Displaying items by tag: Government

Energy has been the theme for a couple of cement news stories of note from Egypt this week. The first concerns the government’s impending plan to centralise distribution of mazut (heavy fuel oil) to cement plants to help them cope with ongoing power shortages. Earlier in the week Cemex signed a deal with the Assiut Governorate to operate a second municipal solid refuse processing unit in the country. The company’s first Regenera facility, in Mahala, started operations in May 2024. Another story from mid-September 2024, along the same theme, covered the inauguration of an 18MW waste heat recovery (WHR) unit at Heidelberg Materials Egypt's Helwan Cement plant.

The wider story is that the country has faced so-called load shedding, or power rationing, since mid-2023 due to falling gas production, rising energy demand and negative currency exchange effects making it harder to buy fuel imports. The power cuts were extended in duration in July 2024 due to a heat wave. The government then said in late September 2024 that it is making investments to prevent domestic power cuts in 2025.

The cement stories mentioned above show some of the ways cement companies cut their energy costs. Two potential ways of doing this are to increase the use of alternative fuels (AF), such as municipal solid waste, or to install a WHR unit. Titan Cement, for example, reported AF thermal substitution rates of above 40% in Alexandria and above 30% in Beni Suef in the first half of 2024. The local press hasn’t reported power shortages amongst the country’s cement producers, but the plans to control the distribution of mazut suggest that either ‘something’ has happened or the government is trying to avoid ‘something.’ Readers may recall that producers have periodically faced step changes in power supplies over the years. In the mid-2010s, for example, lots of plants switched from heavy fuel oil and gas to coal. The energy price fluctuations following the start of the Russia - Ukraine war in 2022 then saw the price of coal rise.

However, what the foreign-owned producers have complained about in the first half of 2024 is the declining exchange rate of the Egyptian Pound. Cementir, Cemex and Titan Cement all noted this. However, Titan reckoned that International Monetary Fund and European Union investment had actually eased the economic situation in the first half of the year leading to an increase in the number of large construction projects.

One effect of the currency problems upon the cement market has been a focus on exports. At the start of September 2024 the Federation of Egyptian Industries said that national cement consumption in 2024 was expected to drop by 4% year-on-year to 45Mt. However, exports were projected to rise to 15Mt. The first and second most popular destinations so far in 2024 have been the Ivory Coast and Ghana. Yet, exports to Libya, the third biggest external market, may have had the biggest effect. These have been blamed for creating a shortage of trucks that was causing delays to the local construction sector. The round-journey from Egypt to Libya can take up to 12 days. This has left building sites bereft of raw material deliveries because all the trucks are elsewhere! Vicat acknowledged the growing importance of imports for its business in Egypt in its half-year report for 2024. It said that ‘sluggish’ domestic market conditions “were more than offset by growth in cement and clinker volumes for export to the Mediterranean and Africa regions.”

The wider picture of the cement sector in Egypt remains one of overcapacity with integrated capacity estimated above 70Mt/yr. The government introduced cement production quotas in mid-2021 and this stabilised prices (and profits). The recent state of the local economy may have strained this, but the latest round of external investment appears to have buoyed things for now. Although the effects of the Israeli military action in Lebanon may have unforeseen consequences upon neighbouring markets. In the meantime, cutting energy costs and growing exports offer two ways for producers to raise their profits.

China’s Ministry of Ecology and Environment announced plans last week to add the cement sector to the country’s emissions trading scheme (ETS) by the end of 2024. The ministry has started the consultation process to also add steel and aluminium production to the system. 2024 will be used as a control year for the new industries entering the scheme, an implementation phase will run in 2025 and 2026 and then the quota allocated to companies will start to be reduced from 2027 onwards. Plants that emit 26,000t/yr of CO₂ or higher will be included in the ETS.

