2014Tanzania: Dangote Cement has applied for a licence to build a 75MW coal-fired plant in Tanzania that would power a US$500m cement plant now under construction, Tanzania's energy watchdog has reported.
"Dangote Industries applied for a 75MW electricity generation licence to build, own and operate a coal-based captive power plant adjacent to its cement plant," the state-run Energy and Water Utilities Regulatory Authority (EWURA) said. All the generated electricity will be used to run the plant and associated utilities.
"Any interruption in power supply or unstable voltage/frequency causes extensive damage to the refractory and also to the rotary kiln parts. Refractory failures cause production shutdowns varying from 15 to 30 days and unscheduled use of costly imported refractory bricks," the regulator added.
The Dangote cement plant in southern Tanzania is scheduled to be commissioned in the second half of 2015. With a capacity of 3Mt/yr it will supply Tanzania's domestic market and export to landlocked nations in the region.
Nigeria’s Dangote to invest in Tanzania’s coal mine
24 October 2014Tanzania: The chairman and president of Dangote Group, Alhaji Aliko Dangote, is set to invest in developing the Mbinga Coal Mine in west Tanzania to power the Mtwara cement plant. The sale of excess coal will be used to finance cement exports from Tanzania.
According to reports, Dangote Cement plans to take advantage of the surge in local demand for cement amidst increased construction activity in the region using its 3Mt/yr capacity Mtwara cement plant when it is completed. Dangote Cement expects cement demand in Tanzania to surge in the near future due to the country's improving economic performance.
It won't surprise anyone to know that cement sales have fallen in the west African countries that are suffering from the on-going Ebola outbreak. However the scale may yet be instructive for this and other crises that may affect the cement industry in the future. The local data that follows mostly comes from a report by the World Bank published in early October 2014 looking at short and medium term economic impacts, as well as Global Cement research conducted towards the Global Cement Directory 2015.
All three of the principal countries involved – Liberia, Sierra Leone and Guinea – have low gross domestic products (GDP). They do not have cement kilns but they do have grinding plants and cement import infrastructure run by both local and international firms. They also lack readily accessible limestone deposits. In the short term (in 2014) a health crisis is expected to hit manufacturing through transportation and market disruptions stemming from both direct health implications and behavioural responses.
Liberia's cement sales fell by 60% in the third quarter of 2014, a drop the World Bank attributed to causes other than the rainy season. Quarterly cement sales more than tripled in 2013 from around 10,000t to over 25,000t marking the commissioning of a new mill at the Liberia Cement Corporation (HeidelbergCement) grinding plant. Dangote also has an import terminal in the country and is building its own grinding plant. The drop in cement sales since June 2014 has nearly undone all this production growth.
Neighbouring Sierra Leone has seen a steady fall in weekly cement sales since June 2014. Similar to Liberia, it has a HeidelbergCement-run grinding plant with Dangote planning expansion soon. Guinea, which had about a sixth of the notified cases of Ebola in mid-October 2014, has seen its cement imports fall by 50% in the year so far compared to 2013.
Before readers become too depressed though, it should be considered that Nigeria has been declared Ebola free by the World Health Organisation after six weeks with no new cases. It may have been relatively expensive to contain Ebola through public health measures but the alternatives for the regional economies could have been worse. More cases are expected to arrive in Nigeria but the country has shown that Ebola can be stopped.
Immediate cement operators threatened by the epidemic include HeidelbergCement with its five grinding plants in west Africa. How an uncontrolled or high case Ebola epidemic affects Dangote's expansion plans in its 'backyard' will also be hard to predict. West Africa is the obvious place for the Nigerian cement giant to build itself up before it tackles other markets in sub-Saharan Africa that have stronger competition like South Africa's PPC. Take this market stability away and Dangote faces a direct economic threat to its growth beyond the humanitarian horror of the epidemic. What also has implications for the cement industry in Senegal, the second biggest cement producer in the region, where there are two integrated plants.
The World Bank report concludes that Liberia, Sierra Leone and Guinea could lose US$129m in GDP in a low case scenario or up to US$815m in a high case scenario. To give this some context, Sierra Leone's GDP was US$2.7bn in 2013. In a high case situation it could lose US$439m or an amount equivalent to 16% of its GDP in 2013. If and when the fight against Ebola turns, this still leaves a severe economic recession for the survivors in what is already one of the poorest countries in Africa. Cement, one of the indicators of a country's economic and industrial development, is intricately bound up in this.
Zambian minister sued by Dangote over corruption allegations
14 October 2014Zambia: Dangote Cement's Zambian subsidiary has sued the country's labour minister for libel and slander after he accused an executive of Dangote Cement Zambia of attempting to bribe him in September 2014. Dangote said that that the minister had created an impression that the company was exploiting Zambian workers and enticing government officials with bribes.
"The plaintiff has been brought into public scandal and its reputation has been injured," said Dangote. Local reports suggest that the dispute is the latest in a string of incidents in which Zambia's government has resorted to unorthodox tactics against foreign investors that it believes are circumventing labour laws.
Dangote Cement to pay compensation for murder
10 October 2014Nigeria: Following the intervention of the National Human Rights Commission (NHRC), the management of Dangote Cement plant, Gboko Local Government Area, Benue State, has agreed to pay compensation to the families of seven dead and numerous injured victims who were attacked by army officers attached to the cement plant on 18 March 2014, following a dispute between one youth and a guard.
Chairman of the Investigations Panel, Tony Ojukwu, said that the investigations had concluded that the incident infringed on the rights of the youths. He confirmed that the management of the plant wrote a letter of satisfaction to the commission accepting to pay the compensation as agreed. Ojukwu disclosed that the victims 'have not given their consent that the amount given to them as compensation be revealed.'
Zambian minister accuses Dangote Cement of bribery
19 September 2014Zambia: A Zambian government minister, Fackson Shamenda, has accused a Dangote Industries Zambia (DIZ) executive of attempting to bribe him, according to local media. DIZ has described the allegations as 'malicious misinformation.' DIZ has 400 workers building a US$400m cement plant in Zambia. The staff count should rise to 2000 when production starts in November 2014.
"For the record, DIZ categorically deny any claims of corruption and bribery and reserve our rights on this matter," said DIZ in a statement. Shamenda did not specify what was offered by the executive and said that he had rejected it because he had critical labour issues to sort out with DIZ and did not want to be compromised.
"He told me that it was a tradition in their culture to give someone a token of appreciation. Maybe his idea was that I turn a blind eye to what is happening at Dangote," said Shamenda, according to local media reports.
Shamenda also said that DIZ should offer workers at the company permanent employment and allow them to join unions. "There is no union and according to the reports I have received, those who have attempted to join unions have had their contracts terminated.
I have asked the labour commissioner to investigate and tell me all the categories of employees, because the reports we have received indicate there are no permanent employees."
DIZ said in its statement that Shamenda had made four surprise visits to the cement plant in the last four months, prompting the company to complain about his conduct as it felt that the minister was deliberately looking for wrongdoing. "DIZ was beginning to feel harassed and unwelcome in Zambia and immediately brought this to the attention of the Ministry of Commerce, Trade and Industry," said DIZ in a statement.
Dubai’s ICD buys US$300m stake in Nigeria’s Dangote Cement
09 September 2014Nigeria/Dubai: The Investment Corp of Dubai (ICD) has bought a 1.4% stake in Nigeria's Dangote Cement for US$300m. Dangote Cement spokesman, Carl Franklin, confirmed the sale, but provided no further details.