Displaying items by tag: Dangote Cement

Nigeria: German vertical roller mill (VRM) producer Loesche GmbH has been awarded a contract for five new VRMs from China's Sinoma International Engineering, which is building a two kiln extension to the existing Dangote Cement Ibese plant. Loesche previously delivered equipment for the first and second lines at the same plant.

The five VRMs to be supplied are two 450t/hr Loesche Mill Type LM69.9 for raw material and three 310t/hr cement LM 63.3+3C cement mills. As with previous work at Ibese, the high moisture of the material of up to 20%, the sticky nature of the raw material and the low grindability of the raw material represent special challenges for the project.

In addition to the mills and the mill motors, Loesche will deliver metal detectors and hopper discharge feeders. The supply of the equipment will be split between Loesche, which is supplying key parts, and a Chinese-manufactured portion arranged by Sinoma International under supervision of Loesche. Delivery is scheduled at the end of 2013.

Nigeria: The people of Benue State have protested against the continued closure of Dangote Cement's Gboko plant. The plant has been temporary shut down as a result of an alleged cement 'glut,' which cement producers say is being caused by massive cement imports.

A statement from Dangote Group said that the chairman, Gboko Local Government, Nahan Zinda decried the continued closure of the Dangote plant, saying that his local government is losing vast sums of revenue and that the closure was having knock-on effects in other areas of the economy, including trading stalls outside the factory. Zinda called on the federal government to expedite action by doing all it takes for the factory to reopen.

"Since the company was closed, cement prices have risen," said Zinda. "Our people have been jobless and suffering. It may also lead to anti-social behaviours. Our women, who have petty businesses outside the gate, are also complaining bitterly," he said.

Grace John, who spoke on behalf of women traders in Gboko, said that social and commercial activities have virtually come to a halt and that life was becoming difficult. She appealed for the quick reopening of the plant in the interest of women traders.

Benue State Commissioner of Finance Conrad Werbga said, "Importation impacts negatively on the economy. It causes lots of ripples. It comes with attendant negative consequences for our nation. The federal government must do all it could to reverse the trend."

All parties will be keen to keep disruption caused by the plant closure to a minimum. On 17 August 2011, a dispute between a trader and cement plant worker rapidly escalated to a full-scale riot, with 20 deaths and widespread looting in Gboko.

Nigeria's Minister of Trade and Investment, Olusegun Aganga brought together warring parties from Dangote and Ibeto Cement this week to discuss their very public spat about the state of the country's cement industry.

Claims that Nigeria is facing a 'glut' of cement have been building since the Cement Manufacturing Association of Nigeria (CMAN) declared that Nigeria was 'self-sufficient' in cement in late 2012. So when leading cement importer Ibeto Cement questioned this narrative, leading cement producers Dangote and Lafarge hit back. Aganga then announced a review of the country's industry.

Despite Nigeria's potential to consume cement, something is stopping it. Yet, as Ibeto Cement rightly asked, if Nigeria is producing too much cement why isn't the price falling?

Hard facts about the Nigerian cement industry are elusive. This is what we know. Nigeria's population is apparently 170m. Its cement industry has the capacity to produce 28Mt/yr (Global Cement Directory 2013). Its production level was 18.5Mt/yr in 2012 according to CMAN. However figures compiled by the United States Geological Survey placed production much lower at 11.6Mt in 2011. Consumption is believed to be 17-20Mt/yr. In 2011 it was 17Mt. Ibete Cement, the sole importer into the country, is allowed to import up to 1.5Mt/yr.

Nigeria's main producers include Dangote (19Mt/yr capacity, 70% of the market), Lafarge WAPCO (4.6Mt/yr, 17%), Unicem (2.5Mt/yr, 9%) and Ashaka Cement (2Mt/yr, 7%).

Hype about Nigeria's potential as a cement-producing nation hinges upon its low per capita consumption (110kg) compared to some of its African neighbours and indicators of expected growth such as a housing deficit of 16 million homes.

CMAN boss Joseph Makoju addressed this head-on, blaming the high cost of haulage and energy. He said that the energy cost accounts for over 35% of the production cost and that the price of low pour fuel oil (LPFO) had risen by over 300% from US$0.16/l in 2009 to US$0.69/l in November 2012. It should be pointed out that Makoju is also the special adviser to the president of Dangote Group, Aliko Dangote. Unsurprisingly he has advised the Federal Government to impose higher taxes on imported cement to discourage imports.

The production boom of recent years has been threatened by a weakening increase in demand. The gap between production and lower consumption estimates is around 1.5Mt. Dangote and Lafarge WAPCO's combined unsold stock at the end of 2012 was also just below 1.5Mt. Both figures are suspiciously close to the amount Ibeto is allowed to import annually. As usual, the easiest target is the cement importer. Dangote's political clout as a key Nigerian company, large-scale employer and all round African success-story will doubtless help its argument.