Clearly this is a big deal for the cement industry worldwide, as China produces around half of the world’s cement. As Ian Riley the CEO of the World Cement Association commented, "The inclusion of cement in the Chinese ETS is a critical and long-awaited step. As we have seen in Europe, a well-implemented carbon ETS can be beneficial by not only curbing emissions but also catalysing industry restructuring that favours the most efficient and lowest-emitting producers. This move signals China’s intent to prioritise sustainability in high-emission sectors…” In 2023, for example, China produced 2.02Bnt of cement compared to a global output of 4.10Bnt. This compares to the 176Mt of cement produced in the European Union (EU) in 2022. The EU, of course, is the home of the world’s second largest ETS.

China’s National ETS originally started in 2021 focusing on the power generation sector. It followed several pilot markets in eight regions, which continue to operate in parallel with the national system. At present the National ETS covers more than 2000 companies with emissions exceeding that 26,000t/yr of CO₂ figure mentioned above. These are mostly generation businesses, but it does also cover captive power plants. Overall, the scheme is estimated to cover around 5Bnt/yr of CO₂ and accounts for over 40% of the countryʼs CO₂ emissions. The current targets are an 18% reduction in carbon emissions per unit of GDP compared to 2020 levels by 2025, peak CO₂ emissions by 2030 and net zero emissions by 2060. Following the addition of the cement, steel and aluminium sectors, however, the ETS is estimated to grow to 8Bnt/yr of CO₂ and it should account for 60% of the country’s CO₂ output.

In April 2024 the average spot price of emissions traded on the Shanghai Environment and Energy Exchange reached €12.7/t of CO₂. This was a notable milestone because in the local currency it exceeded the ‘psychological’ 100 Chinese Yuan threshold. Meanwhile, the EU ETS CO₂ price started to increase in 2021 finally making it just past Euro100/t of CO₂ in early 2023. Since then, it has declined somewhat but remains at €50-75, well above the levels of the 2010s.

In practical terms the real significance of China’s National ETS for the cement sector should begin to be felt once the government starts to tighten up the allocated quotas from 2027 onwards. It is at this point that it will become apparent how the system is being used to drive the pace of decarbonisation. The other part of this to watch is if or when domestic talk turns to setting up a version of the EU’s Carbon Border Adjustment Mechanism (CBAM) to stop imports. It is at this point that one might be able to tell if the ETS has ‘bite.’

The government has not been shy in regulating industry and one of its starkest tools so far in tackling overcapacity has been mandating cement plants to simply stop production for some months of the year through so-called peak shifting. The National ETS gives it another tool to drive policy changes. Yet it is more complicated and with wider implications to other industries than simply telling plants to take a break. How it fits in globally, where there is a significant difference between the ETS price in China and the EU, remains to be seen. Yet, any additional CO₂-based burden upon the cement sector in the world’s largest cement producing country is a major step towards decarbonisation.

Afghanistan: The governments of Azerbaijan and Uzbekistan have agreed to build a new 1Mt/yr cement plant in northern Afghanistan. Trend News has reported that representatives of the three countries met to discuss the upcoming plant, as well as other opportunities for regional cooperation, railways and the role of Afghanistan in the Economic Cooperation Organisation.

Kyrgyzstan: A partly state-owned consortium of companies including Terek Tash and Zenit has commissioned a new 1.5Mt/yr clinker plant in Kemin, Kara-Kyrgyz Autonomous Oblast. Central Asia News has reported that the plant is intended to supply clinker for use in cement production at an upcoming grinding plant at Novo-Pokrovka in Chui. The projects have a combined value of US$150m.

The mountainous eastern shore of the Adriatic Sea and its hinterlands in Europe’s Balkan Peninsula have one of the world’s highest densities of countries: six, across a broad equilateral triangle of 212,000km². All six states – Albania, Bosnia & Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia – are historically characterised by political non-alignment, carrying over from the Cold War period, and all the more notable for the presence of the EU to the north (Croatia, Hungary and Romania) and east (Bulgaria and Greece).

