Displaying items by tag: Ethiopia
PPC reports progress of cement plant projects in Democratic Republic of Congo and Ethiopia
16 November 2016South Africa: PPC has reported update on projects in the Democratic Republic of Congo (DRC) and Ethiopia. In the DRC it said that engineering, procurement, and construction (EPC) contract work from Sinoma is complete and overall the cement plant it is building is 90% complete. Power infrastructure is being built at present and hot commissioning at the site will start once this is in place. Sales of cement are scheduled to start in February 2017.
In Ethiopia the cement producer has planned to commission its 1.4Mt/yr Habesha plant in the second quarter of 2017. Plant construction is reported as ‘progressing well’ with overall project progress above 80%, civil construction 94% complete, mechanical erection at 66% and 95% of equipment manufactured and delivered to site. The project has a budget of US$180m.
Nigeria: Dangote Cement’s pre-tax profit has fallen by 10.9% year-on-year to US$466m in the first nine months of 2016 from US$523m in the same period in 2015. Its earnings before interest, taxation, depreciation and amortisation (EBTIDA) fell by 16.3% to US$559m from US$667m. However, sales revenue rose by 20.9% to US$1.38bn from US$1.14bn. It blamed the drop in profitability on falling prices in Nigeria, negative currency effects and on rising fuel and power costs.
“Nigeria has achieved record volume growth and our non-Nigerian operations are performing well across Africa. Our switch to coal in Nigeria will have an immediate impact on margins now that we have abandoned the use of low pour fuel oil (LPFO), improving fuel security and reducing the need for foreign currency. Furthermore, our new pricing will offset the impact on costs of the devalued Naira,” said the chief executive officer, Onne van der Weijde. He added his company’s strong performance in sales had been hit by poor economies in the countries it operates in and by heavy seasonal rains in West Africa.
The producer reported that its sales volumes of cement sold grew by 28.1% to 11.9Mt in Nigeria and by 72.9% to 6.5Mt elsewhere in Africa. Sales outside of Nigeria were bolstered by production ramp-up in Ethiopia and Zambia, new operations in Tanzania and improved sales in Ghana. Plants in the Republic of Congo and Sierra Leone are due to become operational in mid-November 2016.
Rioters attack Dangote cement plant in Ethiopia
05 October 2016Ethiopia: Rioters have set fire to trucks and machinery at the Dangote cement plant at Ada Berga in Oromia, according to the Ethiopian state broadcaster Fana. The riots have followed the deaths of at least 55 people in a stampede at a local religious festival on 2 October 2016. Regional government offices were also set on fire and a police station was stormed during the fracas.
Dangote attracted to Ethiopia with alleged cheap electricity deal
07 September 2016Ethiopia: The former governor of Nigeria's central bank, Sanusi Lamido Sanusi, has claimed that it was a cheap electricity deal that attracted Dangote to set up a cement plant in Ethiopia and that the cement market in East Africa will be impacted as the Adaberga wereda-based plant starts exporting cement costing almost 40% less than regional manufacturers, according to AFK Insider.
To attract Dangote to the East African country, the government offered to supply the company with electricity at a discounted rate of US$0.03/kWh, in exchange for the company building a plant in Ethiopia. This enabled Dangote Cement to cut the cost of producing a ton of cement by 60%, according to Sanusi in an opinion piece published by Premium Times. For a cement manufacturer, that is all the incentive that you need, Sanusi said, adding that this helped the construction industry in Ethiopia to boom.
The low-cost cement is now being exported to neighbouring countries like Kenya, where retail prices have remained static even as competition increased in the sector over the last decade. This is likely to shake up the regional cement market and make it affordable for developers to build more properties. Dangote Cement, one of the largest manufacturer of the product in Africa, said in a statement last week that it had started exporting to Kenya at US$74/t, more than 40% cheaper than what local manufacturer sell their brands for.
Dangote also started selling cement in Tanzania in 2016 after completing its factory in Mtwara about 400km from Dar es Salaam.
Ethiopia, one of the beneficiaries of the Power Africa program, an initiative of US President Barack Obama, has the highest electricity generating potential in East Africa due to its vast number of rivers and hilly terrain. It has invested billions of dollars to build several hydro-electric power plants including what will be Africa's largest dam, the Grand Ethiopia Renaissance Dam.