Yet if imports are really more competitive than Nigeria's domestic product how can the country possibly hope to export cement? Also this week Liberia announced it has relaxed its tariffs on cement. As luck would have it Dangote is building a new cement plant in the country. Sounds ideal for tricky import negotiations.

Liberia: President Ellen Johnson Sirleaf of Liberia has suspended tariffs on cement. The government cited that the move was in the interest of national reconstruction and development.

Under Executive Order No. 46, titled 'Re-Instituting the Suspension of the Protective Tariff on Cement,' the Liberian government has repealed a US$2 protective tariff per 50kg bag of Portland cement imposed under the Revenue Code of Liberia, tariff No. 25.23. The mandate added that the need still exists to encourage local industries to supply cement to the general public at reasonable prices.

Liberia currently has one cement grinding plant, the Liberia Cement Corporation, a subsidiary of HeidelbergCement which employs 63 people. In 2012 Nigerian cement producer Dangote announced plants to build a US$35m plant in the country.

Nigeria: Nigeria's Minister of Trade and Investment, Olusegun Aganga has announced that he will conduct an independent assessment of the country's cement industry to make it more competitive. The move follows a dispute between importer Ibeto Cement Company and leading producer Dangote Cement.

According to Aganga, at a meeting for stakeholders from the cement industry held on 7 January 2013 in Abuja, by the end of the entire review the Federal Government will draw up with a new strategy for the industry with three goals. The first is to bring down the price of cement in the country, the second is increase consumption of cement and the third is work on policies to open up the export market.

Aganga defended Nigeria's 10-year implementation of the Backward Integration Policy (BIP). According to Aganga the BIP has resulted in about US$6bn of investment in the sector, with a growth from 2Mt/yr to 28Mt/yr, and it has saved the country foreign exchange of about US$1.4bn/yr. The Nigerian cement industry provides direct and indirect employment for about two million people.

"We have achieved everything we set for ourselves 10 years ago when the BIP was introduced; we want to take the next step as part of our strategy on the way forward," said Aganga.

Nigeria: Cement manufacturers have hit back at Ibeto Cement Company over its resolve to continue to import cement into Nigeria, despite the capacity of local manufacturers to meet demand.

A statement by Dangote Cement's head of corporate communications Anthony Chiejina said that Dangote and Lafarge WAPCO Cement were worried about the glut created by, according to him, importers.

Cement manufacturers, under the aegis of Cement Manufacturers Association of Nigeria (CMAN), have also said that unless the federal government fulfils its promise of halting importation the cement sub-sector of the economy might go into serious decline, with inventories building up at plants and reduced production. Cement producers are strongly lobbying for the development of concrete roads in Nigeria.

CMAN chairman, Joseph Makoju, said that the domestic cement production level of 18.5Mt/yr was being threatened. "The target of 18.5Mt/yr represents just 65% of the present total installed capacity of the industry," he explained. "Between 2002 and May 2012 a total of US$6bn in new investment was made by local manufacturers, while the ongoing expansion and new plants are estimated to have cost another US$3.5bn. Due to continuous rapid growth the nation no longer requires cement imports as local demand is being effectively met and even surpassed."

The reported oversupply in the the Nigerian market has already forced Dangote to halt production in its 4Mt/yr Gboko plant in Benue State and has prompted Lafarge WAPCO to reduce production. According to the plant manager at Lafarge's Ewekoro cement plant, Lanre Opakunle, 50% of Lafarge's Shagamu plant had been shut down. The Ewekoro plant has reportedly been running on a skeletal staff to prevent it from being closed completely. The manufacturers stress that, if the cement glut continues, it may force 'hundreds of thousands' of Nigerians out of jobs.

Nigeria: Two major Nigerian cement producers, Dangote and Lafarge WAPCO, have ended the 2012 calendar year with 1.47Mt of unsold cement and clinker. Figures obtained from the two manufacturers show that Dangote had unsold stock of 950,000t while Lafarge had 520,000t.

"At Lafarge, the situation is so bad. We have 300,000t of unsold cement and 220,000t of clinker in our silos across our three plants (Sagamu, Ewekoro I and Ewekoro II). Before these pileups, we used to load 10 trucks per day but now that there are no sales and loaded trucks have nowhere to go. As a result we are losing 800t/day," said Lanre Opakunle, plant manager at Lafarge Ewekoro II.

Commenting on why the price of cement remained high in Nigeria despite the glut, Opakunle said that manufacturers are coping with rising energy inputs and high haulage costs. Fuel costs account for 31% of production cost in Nigeria compared to less than 10% in China.

In early December 2012 Dangote Cement announced that it was going to shut its 4Mt/yr Dangote Cement plant in Gboko, Benue State due to a glut of cement in the market.

Nigeria: Ibeto Group, the owners of Ibeto Cement Company Limited, has stated that the cement the company imports into Nigeria is not responsible for any market surplus. In a statement issued by Ibeto Cement the company proposed that the first sign of a glut in the market of a product is a 'drastic' reduction in price. There has been no drop in the price of cement in Nigeria.

