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What price for cement industry development in Cameroon?
Written by David Perilli, Global Cement
22 April 2015
Cameroon announced this week that it intends to ban imported cement to aid the sales from the new Dangote owned cement plant in the country. Readers should note that Dangote is a Nigerian-based company. Protective legislation such as this should come as no surprise given the rise of Nigeria's own cement industry and similar initiatives in that country. The difference here, however, is that the Cameroonian government is protecting investment by a foreign company rather than propping up any home grown concerns.
The new Dangote-run cement plant in Douala will start with a cement production capacity of 0.95Mt/yr with the intention to rise to 1.5Mt/yr in 2016. A meet-and-greet by company officials with local press in early April 2015 revealed that the company intends to snatch 30% of the local cement market in 2015 with prices primed to just undercut the other major producer.
What then of the country's two other integrated cement plants? Both have foreign ownership. Cimenteries du Cameroun, with a 1Mt/yr plant, is a subsidiary of France-based Lafarge. Ciments de L'Afrique, with a 0.5Mt/yr plant, is a Moroccan firm. Add the new 1.5Mt/yr Dangote cement plant and domestic production in Cameroon is anticipated to exceed local demand.
When this happens how will the Cameroonian government view the two non-Dangote producers who may well be importing clinker and other products into the country for their operations? If the experience of Nigeria is a model then a 'self-sufficiency' battle may ensue in the media. Alongside this the price of cement may well stay fairly stable despite any alleged 'gluts'. This week, for example, the Cement Producers Association of Nigeria has lobbied the President-elect of Nigeria, Muhammadu Buhari, to cut the price of cement by half. The hypocrisy during the Nigerian spat over imports was that Nigeria wanted (and has become) a cement exporter.
At the time this column asked how that could work if imports at the time were so much more competitive that they had to be banned at home. Then as now deals seem to mark the way. At that time, in early 2013, Liberia relaxed its tariffs on cement just as Dangote was building a new plant there. Now, in Cameroon, once again Dangote appears to be negotiating some form of preferential treatment.
At the root of these issues, Cameroon's citizens and industry want to build and develop their country. Cheaper cement will enable them to do this by pushing up per capita cement consumption. Protecting their domestic industry or those that have invested in the country may not necessarily lead to cheaper cement.
Iran: Iranian cement producers owe €600m to the country's National Development Fund, according to Abdolreza Sheikhan, the secretary of the Union of Iranian Cement Industry Employers. Sheikhan also cited studies supporting that the price of cement should be increased by 17%, due to transportation and production costs, in order to present cement plants being closed.
"Presently, Iran with an output capacity of 70 million tons of cement a year is the world's fourth largest producer of cement after China, India and the United States," said Sheikhan. Iran could become the world's third largest cement producer if its 75Mt/yr nominal production capacity becomes its actual capacity, he noted. In May 2014, Sheikhan said that cement prices might be increased by 22%.
Dangote Cement to start Ethiopian production in May 2015 20 April 2015
Ethiopia: Dangote Cement's new cement plant in Ethiopia will open in May 2015. Minister of Mines, Tolosa Shagi visited the plant and commented that new plants and upgrades to existing plants will enable Ethiopia to meet local demand, according to local media. The new cement plant in Oromia cost US$400m and it will have a cement production capacity of 2.5Mt/yr making it one of the largest in East Africa.
Currently, cement demand in Ethiopia is estimated to be around 7 – 8Mt/yr with cement production at 5.4Mt/yr. Once fully operational the Dangote Cement plant is hoped to raise the country's cement production to 8Mt/yr.
Ghana: Savanna Diamond Cement Co has launched operations of a 0.44Mt/yr integrated cement plant in Buipe, in northern Ghana. President John Mahama officially inaugurated the US$90m project, according to local media. The new plant uses limestone from Buipe. The plant holds a partnership with state power company GRIDCo with a 25MW substation from which 7MW is used by the cement plant and the remaining 18MW is used by the local community. Diamond Cement also owns two other cement plants in the country.
Protest against Semen Indonesia Rembang cement plant 17 April 2015
Indonesia: Former Corruption Eradication Commission (KPK) commissioner Bambang Widjojanto joined a protest on 16 April 2015 against the construction of Semen Indonesia's new cement plant in Rembang, Central Java. However, the Semarang State Administrative Court (PTUN) ruled on the same day that PT Semen Indonesia could operate in the area.
Bambang said that the construction and operation of the cement plant could pose a threat to the ecosystem in the region. The former KPK commissioner joined the rally in front of the PTUN, which is currently holding a trial on the legality of the local government's decision to allow PT Semen Indonesia to start mining activities in the area. "We hope that the judges listen to their consciences and side with the people," said Bambang.
Residents of Rembang, Central Java, have staged a series of rallies since 2014, protesting the plan to build a cement plant in Watu Putih. They claim that a plant would impact nearby water resources and directly degrade their livelihoods. The Indonesian Forum for the Environment (Walhi), an environmental non-government organisation (NGO) that has assisted the locals, has estimated that the potential loss of water could reach 51ML.