Original story from AFK Insider, http://afkinsider.com/132330/ethiopias-cheap-electricity-helps-dangote-shake-up-east-africas-cement-market/
Derba Cement plans US$300m expansion
04 April 2016Ethiopia: Derba Cement is planning to build a US$300m expansion to its cement plant. The new plant in Chancho City, Sululta will have a production capacity of 2.5Mt/yr. The project is expected to take 18 – 24 months to complete once started, according to the Cihan News Agency.
The subsidiary of MIDROC is in talks with China National Building Materials Company to build the new plant. It is negotiating with the Development Bank of Ethiopia, International Financial Corp, the World Bank Group investment arm, the African Development Bank and the European Investment Bank to finance the project, according to Derba Cement CEO, Haile Assegide.
Haile added that Derba Cement’s decision to build an upgrade in a market with excess production capacity made sense due to the project’s cost efficiency. The new plant will use existing infrastructure to cut its costs. The plant will also benefit if the government implements the Second Growth and Transformation Plan (GTP II) increasing demand for cement.
Derba Cement has a 2.5Mt/yr cement plant at Chancho City. However, the plant is producing 0.5Mt/yr less than its capacity due to power supply interruptions. The Gilgel Gibe III Dam, that started producing electricity in late 2015, is expected to normalise the electric supply to the plant.
Dangote to spend US$450m on cement plant expansion in Ethiopia
19 November 2015Ethiopia: Dangote Cement is to invest US$450m to double its current production capacity to 5Mt/yr at its Oromia Plant. The Nigerian cement producer has already received a 36ha plot of land from Oromia State, near the plant's site in Mugher, Adebern Wereda.
The company requested the land from Oromia Investment Commission in September 2015. Now it is processing right of way issues at Wereda level. The new plant will employ 1300 people when it is completed, according to All Africa. The company also intends to open a bag factory to supply packaging for Dangote and others.
Ethiopia is estimated to have a cement production capacity of 15.1Mt/yr yet actual production is only 10Mt/yr. Cement production capacity is expected to reach 27Mt/yr by the end of country's second Growth and Transformation Plan.
Dangote to launch Tanzanian cement plant in October 2015
30 September 2015Tanzania: Nigeria's Dangote Cement is set to commission its new 3.0Mt/yr cement plant in Mtwara District on 10 October 2015. The company will also hold the ground-breaking ceremony for 25 hectares of jetty land at Mgao village in Mtwara District on the same day.
The commissioning of the new cement plant, which is part of the company's Africa expansion strategy, will be the fourth in the series after Ethiopia, Zambia and Cameroon. Cement plants due for commissioning this year are located in Senegal and South Africa, while construction works are ongoing in several other African countries.
Ethiopia: Messebo Cement has hired Industrial Projects Service (IPS), a state-owned consultant, to conduct an assessment of the cement market around Addis Ababa. It wants to explore the feasibility of opening a grinding plant where semi-processed clinker from Tigray will be processed to produce cement.
"The project is mainly intended to minimise the transportation cost incurred from Mekelle to Addis Ababa, which is US$24.5 – 33.7/t, and hence to enable the plant to compete with existing cement plants in the city," said Kidane Tekelehaimanot, Messebo's deputy project manager. Mekelle is 770km away from Addis Ababa. The Addis plant, if opened, would receive and crush the semi-processed clinker by mixing it with additives, which account for 30% of the total amount currently transported from Mekelle. The Mekelle plant produces 83% of its 2.24Mt/yr cement production capacity.
Messebo is the second company after newcomer Habesha Cement to undertake a market study. Habesha, which has a designed production capacity of 2.5Mt/yr, has hired Waas International Consulting to assess the current and future demand and supply of cement, as well as to determine the need of for expansion. Dangote and Derba Midroc cement plants are also planning expansions, with Derba intending to double its 2.3Mt/yr production capacity.
Ethiopia: After some delay and with construction of its original project still ongoing, Habesha Cement is reported to be considering an additional expansion project. The firm hired Waas international Consulting Firm (WICF) in June 2015 to conduct a study to change its market strategy and establish the need for further expansion projects even though the construction of its 1.3Mt/yr cement plant is not yet complete.
