Displaying items by tag: Nigeria

Nigeria: Dangote Group has described online reports that it would halve the price of its 50kg bags of cement as ‘fake news.’ Anthony Chiejine, Spokesperson for Dangote Group, was responding to apparently unfounded reports that prices would tumble on 1 October 2023.

Earlier, Bahir Ahmad, a media aide to former Nigerian President Muhammadu Buhari, saying on X (formerly Twitter) “The Dangote Group has denied the trending reports that it has reduced the price of cement.”

The online rumour is thought to have gained traction after Dangote’s rival BUA Group chair Abdul Samad Rabiu disclosed that he had discussed a substantial potential price reduction with current President Bola Ahmed Tinubu earlier in September 2023.

The prospect of lower cement prices in Nigeria is often reported, but prices remain stubbornly high. On 28 September 2023, the regional monarch of Idjerhe Kingdom, King Udurhie I, called on the new national President Bola Ahmed Tinbu to reopen the mothballed Madewell Cement Factory in Idjerhe, and five others like it throughout Nigeria, in an effort to increase supply and introduce competition to a market dominated by two or three major players.

King Udurhie toured the Madewell facility with regional chiefs, stating “It is 15 years ago that this project was brought down by cabals in the cement industry. As a King of this land, I see pain and I believe that, with the coming in of President Tinubu, a man who is business-oriented, he knows the importance of the cement sector to the Nigerian economy. The cement industry is too large for one man or one company to deal in, no individual can do this.”

Nigeria: The Cement Producers Association of Nigeria (CPAN) has warned that the federal government’s plan to introduce concrete roads will nearly double the price of cement. It also called on the administration to ‘permanently address’ perennially high cement prices in the country by encouraging greater participation in the sector.

CPAN, in a statement jointly signed by its National Chair, Prince David Iweta and National Secretary Chief Reagan Ufomba, commended the government’s stance on converting the country to concrete-based roads, but suggested greater emphasis on road designs that allow both concrete and asphalt pavement to run concurrently and provide ample time for a smooth transition that allows contractors and producers time to adjust.

The statement read “While we commend the Honourable Minister’s position on concrete-made roads, we warn of the dire consequences if the supply end is not properly addressed. In fact, it would amount to dereliction of duty not to intervene. And the time is now. To do otherwise is to continue in a worsening pipe dream that prices would suddenly drop for this essential input that will continue to drain the purse of Nigerians, render them homeless, encourage chaos between demand and supply, and worsen the infrastructure deficit it sets out to cure, and lead to an unprecedented price hike.”

Nigeria: Cross-industry body Manufacturers Association of Nigeria (MAN) recorded a 30% year-on-year drop in all-Nigeria cement sales during the first half of 2023. MAN attributed the decline to the government’s replacement of the naira with a new central bank digital currency. The Punch newspaper has reported that this ‘wiped out’ some cash-based businesses, including cement retailers. Point of sale charges also increased costs along the supply chain. The association said that the impacts of the policy led manufacturers in some sectors to halt their operations.

Nigeria: Dangote Cement plans to raise its alternative fuel (AF) substitution rate across its Nigerian operations to 25%. The Punch newspaper has reported that the producer consumed 34,800t of AF during the first half of 2023.

Obajana cement plant head of sustainability Eseosa Ighile said “We are working towards installing AF feeding systems in all our operation lines by 2024.”

Dangote Cement felt compelled to issue a statement clarifying its prices at the end of August 2023. In the release it stated what its ex-factory price was in Nigeria and added that transport costs and the location of a delivery could add additional expense. It made the declaration in response to alleged “misinformation” on social media channels that the company had been selling its cement more cheaply in the neighbouring country of Benin. A subsequent investigation by the This Day newspaper reported that Dangote Cement does not officially export cement to Benin and that the average price in the country was actually slightly higher than the end prices Dangote Cement provided. Competitor BUA Cement wasted no time though in saying at its annual general meeting that it would ‘crash the price of cement.’

All of this may sound familiar because a similar argument broke out in early 2021. At that time prices were rising following the outbreak of Covid-19, although other factors were at play. Then as now, Dangote Cement, the largest domestic producer, defended itself by publishing its prices and BUA Cement made another showy claim saying that it had no plans to raise the ex-factory price of its cement at the present time or in the future, “…barring any material, unforeseen circumstances.” The government also became involved with the Senate of Nigeria discussing the matter in relation to potential legislation at the time. Part of the problem here has been that Dangote Cement is the biggest producer and it has gradually started exporting cement from Nigeria in recent years and, regardless of any effects to the domestic market, it leaves it exposed to the kind of unsubstantiated scuttlebutt it has faced recently. Back in 2021 it briefly stopped exporting cement for a while before resuming it again in May 2021.

Graph 1: Half-year sales revenue from selected large cement producers in Nigeria. Source: Company reports.

