Displaying items by tag: Dangote Cement
Dangote Cement defends temporary production shutdown in Tanzania
30 November 2016Tanzania: Dangote Cement has clarified that a temporary production shutdown at its Mtwara plant has been made due to technical problems. Country chief executive officer Harpreet Duggal made the announcement in response to claims that the stoppage was due to high production costs in the country, according to the Tanzania Daily News newspaper. The plant is expected to resume production in a few days.
Duggal described operating costs in Tanzania as ‘high’ due to the producer’s dependence on diesel generators. He also cited high transport costs due to the plant’s distance from its key markets.
Dangote Cement defends conduct in Ghana
01 November 2016Ghana: Dangote Cement has defended its conduct against accusations of tax evasion, dumping and other unfair trade practices by local cement producers. Tor Nygard, managing director of Dangote Cement Ghana, defended the Nigerian company at a press conference in Tema saying that the company's entry into the local market had stabilised the price of cement and strengthened competition, according to the Business and Financial Times newspaper. He also described the attacks by market competitors as ‘smear tactics.’
The Cement Manufacturers Association of Ghana (CMAG), representing local cement producers such as Ghacem and Diamond Cement, lobbied the Ghanaian government in October 2016 calling for a ban on imports of cement.
Nygard dismissed accusations of dumping cement in Ghana from Nigeria and confirmed that the company pays all the relevant taxes on its imports. He added that Ghacem and Diamond Cement employ 3000 workers after 55 years of operation but that Dangote Cement employs 2000 workers in the country after only six years of operation. Finally, he detailed plans for the company’s new US$100m cement grinding plant in Takoradi that is due to be commissioned at the end of 2017.
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.
Ghanaian Ministry of Trade and Industry responds to Cement Manufacturers Association call to halt imports
20 October 2016Ghana: The Ministry of Trade and Industry has responded to calls by the Cement Manufacturers Association (CMA) that it stop imports of cement by saying that the CMA has misrepresented the role of the Cement Monitoring Committee (CMC) and the process of the licensing regime. The CMA took exception to the issuance of permits by the ministry to three foreign cement producers given that they say the country has a surplus of cement, according to the Ghanaian Chronicle newspaper.
In a statement the Ministry of Trade said no authority or mandate has been given to the CMC to instruct or direct the Minister on which firms should be awarded a license and what that company's specific annual imports should be. It added that the CMC's role is intended to give the ministry and all stakeholders access to relevant information and data for the effective implementation of the relevant legislation. It said that the law does not place a ban on imported cement but rather provides a mechanism, rules and procedures for controlling imports.
It went on to explain that the major reason for granting China’s Fujian Cement a licence to import cement into Ghana was because it was building a cement plant in the country and that the company was attempting to establish itself in the market ahead of local production. Fujian Cement originally asked the ministry to import 1.5Mt/yr of cement into the country but this was restricted to 0.5Mt/yr. The ministry also reinforced that it had not granted any import licenses to Dangote Cement and Sol Cement, the companies accused by the CMA of importing cement.
Nigeria: A Federal High Court in Lagos has adjourned legal action by Dangote Cement against Ibeto Cement until 1 November 2016 pending a decision of the Court of Appeal. Dangote Cement is alleging that Ibeto Cement evaded paying taxes on imports of cement to give itself a ‘unfair’ advantage in 2008, 2009 and 2010, according to the National Mirror Newspaper. It is also seeking an injunction against the Ibeto Cement and other defendants in the case from importing cement into the country unless approved by the appropriate authority under the current tax rules.
However, the Federal Government is alleging that Dangote Cement is attempting to minimise its competition. Other defendants in the case also include: IBG Investments Limited, Derima Venture Limited, the Federal Republic of Nigeria, Attorney General of the Federation, Federal Ministry of Finance, the Federal Ministry of Trade and Investment, the Board of Customs and Excise, the Federal Inland Revenue Services and the Nigerian Port Authority.
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 completes conversion to coal at cement plants
30 September 2016Nigeria: Dangote Cement has switched to using coal at its cement plants in response to disruption to gas supplies and to lower input costs. The cement producer intends to use 12,000t/day of coal, according to Reuters. "All our cement plants have been converted to coal," said owner Aliko Dangote.
