Displaying items by tag: Chamber of Cement Manufacturers Ghana

A battle over cement pricing in Ghana reached a new stage this week when the Chamber of Cement Manufacturers (COCMAG) hit back at proposed government regulation. Frédéric Albrecht, the chair of the association, told a meeting that about 80% of local production costs linked to cement manufacture are related to the local currency exchange rate. So fixing the price would do little to address the main cause behind rises.

Albrecht was speaking at a stakeholders’ forum organised by the Ghana Chamber of Construction. The group was convened to discuss the government’s proposed Ghana Standards Authority (Pricing of Cement) Regulations 2024 that were formally presented in the country’s parliament in early July 2024. The association argues that the cement sector has not been consulted properly over the proposal and that introducing it could have negative consequences for the construction sector as a whole. It says that imported clinker is subject to numerous taxes and that the average price of cement has actually lagged behind the rate of inflation.

The government is dealing with an economic crisis that forced it to default on its external debts in 2022 and ask the International Monetary Fund for support. This has led to depreciation of the local currency and high inflation. Around the same time the authorities have also been attempting to regulate the cement sector more closely. In 2022 the Ghana Standards Authority (GSA) took action against a brand of cement, Empire Cement, that appeared to be on sale without any of the required permits. Then in the autumn of 2023 the Ghana Revenue Authority (GRA) shut down Wan Heng Ghana’s grinding plant in Tema after the company failed to pay a major tax bill. Action by the GSA followed when it shut down three more plants in the Ashanti Region - Xin An Safe Cement Ghana, Kumasi Cement Ghana and Unicem Cement Ghana - for using inferior materials in cement production.

In April 2024 a nine-member committee was established to monitor and coordinate the local cement industry. Notably, cement producers have been required to register with the committee in order to secure a licence to manufacture cement. Kobina Tahir Hammond, the Trade and Indus¬try Minister, then said in late June 2024 that the government wanted to intervene in cement pricing to protect consumers from what he described as the ‘haphazard’ increment in cement prices by manufacturers. A legislative instrument doing just that was presented in parliament on 2 July 2024. Around the same time the GSA reportedly threatened to close down ‘several’ more cement plants for non-compliance.

The cement industry in Ghana is particularly vulnerable to currency exchange effects as it is dominated by grinding plants. One integrated cement plant, Savanna Diamond Cement, was launched in the north of the country in the mid 2010s. However, this compares to 14 licensed grinding plants in the country reported in the local media. This includes units run by Ciments de l’Afrique (CIMAF), Dangote Cement, Diamond Cement (WACEM) and Heidelberg Materials subsidiary Ghacem and its CBI Ghana joint-venture amongst others. This makes it one of the countries in Sub-Saharan Africa with the most grinding plants, along with places such as Mozambique and South Africa. When the Ministry of Trade and Industry started a consultation on regulating the cement sector in late 2023 it calculated that the country produced 7.2Mt of cement in 2021 and that the country had an overcapacity of 3.5Mt. This gives the country an estimated cement production capacity of just below 11Mt/yr.

Some sense of the growing costs that the cement sector in Ghana is facing can be seen in the Ghana Statistical Trade Report for 2023. Clinker was the country’s third biggest import by value at US$206m. It was only exceeded by diesel and other automotive oil products. The Ghana Statistical Service reported that most of the country’s imported clinker in 2023 came from Egypt, South Africa and its neighbours in West Africa. Both Dangote Cement and Heidelberg Materials flagged up the country’s economy as being hyperinflationary in their respective annual reports for 2023.

Argument and counter-argument over cement pricing is prevalent around the world especially in Africa. Fellow West African country Nigeria, for example, has endured plenty of very public dialogue and debate about the price of cement. In Ghana’s case it seems more likely than not that factors beyond the control of the local cement companies are driving the prices given the grinding-dominated nature of the sector with lots of different companies involved. Negative currency effects and inflation look more likely to be driving cement prices than anything else, although one should always be wary of the potential for cartel-like behaviour by cement producers. The economic crisis in Ghana certainly fits the bill for the conventional introduction of price controls on selected commodities but getting the fine tuning right could be difficult in practice. Fixed prices will reassure consumers in the short term provided supplies hold. Beyond this the actual causes of the high cement prices should emerge in time.