Graph 1 shows how some of the large cement producers in Nigeria did in the first half of 2023. Dangote Cement is the market leader by a considerable margin and the figures here do not even include its sales elsewhere in Sub-Saharan Africa. Despite its market dominance its sales revenue has fallen so far in 2023 and the company blamed election uncertainty, a “cash crunch”, negative currency exchange issues and the weather. That said though it did manage to increase its earnings through initiatives such as using alternative fuels, making efficiencies at its plants and utilised compressed natural gas in its truck fleet.

BUA Cement and Lafarge Africa provided less descriptive context in their release. Both BUA Cement’s revenue and profit after tax rose year-on-year but Lafarge Africa’s profit after tax fell. This may have been due to a rise in fixed production costs such as staffing, by-products costs and electricity, although depreciation was also an issue.

For all of BUA Cement’s talk of “crashing the cement price” it is preparing to commission two new 3Mt/yr production lines at its Obu and Sokoto plants respectively in the first quarter of 2024. Given everything else that is going on in the Nigerian economy, such as inflation, and the large size of the country it seems unlikely to lower the price although it might slow down the rate by which the price continues to rise. In its 2022 annual report BUA Cement’s managing director Yusuf Haliru Binji said that the new production lines would enable it to potentially increase its exports. This is the logical next step for a local sector outgrowing its domestic bounds and this is exactly what Dangote Cement has done. Yet, as the recent price debacle has shown, the price of cement matters to Nigerians. If the price keeps going up all of the local producers may end up facing negative attention whether warranted or not.

Nigeria: Dangote Cement has publicly confirmed the price of cement from its plants. It made the announcement in response to allegations that it has been selling its products at “significantly” lower prices in neighbouring countries including Benin, according to the Daily Trust newspaper. It also detailed how much transportation costs and the location of a delivery could affect the end price. Arvind Pathak, the Group Managing Director of Dangote Cement, added that the company’s ex-factory price could be different from the end retail price.

Nigeria: Lafarge Africa has installed a new bag filter at its 3.9Mt/yr Ewekoro cement plant in Ogun State. The filter cost US$8.51m. Lafarge Africa says that the equipment has successfully reduced the plant’s dust emissions to below 50mg/Nm³. The company said that it has made ‘significant adjustments’ to its production activities, besides introducing air quality measurement systems across a 10km radius of the plant.

Lafarge Africa’s head of health, safety and environment Rachael Ezembakwe said “Care for the environment and for our host communities is built into all aspects of our operations within the country. Our social impact is focused on the areas of the most need: education, empowerment, health and safety, and shelter/infrastructure.”

Nigeria: BUA Cement says that it expects to inaugurate its upcoming Okpella and Sokoto cement plants in early 2024. The Punch newspaper has reported that chief financial officer Jacques Piekarski said the plants will have a combined capacity of 6Mt/yr, and will raise BUA Cement’s Nigerian cement capacity by 54% to 17Mt/yr from 2024.

Nigeria: Lafarge Africa's sales were US$257m during the first half of 2023, up by 5.9% year-on-year from US$242m during the first half of 2022. Costs rose and the company's profit after tax fell by 5.2%.

Lafarge Africa said "Our strategic and cost management initiatives have contributed to improved results, despite the challenges. We remain steadfast in our commitment to driving innovation and accelerating green growth in line with our sustainability ambitions and targets." The company added "The Nigerian infrastructure and construction sector is expected to continue to grow despite inflationary pressure on purchasing power. As a result, we maintain our positive outlook, with market recovery expected for the second half of the year. We will continue to maximise volume opportunities across our markets and actively manage our costs. The company remains committed to its sustainability ambitions and strategy of Accelerating Green Growth.”

Nigeria: Dangote Cement sold 13.4Mt of cement during the first half of 2023. Its sales volumes outside Nigeria were 5.4Mt, up by 12% year-on-year from 4.9Mt in the first half of 2022. The producer noted 'robust demand' in Ethiopia, the Republic of Congo, Senegal and Zambia. It reported revenues worth US$1.23bn in the first half of 2023, up by 17% from first-half 2022 levels. KOGI Reports News has reported that the producer's profit after tax rose by 3.8% in the half, to US$232m.

Chief executive officer Arvind Pathak said "Dangote Cement delivered positive results in the first half of the year. Our Nigeria operations achieved a 23% quarter-on-quarter recovery in sales during the second quarter of 2023, which was impacted by the general elections and the 'cash crunch.' However, the steep currency devaluation in mid-June slowed this volume recovery and increased already inflated operating costs." He added “We will continue to focus on our strategic growth priorities, hinged on our vision of transforming Africa and building a sustainable future. I am optimistic that our business remains resilient and well positioned to overcome unforeseen macroeconomic headwinds.”