Update on Kenya
14 September 2016Tensions have boiled over regarding imports of cement to Kenya in recent weeks as different importers have received opprobrium in the local press. Last week Dangote Cement was attacked for importing cheap cement into the country from Ethiopia, allegedly off the back of a cheap electricity deal. This week, Chinese imports have been in the firing line, following data reportedly seen by the Business Daily newspaper that showed that the value of Chinese cement imports rose tenfold year-on-year in the first half of 2016.
At the heart of these rows lies a strong demand for cement: Kenya had a cement production utilisation rate of 90% in 2015 according to Kenya National Bureau of Statistics (KNBS) data. It produced 6.35Mt in that year and used 5.71Mt for consumption and stocks. Its utilisation rate has been rising steadily since 2012. It was 93% for the first six months of 2016.
Unfortunately for the local producers this kind of demand attracts competition from within and without. Nigeria’s Dangote Cement is planning to build a 3Mt/yr plant at Kitui and Cemtech Kenya, a subsidiary of India’s Sanghi Group, is planning to build a 1.2Mt/yr plant at Pakot.
Local producer ARM Cement reported both falling turnover and a loss for the first half of 2016. It blamed this on increased competition in Tanzania. However, in 2015 it increased its turnover in Kenya by importing clinker over the border from its new Tanga plant in Tanzania. It also noted a ‘competitive landscape’ in Kenya and lamented the effects of currency devaluation on its financies as a whole. East African Portland Cement had a tougher time of it for its half-year that ended on 31 December 2015, issuing a profit warning of a loss and expected reduced profits despite a rise of 12% in sales revenue. By contrast, Bamburi Cement, LafargeHolcim’s subsidiary, reported both increases in revenue and operating profit in 2015. Although it too noted problems with interest rates and currency depreciation in the country during this period.
The focus on Chinese imports follows Chinese contractors winning some of the biggest infrastructure projects in the country. The China Rail & Bridge Corporation (CRBC), for example, is building a railway between Mombasa and Nairobi. The Business Daily newspaper has found data showing that Chinese cement imports worth US$19.8m to Kenya in the first half of 2016 compared to US$1.99m in the same period of 2015. The background to this is that China has more than doubled the value of all of its imports to Kenya since 2011 according to the KNBS. Total import volumes of clinker from all foreign countries increased by 51% in 2015 from 1.31Mt in 2014, the largest increase in at least five years.
If local cement producers are being locked out of supplying these kind of deals no wonder they are getting angry. However, another angle on what’s happening here might be that local producers who are suffering from increased competition, falling prices and a precarious national financial situation are lashing out at the easiest target. The local press doesn’t appear to have criticised ARM Cement for moving its Tanzanian clinker north of the border for example. Likewise, a Bamburi Cement spokesperson previously said that the producer had supplied 300,000t of cement to the rail project since September 2014, earning it nearly US$10m. Kenya needs cement as it builds its infrastructure. Fortunes will be made and tempers will be lost as it does so.
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/
South Africa: Modilati Gustav Mahlare is to retire from Sephaku Holdings at its annual general meeting (AGM) to be held in September 2016. Mahlare has served on the company’s board as chairman of the audit and risk committee for three consecutive terms. He is not eligible for re-election. MJ Janse van Rensburg has been recommended to replace Mahlare. Her appointment will be subject to shareholder approval at the AGM.
Janse van Rensburg has served as the Chief Financial Officer and, later, Chief Executive Officer at the Trans Caledon Tunnel Authority between 1994 and 2008. Prior to this she worked as a non-executive director for the Bond Exchange of South Africa, the Airports Company of South Africa, the Johannesburg Water Department and Denel, during which time she also fulfilled the role of a member or chairman of the respective audit committees. She is currently a non-executive director of the Development Bank of South Africa and a non-executive member of the Credit Committee overseeing Africa and India at First National Bank.
Sephaku Holdings holds a 36% stake in Sephaku Cement. The remainder is held by Nigeria’s Dangote Cement.