A nine-plant, 9Mt/yr local cement sector serves the 16.8m-strong population of the unconsolidated ‘bloc.’ Albania has 2.8Mt/yr (31%), Serbia 2.7Mt/yr (30%), Bosnia & Herzegovina 1.6Mt/yr (18%), North Macedonia 1.4Mt/yr (15%) and Kosovo 500,000t/yr (6%), while Montenegro has no cement capacity – for now. Altogether, this gives this quarter of South East Europe a capacity per capita of 539kg/yr. The industry consists entirely of companies based outside of the region. Albania’s two plants are Lebanese and Greek-owned (by Seament Holding and Titan Cement Group respectively). Titan Cement Group also controls single-plant Kosovo and North Macedonia, and competes in the Serbian cement industry alongside larger and smaller plants belonging to Switzerland-based Holcim and Ireland-based CRH, respectively. Lastly, Bosnia & Herzegovina’s capacity is shared evenly between Germany-based Heidelberg Materials and Hungary-based Talentis International Construction, with one plant each.

Lafarge Srbija, Holcim's subsidiary in Serbia, announced plans for its second plant in the country, at Ratari in Belgrade, last week. No capacity has yet emerged, but the plant will cost €110m, making something in the region of the country’s existing 0.6 – 1.2Mt/yr plants seem likely. This would give Serbia over a third of total capacity in the Central Balkans and twice the number of plants of any other country there, expanding its per-capita capacity by 22 – 44%, from a regionally low 408kg/yr to 500 – 590kg/yr.

In announcing the upcoming Ratari cement plant, Lafarge Srbija laid emphasis on its sustainability. The plant will use 1Mt/yr of ash from the adjacent Nikola Tesla B thermal power plant as a raw material in its cement production. In this way, it will help to clear the Nikola Tesla B plant’s 1600 hectare ash dumps, from which only 180,000t of ash was harvested in 2023. Circularity has been front and centre of Holcim’s discussions of its growth in Serbia for some time. When Lafarge Srbija acquired aggregates producer Teko Mining Serbia in 2022, the group indicated that the business would play a part in its development of construction and demolition materials (CDM)-based cement and concrete.

Holcim’s Strategy 2025 growth plan entails bolt-on acquisitions in ‘mature markets,’ backed by strategic divestments elsewhere. Other companies have been more explicit about a realignment towards metropolitan markets, above all in North America, at a time when they are also diversifying away from cement and into other materials. Just why a leading producer should look to build cement capacity in Serbia warrants investigation.

Serbia is the only Central Balkan member of Cembureau, the European cement association. In a European market report for 2022, the association attributed to it the continent’s fastest declining cement consumption (jointly with Slovakia), down by 11% year-on-year. Like the rest of Europe, Serbia is also gradually shrinking, its population dwindling by 0.7% year-on-year to 6.62m in 2023, which limits hopes for a longer-term recovery. Serbia remains the largest country in the Central Balkans, with 39% of the total regional population.

Several factors have compounded Serbia’s difficulties as a cement-producing country. Firstly, like the Nikola Tesla B thermal power plant, its kilns run on coal. 50% of this coal originated in Russia and Ukraine in 2021, causing the entire operation to become ‘imperilled’ after the former’s brutal invasion of the latter in February 2022, according to the Serbian Cement Industry Association. In planning terms, this was a case of putting half one’s eggs in two baskets – and dropping them both.

Secondly, Serbia’s choice of export markets is mainly confined to either the EU or global markets via the River Danube, Black Sea and Mediterranean. Either way, it is in competition with a cement exporting giant: Türkiye. Serbia sold €19.7m-worth of cement in the EU in 2023, up by 63% over the three-year period since 2020 – 31% behind Türkiye’s €28.8m (more than double its 2020 figure).¹ One other Central Balkan country had a greater reliance on the EU market: Bosnia & Herzegovina. It exported €48.4m-worth of cement there, quadruple its 2020 figure and behind only China (€133m) and the UK (€54.7) in cement exports to the bloc by value.

