Nigeria: The 4Mt/yr Dangote Cement plant in Gboko, Benue State, is due to shut because of glut of cement in the market, according to an announcement from the company.
The move was necessary because of the increase in local production of cement and also the continued import of subsidised cement into the country, according to the group's head of corporate communication Anthony Chiejina. He said in a statement that the production figures for the first 11 months of 2012 show that local supply now exceeds demand.
The total supply of cement to the Nigerian market at the end of November 2012 was a record 11.4% higher than by the same point in 2011. Chiejina said it was disheartening to note that despite the glut in the local cement market, cement imports, though reduced, have continued, thus calling to question the rigorous implementation of the backward integration policy, which was introduced to encourage local production.
Explaining why the Gboko plant should be shut, Chiejina said, "With the dumping of subsidised imported cement in the south-eastern market there is no way that our Gboko Cement plant can survive. The inventory of finished products is beginning to build up at our plants. Don't forget that projects from our investments of about US$1.8bn in additional capacity are already on stream, with lines three and four at Ibese and line four at Obajana, coming on stream early this year."
Chiejina said that other Nigerian manufacturers are also experiencing the same problem of low sales and high inventory. He advised that the government should vigorously implement the provisions of the cement backward integration policy, which he said is needed to protect local manufacturers from dumping. Chiejina said that he wants the government to consider the total ban on cement imports, in view of the fact that local production now surpasses demand for cement and in the interim also increase duty and levy on imported cement to the maximum permissible level.