The group, in a statement signed by its executive director of Strategy and Public Affairs, Dr Ben Aghazu, argued that since it imports 1.5Mt/yr or less than 5% of the annual cement supply to the Nigerian market it cannot be held responsible for any surplus on the market. Ibeto Cement became the sole importer of cement into the country following an out of court settlement following the closure of its bagging plant in Bundu Ama in 2005. Ibteo Cement was subsequently allowed to import 1.5Mt/yr bulk cement from October 2007 until September 2017.

Aghazu further accused Dangote Group of trying to influence the Federal Government to 'invalidate' Ibteo's import quota by raising the taxes on imported cement or by banning clinker imports outright.

"Unfortunately, in our country the antitrust laws probably don't exist or aren't enforced when it pertains to the Dangote Group, which holds a monopolistic stranglehold on several significant and strategic sectors of the economy," said Aghazu.

Nigeria: The 4Mt/yr Dangote Cement plant in Gboko, Benue State, is due to shut because of glut of cement in the market, according to an announcement from the company.

The move was necessary because of the increase in local production of cement and also the continued import of subsidised cement into the country, according to the group's head of corporate communication Anthony Chiejina. He said in a statement that the production figures for the first 11 months of 2012 show that local supply now exceeds demand.

The total supply of cement to the Nigerian market at the end of November 2012 was a record 11.4% higher than by the same point in 2011. Chiejina said it was disheartening to note that despite the glut in the local cement market, cement imports, though reduced, have continued, thus calling to question the rigorous implementation of the backward integration policy, which was introduced to encourage local production.

Explaining why the Gboko plant should be shut, Chiejina said, "With the dumping of subsidised imported cement in the south-eastern market there is no way that our Gboko Cement plant can survive. The inventory of finished products is beginning to build up at our plants. Don't forget that projects from our investments of about US$1.8bn in additional capacity are already on stream, with lines three and four at Ibese and line four at Obajana, coming on stream early this year."

Chiejina said that other Nigerian manufacturers are also experiencing the same problem of low sales and high inventory. He advised that the government should vigorously implement the provisions of the cement backward integration policy, which he said is needed to protect local manufacturers from dumping. Chiejina said that he wants the government to consider the total ban on cement imports, in view of the fact that local production now surpasses demand for cement and in the interim also increase duty and levy on imported cement to the maximum permissible level.

The outgoing chief executive of PPC (Portland Pretoria Cement) officer, Paul Stuiver, summed up the dilemma facing cement producers on the east coast of Africa. Building near the coast leaves you vulnerable to imports.

In a recent interview with the South African business weekly, 'Financial Mail', Stuiver said that imports are not a threat to African expansion, provided that a facility is not built within 200km of a port. Exactly the same issue was raised by Yves De Moor in his column in the November 2012 issue of Global Cement Magazine.

Countries along Africa's east coast receive imports, but Stuiver said that Africa's high logistics costs mean the prices increase steeply as the cement is transported inland. He commented that the markets in Mozambique and KwaZulu Natal in South Africa were especially vulnerable and that most imports to South Africa come through Durban. Unsurprisingly both of PPC's big recent investments have been in landlocked countries, Zimbabwe and Ethiopia respectively. In July 2012 it also tried to invest in CINAT, the Democratic Republic of Congo's state-owned cement producer.

The import issue to South Africa reignited last week when the South African National Regulator for Compulsory Specifications (NRCS) confirmed that it had confiscated 'sub-standard' cement imported from Vietnam. As we covered in August 2012 in this column this follows a row in July 2012 about whether cement from Pakistan's Lucky Cement was complying with South African standards.

Although standards still lead the argument, more honesty has emerged with the use of the word 'dumping' in the complaints. Stuiver explained that "...the price of cement from Pakistan, India and Vietnam is low because electricity, fuel and transport rates are subsidised." Whilst PPC can report that its revenue has risen by 9% to US$837m for the first nine months of 2012, complaints against foreign imports seem overly protective. In 2009 PPC confirmed the existence of a cartel in the country. PPC has even gone to the Advertising Standards Authority to stop imports with elephants on their bags!

With reports that Nigerian producer Dangote is building a new US$389m plant in South Africa, thoughts turn to what will happen once South Africa becomes 'self-sufficient' in cement, like Nigeria which has proudly announced this recently. Giant infrastructure projects are one way to use all that excess cement and this is what Lafarge WAPCO has been asking the Nigerian government to do recently, in a road building drive. Better transport links in South Africa would wreck Stuiver's maxim about not building near a port.

Two solutions from this week's news might appeal to the industry on the south and east coasts of Africa. The first is to use inventive export barriers just like the Bureau of Indian Standards have imposed to slow down exports from Pakistan. The second is to persuade importers to do what a North Korean ship reportedly did with its consignment of cement this week off the coast of Somalia: dump it in the sea.