Bosnia & Herzegovina’s cement industry underwent a different permutation at the start of 2024: an acquisition, replacing one EU-based player with another. Lukavac Cement, which operates the 800,000t/yr Lukavac cement plant in Tuzla, changed hands from Austria-based building materials producer Asamer Baustoffe to Hungary-based property developer Talentis International Construction. Talentis International Construction belongs to one of Hungary’s major family-owned conglomerates, Mészáros Csoport.

Besides Central Europe, Balkan countries have found a ready source of investments in the past decade in China. In construction alone, Chinese investments total €13.2bn in Serbia, €2.4bn in Bosnia & Herzegovina, €915m in Montenegro and €650m in North Macedonia.² This can be a booster shot to all-important domestic cement markets, but has some risks. Montenegro previously faced bankruptcy after Export-Import Bank of China began to call in an €847m loan for construction of the still upcoming A1 motorway in the country’s Northern Region. This did not put off the Montenegrin government from signing a new memorandum of understanding (MoU) with China-based Shandong Foreign Economic and Technical Cooperation and Shandong Luqiao Group for construction of a new €54m coast road in the Coastal Region in mid-2023.

In Montenegro, UK-based private equity firm Chayton Capital is currently funding a feasibility study for a partly state-owned cement plant and building materials complex at the Pljevlja energy hub in the Northern Region. Along with an upgrade to the existing Pljevlja coal-fired power plant, the project will cost €700m.

In 2026, EU member states will begin to partly tax third-country imports of cement and other products against their specific CO₂ emissions, progressing to the implementation of a 100% Carbon Border Adjustment Mechanism (CBAM) by 2034. Montenegro led the Central Balkans’ preparations for the EU’s CBAM roll-out with the introduction of its own emissions trading system in early 2021. Bosnia & Herzegovina will follow its example by 2026, but other countries in the region have struggled to conceive of the arrangement except as part of future EU accession agreements.

Based on the average specific CO₂ emissions of cement produced in the EU, the World Bank has forecast that exporters to the bloc will be disadvantaged if their own specific emissions exceed 5.52kg CO₂eq/€.³ By contrast, any figure below this ought to offer an increased competitive edge. Albanian cement has average emissions of 4.71kg CO₂eq/€, 15% below ‘biting point’ and 13% below Türkiye’s 5.39CO₂eq/€. Albania’s government consolidated its anticipated gains by quintupling the coal tax for 2024 to €0.15/kg. The figure is based on the International Monetary Fund’s recommended minimum CO₂ emissions tax of €55.80/t, 21% shy of the current EU Emissions Trading Scheme (ETS) credit price of €70.49/t.⁴

The Central Balkans is a region of apparently slow markets and industry growth regardless – to 11 cement plants, following the completion of current and upcoming projects. A recurrent theme of capital expenditure investments and the way investors talk about them may help to explain this: sustainability. Looking at the mix of technologies in the current nine plants, these include wet kilns and fuels lines built for conventional fossil fuels. This is not to presume that any given plant might not be happy with its existing equipment as is. Nonetheless, the overall picture is of a set of veteran plants with scope to benefit from the kind of investments which all four global cement producers active in the region are already carrying out elsewhere in Europe. Such plans may already be in motion. In late 2023, Titan Cement Group’s North Macedonian subsidiary Cementarnica Usje secured shareholder approval to take two new loans of up to €27m combined.

As the latest news from Serbia showed, taking care of existing plants does not preclude also building new ones. The cement industry of the Central Balkans is finding its position in the new reduced-CO₂ global cement trade – one in which old and new work together.

References

1. Trend Economy, ‘European Union – Imports and Exports – Articles of cement,’ 28 January 2024, https://trendeconomy.com/data/h2/EuropeanUnion/6810#

2. American Enterprise Institute, 'China Global Investment Tracker,' 3 February 2024 https://www.aei.org/china-global-investment-tracker/

3. World Bank Group, ‘Relative CBAM Exposure Index,’ 15 June 2023, https://www.worldbank.org/en/data/interactive/2023/06/15/relative-cbam-exposure-index

4. Ember, 'Carbon Price Tracker,' 26 August 2024, https://ember-climate.org/data/data-tools/carbon-price-viewer/

Kyrgyzstan: The government says that construction of the upcoming 1Mt/yr Tash-Kumyr cement plant in Jalal-Abad region is 60% complete, and the plant is on track for commissioning in 2025. Central Asia News has reported that the facility will employ 250 – 300 people.

