Displaying items by tag: Nigeria
Madugu Cement to build 5Mt/yr cement plant at Kembu
27 July 2021Nigeria: Madugu Cement plant to build a 5Mt/yr cement plant at Kembu in Gombe state. The producer has awarded an engineering, procurement and construction (EPC) contract for the project to China-based Sinoma International Engineering Company. Construction will consist of two phases, each of which will establish a production line of 2.5Mt/yr capacity. The Nigerian Tribune newspaper has reported that, when commissioned, the plant will be the second in Gombe state. The state has extensive gypsum reserves and a surplus of coal and hydroelectric power.
Nigeria: Dangote Cement says that its new 6Mt/yr cement plant at Okpella in Edo state is ready to enter cement production. The Daily Independent newspaper has reported that group invested US$1bn in the plant. China-based Sinoma International Engineering Company supplied engineering, procurement and construction (EPC) services. When commissioned, the plant will employ 6000 people, according to the owner.
Dangote Cement is in the process of establishing a further 6Mt/yr cement plant at Itori in Ogun state. The launch of both plants will give the producer an active cement capacity of 41.3Mt/yr. The company says that its aim is to increase the uptake of cement in Nigeria. It said, “We still need to do more to make the cement get to the poorest of the poor.”
BUA Cement increases its prices
12 July 2021Nigeria: BUA Cement has increased the ex-factory price of its cement by 7%. It previously claimed that it did not intend to increase its prices, according to the Sun newspaper. In statements issued between April and June 2021 it said, “the company had no plans to increase prices of its cement now or in the near future.”
In April 2021 Dangote Cement was forced to publicly defend the price of its cement due to allegations that its prices were allegedly lower in Ghana or Zambia. Around the same time the Senate of Nigeria called for the federal government to introduce policies, such as tax breaks, to encourage local investments in cement production and to reduce prices.
At its annual general meeting in July 2021, BUA Cement issued dividends worth US$170m to its shareholders. The company reported sales of US$509m in 2020, a rise of 20% year-on-year. However, its costs increased by 22% to US$277m at the same time.
Cameroon: Two cement trucks masquerading as belonging to a United Nations agency have been seized by customs officials. The smugglers were pretending to be transporting food and pharmaceutical products in transit to Chad, according the Ecofin Agency. The cement is believed to have originated from Nigeria. The operation by customs authorities was part of the ongoing Halcomi (halte au commerce illicite) initiative.
Dangote Cement completes US$734,000 bond issuance
17 June 2021Nigeria: Dangote Cement has successfully issued 50bn fixed rate senior unsecured bonds. The total value of the multi-instrument issuance programme is US$734,000. The proceeds of the bond issuance will be used to pay for expansion projects, short-term debt refinancing and working capital requirements.
Dangote Cement to increase Nigerian cement production capacity by 4.5Mt/yr by September 2021
18 May 2021Nigeria: Dangote Cement says that work is underway to increase its total cement production capacity in Nigeria by 4.5Mt/yr before September 2021. The Guardian newspaper has reported that plans consist of new lines at the company’s cement plants in Obajana, Kogi state, and Okpella, Edo state, and the restart of production at its plant at Gboko, Benue state. Sales and marketing director Rabiu Umar said that the reason behind the decision was a surge in demand leading to a ‘sold-out’ situation in the country. He added that the firm has also ceased its export programmes in order to better serve the needs of domestic consumption.
Nigeria: Dangote Cement’s revenue grew by 35.5% year-on-year to US$874m in the first quarter of 2021 from US$655m in the same period in 2020. Cement sales volumes rose by 18.7% to 7.5Mt from 6.3Mt. Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 56% to US$468m from US$300m. Revenue and sales volumes increased fastest in Nigeria but earnings increased faster in the rest of Africa.
“We took the strategic decision to pause our clinker exports to ensure we meet the rapid volume growth in the Nigerian domestic market. We are improving the output of our existing and new assets and aim to recommence clinker exports in the second quarter,” said Michel Puchercos, the company’s chief executive officer. He added that the company had also ramped-up its new 3Mt/yr Obajana Line 5.
