Displaying items by tag: Dangote Cement
Ethiopian regional government demands that foreign cement producers offer jobs to unemployed
21 March 2017Ethiopia: Regional officials are demanding that foreign cement producers, including Dangote Cement and Derba Midroc Cement (DMC), should let cooperatives of unemployed young adults run part of their mining businesses. A draft contract drawn up by Oromia state’s East Shewa Zone administration wants the young adults to operate pumice mines for the cement producers, according to Bloomberg. The initiative follows attempts by the national government to alleviate social pressures, following violent protests in the state in late 2016 in response to over alleged land dispossession, political marginalisation and state repression. The local administration reportedly stopped production at the Dangote and DMC plants in early March 2017 while it discussed its proposals with the producers, according to local press.
Nigerian Government commends Dangote Cement for role in self-sufficiency in cement industry
20 March 2017Nigeria: Kayode Fayemi, the Minister for Solid Minerals Development, has commended Dangote Cement’s role in making Nigeria self-sufficient in cement. He said that it was a success story that the country had moved from importing 60% of its cement to meeting local demand with excess available for export. The Cement Manufacturing Association of Nigeria originally declared the country ‘self sufficient’ for cement in 2012.
“We need to collaborate and partner in these areas at this time that government is trying to reduce the dependence on oil. We need to turn around our mineral resources just as in the cement sector. When you look at our solid mineral industry, there is a wide gap between what we can produce and what is consumed. Imports in these sectors is huge,” said Fayemi. He added that the government wants to replicate the success of the cement industry in other non-oil sectors to diversify the economy. He made the comments as part of a tour to the Ibese plant in Ogun State.
Dangote Cement saw its earnings before interest, taxation, depreciation and amortisation (EBITDA) fall in 2016 as the Nigerian economy entered a recession. Despite this it grew its revenue and sales volumes with an emphasis on growth outside of its home country. The cement producer exported 0.4Mt of cement in 2016. However, the company has also faced allegations of dumping in Ghana.
Tanzania: The Ministry of Energy and Minerals has given Dangote Cement a 10km2 plot of land in Ngaka, Ruvuma to mine coal. The decision follows the acknowledgment by President John Magufuli that Tancoal, the local coal producer, is unable to meet domestic demand, according to the Citizen newspaper. At present manufacturers are unable to import coal from South Africa due to a government ban. In late 2016 Dangote Cement made a deal with the government to supply natural gas to its cement plant at Mtwara following a temporary shutdown at the site.
Nigeria: Dangote Cement’s earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 2% year-on-year to US$817m in 2016 from US$834m in 2015. However, its sales revenue rose by 25.1% to US$1.95bn from US$1.56bn and its sales volumes of cement rose by 25% to 23.6Mt from 18.9Mt. The cement producer reported a particular increase in sales volumes, revenue and earnings outside of Nigeria and it said that its export sales have turned Nigeria into a net exporter.
“We exported nearly 0.4Mt into neighbouring countries and in doing so, we achieved a great milestone by transforming Nigeria into a net exporter of cement. This is a remarkable achievement, given that only five years ago, Nigeria was one of the world’s largest importers, buying 5.1Mt of foreign cement at huge expense to our balance of payments. We will increase our exports substantially in 2017,” said chief executive officer Onne van der Weijde. He added that despite some local and temporary disruptions in Ethiopia and Tanzania, the cement producer strengthened its market share in every country. Operations are also due to start in the Republic of Congo and Sierra Leone in 2017.
By region, Nigeria’s economy entered into a recession in 2016. Dangote Cement increased its domestic sales volumes by 11.1% to 14.8Mt from 13.3Mt, although it said that its fourth quarter was hit by a price increase in September 2016. Despite the poor economic situation in the country it said that overall cement sales grew by 5.7% in 2016. Outside of Nigeria it increased its cement volumes by 54% to 8.64Mt from 5.61Mt, aided by the opening of a plant in Tanzania.
Dangote Cement building upgrades at Mugher plant in Ethiopia
13 February 2017Ethiopia: Dangote Cement is building a bagging plant and a third silo at its Mugher cement plant. The US$19m bagging plant will have a capacity of 120 million bags/yr, according to the Ethiopian Reporter newspaper. It is scheduled for completion by July 2017. The silo should be completed by the third quarter of the year.
Deep Kamara, the managing director of Dangote Industries Ethiopia, also said that the company is considering building a second production line in the country. However, procuring spare parts is proving difficult for the plant due to shortages of foreign currency and delays in shipping new parts. The company is expecting help from the government and it needs to spend up to US$15m on spare parts for the plant.
The Mugher cement plant opened in 2015 with a cement production capacity of 2.5Mt/yr. Equipment at the plant was set on fire in late 2016 in a series of riots in the region.
Kenyan cement exports drop in 2016
12 January 2017Kenya: Data from the Kenya National Bureau of Statistics report that cement exports dropped in value to US$7.6m in 2016 from US$25.6m in 2015. Cement producers have blamed declining volumes on cheap imports, according to the East African newspaper. The opening of a cement plant by Dangote Cement in Tanzania has also contributed to the decline, forcing companies to cut their prices.