WICF, which previously worked on the feasibility study for the overall company, will decide on the need for expansion by looking at the current demand for cement in the country and will restructure Habesha's market strategy accordingly. "We found it necessary to conduct the study because we expect to launch production and join the market in the coming year," said Mesfin Abadi, chief executive director of Habesha Cement, who added that the company's initial market strategy dated from 2013 and did not provide adequate information on market trends past 2015.
The small cement industry of Mozambique, in south west Africa must be an interesting place to make cement. On one side the country's producers, like their more vocal South African counterparts, have been fighting off cheap imports from Iran, Pakistan, China et al. On the other side of the coin though, Mozambique has growing domestic demand and is within striking distance of growing markets further into Africa, like Malawi and the Democratic Republic of Congo (DRC).
With the announcement this week that there will be not one but two new integrated cement plants in the country, bringing over 2Mt/yr of new capacity, everything should be set fair for the coming years then, shouldn't it? Domestic production will rise, the price of local cement will fall as a result, competition from imports will drop off and money will be made from new exports.
Except that might not happen. Before the announcement of these two plants, (one of which does not state a capacity), there was around 5.5Mt/yr of grinding and integrated capacity either currently active in Mozambique or due to come onstream in 2015. With the new projects this rises to over 7.5Mt/yr.
The desirable chain of events described above starts to break down due to the fact that domestic demand in Mozambique, while rising, is not currently anywhere near as high as domestic supply. The United States Geological Survey estimated that the country produced just 1.2Mt/yr in 2012. Data for 2013 and 2014, though unavailable, is highly unlikely to show a three-fold increase. Indeed Insitec, a minority shareholder in Cimentos de Moçambique, predicted in 2014 that demand for that year would rise to just 1.5Mt, before hitting the dizzying heights of 1.8Mt in 2018 – And that's still three years away!
So what are the options? Option 1: Some or all of the planned and mooted cement plants will fail to come to fruition. Option 2: Some or all of the plants will be built but will operate at reduced capacity and/or on a campaign basis. Option 3: The Mozambican cement industry becomes a regional powerhouse and starts to export to its neighbours.
Option 1 is certainly possible. Limak Group, one of the parties linked to the new projects, is a Turkish cement producer that is inexperienced outside of Turkey. There has also been a lack of information on the progress of projects by Austral Cimentos ('coming on stream in 2015'), Star Cement and Consolidated Building Materials, although a lack of progress reports does not necessarily imply 'no progress.'
Option 2 is more likely, as some producers already operate on a campaign basis. InterCement's plant at Nacala, formerly an integrated plant, currently operates only as a grinding station. Option 3 is also possible, with Malawi particularly lacking in cement production facilities.
In reality a combination of all three 'Options' is the most likely outcome. However, this will lead to Mozambique becoming yet another player in an increasingly busy African cement market. The desire for self-sufficiency in cement production, a common goal for the region's governments, can easily lead to over-estimates of local demand growth, with resultant over-capacity. Of course the expectation that all African countries can get rid of this extra cement capacity via exports will ultimately backfire.
In southern Africa we already have South Africa exporting. Angola declared 'cement self-sufficiency' in October 2014 and banned imports at the start of 2015. Zambia, Botswana, Zimbabwe and DRC all have large-scale Dangote and/or PCC projects near completion or in production that will greatly reduce their need for imports. Meanwhile, further north, Nigeria is already a gigantic producer and significant cement exporter. Cameroon has recently banned imports and Ghana is thinking of doing the same. Over in the east of Africa, Ethiopia's (and the rest of that region's) rapidly-developing situation was covered in this column just two weeks ago.
Finally, in the north of Africa, Algeria has declared its intention to be self-sufficient in cement by 2016. This news must have 'gone down like a lead balloon' in Italy, Spain and Greece, which have been reliant on north African markets after the bottoms fell out of their own economies. In the north east, Egypt has different problems at present, also described previously. It needs fuel not cement!
So where does this all lead for regional cement dynamics in Africa? Well perhaps the situation in India points the way. There, as in Africa, local and regional producers with the desire to expand grew from their local bases and eventually overlapped. Against a backdrop of lower-than-expected demand, the country now has overcapacity. This has resulted in smaller producers being acquired and leaving the market.
Could this eventually happen in Africa? Only time will tell. However one thing is certain: It's just not possible for every country to export to every other country!