The price of cement in Nigeria
28 April 2021For those not following the news in Nigeria, a nationwide row has broken out about the cost of cement in the country. Two of the three main local producers have been forced to publicly defend their pricing. Alongside this, the Senate of Nigeria has implored the federal government to encourage further local investment in cement production with the goal of keeping the end price down.
The current debacle started to take form in the autumn of 2020 when the price of cement leapt up by 35%. Builders and those immediately affected started complaining then but the argument really heated up in April 2021 when the local press started comparing the price of cement in Nigeria unfavourably against neighbouring countries. Dangote Cement, one of Africa’s largest cement producing companies and a Nigerian-based one at that, immediately defended itself by pointing out that its ex-factory price was the same or lower than in other African countries. It added that it could not control the price of cement between its factory and the end-consumer with dealers and middlemen benefiting from the gap. A week later the Senate of Nigeria intervened with its members discussing the issue in relation to a bill intended to liberalise the sector. This week, BUA Cement said publicly 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 roots of the current crisis go back to the mid-2010s when Nigeria declared itself ‘self-sufficient’ in cement after building up its domestic production capacity. At the same time it discouraged imports and embraced exports. Today, the country’s cement production capacity is around 49Mt/yr and annual demand is around 21Mt. This self-sufficiency path reached one milestone for Dangote Cement in 2020 with clinker exports starting from its Apapa terminal and the commissioning of its Onne Export Terminal in Port Harcourt. Under the old narrative for the sector this was a moment for congratulation. Suddenly though, instead of being seen as the saviour of the industry, members of the legislature were asking whether it was a good thing for Dangote Cement to hold a 60% share of the local market with most of the rest shared between Lafarge Africa and BUA Cement.
The price row has seen Dangote Cement promptly suspend exports from those new terminals. It also said it had reactivated its 4.5Mt/yr Gboko plant in Benue State, which was reportedly mothballed in 2018. It is worth noting here that the Gboko plant was part of that national capacity total above despite being mothballed until fairly recently. Aside from the middleman argument, the producer said that its production costs had risen over the past 15 months due to negative currency effects but that it hadn’t increased its ex-factory prices since December 2019.
A survey by the News Agency of Nigeria in the north-east of the country revealed all sorts of speculation about why the price was so high but few facts. Some of the opinions expressed included: the coronavirus outbreak; low production rates at the plants; market middlemen; and transport costs. What is clearer is that the country’s cement production capacity is more than double that of its demand. On paper at least the nation should be able to satisfy its own needs and then export the same again with plenty spare. Yet somehow this isn’t happening. If the government really believes in self-sufficiency it may be time to take another look at the cement sector, the challenges it faces and the needs of the end consumers.
Nigeria: The Senate of Nigeria has called for the federal government to introduce policies, such as tax breaks, to encourage local investments in cement production. The upper legislative chamber made the resolution following a debate about a bill intended to relax rules surrounding cement policy in the country, according the Punch newspaper. It also requested the federal government to provide more industrial incentives and protections such as offering concessionary loans and larger tax incentives for new entrants in order to boost production of cement, reduce prices and encourage more ‘valuable’ local producers.
Senator Lola Ashiru, one of the co-sponsors of the bill, noted that cement was one of the few building materials in which Nigeria was self-sufficient with production capacity reportedly over twice as high as estimated consumption in 2018. However, he said that cement prices in the country were about 240% higher than the global average.
Dangote Cement justifies price in Nigeria
14 April 2021Nigeria: Dangote Cement says that the price of cement from its plants in Nigeria is the same as from plants in other countries in Africa or cheaper. The cement producer made the announcement in response to local media reports that its prices were allegedly lower in Ghana or Zambia, according to the Vanguard newspaper. It added that it had control over its ex-factory prices but that it could not set the end market price.
Dangote Group Executive Director, Strategy, Portfolio Development and Capital Projects Devakumar Edwin explained that Dangote Cement has a 60% share of the local cement market at present. Demand for cement has risen following the coronavirus pandemic and the company has had to suspend exports from its recently commissioned export terminals in order to meet local demand. He added that it has also reactivated its 4.5Mt/yr Gboko plant in Benue State, which was closed in 2018, to cope with the situation.