Senegal introduces new cement tax
10 January 2017Senegal: The government of Senegal has introduced a tax of US$4.84/t of cement with effect from 2 January 2017. The tariff will apply to cement from the country’s three cement plants run by Ciments du Sahel, Sococim and Dangote, according to the Quotidien newspaper. Vendors are expected to pass the cost onto consumers with higher prices.
Cement production rose by 10% year-on-year to 5.15Mt in the first 10 months of 2016 from 4.68Mt in the same period in 2015 at the Ciments du Sahel and Sococim plants, according to data from the Directorate of Forecasting and Economic Studies (DPEE), reported upon by the African Press Agency. The increase has been attributed to a 25% surge in exports, although local sales have also risen slightly.
Predicting the future of cement markets
14 December 2016This week the US Portland Cement Association (PCA) revised down its forecast for the rise in cement consumption in 2016 to 2.7% from 4%. It also lowered its prediction for 2017, blaming political uncertainty around the presidential election, inflation and slower construction activity. Global Cement Magazine editorial director Robert McCaffrey pointed out on LinkedIn that he was surprised by the revision down in 2017 given the rhetoric by president-elect Donald Trump to invest in large infrastructure projects.
Clearly the PCA is playing it cautious as a politically unknown entity, Trump, slides from campaign trail promises to executive power delivery. Backing them up are the latest figures from the United States Geological Survey (USGS) that show that both cement production and shipments fell slightly in the third quarter of 2016. In the quarter before the election in November 2016 the cement market slowed down. The hard bit is working out why. As we pointed out in a review of the US cement industry in the May 2016 issue of Global Cement Magazine the PCA had previously downgraded its forecast in 2016 due to economic uncertainty despite strong fundamentals for the construction industry. Then, as now, the great hope for the US cement industry was infrastructure spending down the pipeline, at that time the Fixing America’s Surface Transportation Act. At this point it doesn’t seem to have had much of an effect.
Industrial and economic forecasters aren’t the only ones who have a hard time of it in 2016. Political pollsters have also been caught out. Surprises came from the UK’s decision to leave the European Union and the election of Trump. Neither result was widely expected in the media. As explained above, should Trump make good on his building plans then if any cement company based its plans on a forecast dependent on a Hilary Clinton win then it may have lost money.
The power of forecasts has even greater potential effects in developing markets where the corresponding financial risks and rewards are higher. After all, why would any cement company invest tens of millions of US dollars for a cement grinding plant or hundreds of millions for an integrated plant unless there was some whiff of a return on investment?
This then leads to the problems Dangote has reportedly been having with its plant in Tanzania. Amidst a flurry of local media speculation in late November 2016 about why its Mtwara plant had a temporary production shutdown, Dangote’s country chief clarified that it was due to technical problems. It then emerged this week that Dangote’s owner Aliko Dangote met with President John Magufuli to agree a gas supply agreement to the plant. The point here being that even if the market conditions and demographics seems conducive to profit, as is the case in Tanzania, if the local government changes any incentives agreed at the planning stage then everything can change. At this point forecasts based on data become moot.
There’s a great quote from the US pollster Nate Silver that goes, “The key to making a good forecast is not in limiting yourself to quantitative information.” In terms of election campaigns run at a time of upheaval that might mean listening to people more than looking at polling data. In terms of a cement company operating in Africa that might mean fostering links with the local government to ensure no sudden policy changes catch you off-guard. And in the US that might just mean cement company analysts have to follow Donald Trump’s Twitter account.
Dangote strikes gas deal with Tanzania
12 December 2016Tanzania: Nigeria’s Dangote Cement has struck a deal with the government-run Tanzania Petroleum Development Corporation (TPDC) to supply gas to its cement plant. Company chairman Aliko Dangote met with President John Magufuli on 10 December 2016 to negotiate the agreement, according to Reuters. The agreement follows a dispute between Dangote and the TPDC over the price of gas. Magufuli said that Dangote could now buy gas directly from TPDC. No price details were released. In late November 2016 Dangote’s representative in the country denied that a stoppage at its plant was related to high production costs.
Tanzania: Minister for Industries, Trade and Investments Charles Mwijage has confirmed that the government’s investment arrangement with Dangote Cement that were granted by former President Jakaya Kikwete's administration are still in place. He said that the government would do nothing to compromise Dangote Cement’s investment in the country and described its entry as a ‘game changer’ by reducing the price of cement, according to the Citizen newspaper. The comments were made in response to media speculation regarding a production shutdown at cement producer’s Mtwara plant.
Mwijage said that Dangote Cement could cut its production costs by using local coal or gas. The Tanzania Petroleum Development Corporation has been in negotiations since October 2016 to supply gas to the cement producer. He also added that another cement producer, Engro, is considering building a cement plant and that the government is willing to offer it the same incentives as those given to Dangote Cement.