Ghana: A nine-member committee has been established to monitor and coordinate the local cement industry in Ghana, in line with the Manufacture of Cement Regulations (LI 2480).

The committee, inaugurated in Accra on 5 April 2024, is chaired by Professor Alex Dodoo of the Ghana Standards Authority (GSA). Other members include representatives from the GSA, Ministry of Trade and Industry, Ministry of Environment, Science, Technology and Innovation, Environmental Protection Agency, Ghana Institution of Engineering, Association of Ghana Industries, Chamber of Cement Manufacturers of Ghana, and an expert in cement production nominated by the Minister.

During the inauguration, Trade and Industry Minister Kobina Hammond said “The committee will appraise, evaluate and approve local content and local participation plans and reports of cement manufacturing entities. They will also promote the production, wholesale and retail of cement and cement components.”

According to LI 2480, there is a requirement for manufacturers of cement to register with the Committee. Regulation 11 in LI 2480 state that ‘A person shall not manufacture cement in the country unless the person registers with the Cement Manufacturing Development Committee in accordance with these Regulations.’ The regulations state that a person who did not register with the Cement Manufacturing Development Committee to manufacture cement shall not be granted a licence to manufacture cement under these regulations.

Ghana: The Ghanaian government has ceased to issue permits for new cement plants anywhere in the country. Ghana News Agency has reported that the government enacted the policy in order to ensure the sustainable and responsible growth of Ghana’s cement industry, according to George Dawson-Ahmoah, CEO of the Chamber of Cement Manufacturers, Ghana (COCMAG). Dawson-Ahmoah added that COCMAG is collaborating with the Ministry of Trade and Industry to develop optimal environment, safety and cement quality standards, and to combat unfair trade practices where they arise.

Ghana: The Chamber of Cement Manufacturers (COCMAG) has lobbied against the government’s decision to reduce the benchmark value to 30% from 50%. It says that a reduction in discounts on selected imports will result in higher production costs that could be passed on to the price of cement, according to the Business and Financial Times newspaper. Local limestone producers are also reported to be trying to increase their prices by over 60%, which could also put up prices. COCMAG has cited growing clinker, transport and fuel input costs as a potential source of higher production costs as well as negative currency exchange effects. COCMAG wants the government to maintain the benchmark value at 50% for input materials for cement production

The benchmark system was introduced in 2019 as a way of discounting the price of certain imports. Under the policy, certain commodities were benchmarked to world prices as a risk management tool.

Ghana: The Ministry of Health has responded to criticism from the Chamber of Cement Manufacturers (COCMAG) about disinfection measures being used at ports. It said that it was being used to on the exterior of imported goods and cargo to control or kill infectious agents. It added that the procedure was being implemented on any vehicle that crossed designated biosecurity zones without exception.

“It is obvious that COCMAG, of which you are the executive secretary, does not have much information about the disinfection health service, its applications and the benefits of such a service,” said the ministry in a statement in response to comments in the local press by COCMAG’s leader George Dawson-Ahmoah. It added that the fee for the service was to protect the local economy from the effects of diseases such as Ebola and Covid-19 and that sea ports were, “one of the most infected areas in the country.”

COCMAG has lobbied the government to scrap the disinfection or fumigation levy on cement imports at the country’s ports. It argues that such measures are unnecessary for dry cargo such as clinker, limestone, and other cement raw materials, according to the Ghana News Agency. The levy adds a reported US$0.50/t of cement.

Ghana: George Dawson-Amoah, the executive secretary of the Chamber of Cement Manufacturers Ghana, has warned that mounting clinker costs are negatively affecting the cement industry. He said that the cost of clinker grew by 55% in the first half of 2021 and it is expected to nearly double, according to GhanaWeb. Cement prices have risen subsequently. Dawson-Amoah added that congestion at local ports is also adding to clinker import costs as importers potentially face demurrage fines.