A couple of stories have popped up this week regarding restrictions on cement imports. First, authorities in Taiwan have launched an anti-dumping investigation into Vietnamese cement. Secondly, and perhaps more surprisingly given its growing economy, the authorities in Kyrgyzstan are planning to ban overland imports of cement from within Central Asia. More on that later…

First, to the Far East, where Taiwan’s Trade Remedies Authority has launched an anti-dumping investigation into cement and clinker imported from Vietnam. It will assess imports covering the year from 1 July 2023 to 30 June 2024 and target seven specific Vietnamese cement producers among others. The Vietnamese companies are mandatory respondents – they will be compelled to answer investigators’ questions.

Vietnamese cement has long been among the cheapest in the region due to the country’s drive to hit production targets, rather than simply meeting demand. The situation has resulted in a vast amount of cement available for export. This, coupled to Vietnam’s long, indented coastline, makes it easy to ship cement overseas.

Even with export volumes falling by 1.2% year-on-year to 31.3Mt in 2023, around a third of Vietnam’s capacity, this is a massive volume of cement - and it’s only getting cheaper. The average export value of Vietnamese cement and clinker fell from US$46-48/t at the start of 2023 to just US$31-32/t in May 2024, a decline of 30-35%. These changes have been due, in part, to an increase in tax on clinker exports from 5% to 10% on 1 January 2023 and an anti-dumping investigation launched by the Philippines in March 2023. Falling prices and volumes represent a ‘double-whammy’ for producers, several of which have announced that they made losses in the first half of 2024. Vicem’s top management said that challenges also arose at home due to a reduced demand following limited civil engineering projects and a stagnant real estate market.

It is easy to see why Taiwanese cement producers may feel threatened by the prospect of greater volumes of cheap cement on their doorstep. Taiwan only made 4.9Mt/yr of cement in the first half of 2024. With domestic prices in the region of US$65-70/t according to Cement Network, this provides a very attractive margin of US$33-39/t for Vietnamese producers to export to Taiwan. It will be interesting to see how far the country’s authorities are willing to go to protect the country’s producers and whether any anti-dumping policies lead to further falls in the landed volumes of Vietnamese cement.

Meanwhile, 4600km to the west, Kyrgyzstan has announced that it will enforce a six-month road import ban on several types of cement including Portland cement, alumina cement and slag cement. The ban, affecting both cement and clinker, will take effect on 1 October 2024 and last for six months. According to the State Statistical Committee of Kyrgyzstan, the country saw a 76% year-on-year increase in cement imports – mainly from Iran, Kazakhstan, China and Uzbekistan - between January 2024 and May 2024. The total import volume over the five months was 125,737t. For a country that made just 1Mt over the same period, this is a major change.

The overland import ban is more of a surprise than the Taiwan / Vietnam situation, as Kyrgyzstan recently reported that the North of the country was experiencing a ‘construction boom’ and cement shortages. However, two new plants due to start production in the coming months could help the country out... unless it too would like to export its newly-developed cement production capacity.

And here we arrive at a ‘classic’ impasse. From Pakistani cement in South Africa, to price arguments in West Africa, import bans in Central Asia and Vietnamese cement in Philippines and Taiwan, more and more exporters are finding that their markets are already self-sufficient in cement, with the US perhaps the notable exception. Soon there will be nowhere left for cement to be exported to. Are we at peak cement?

Congratulations to Taiheiyo Cement Philippines (TCPI) this week for inaugurating its new 3Mt/yr production line at its Cebu plant. The US$220m line replaces the old line at the site that was closed in late 2021.

The plant was originally built by Grand Cement Manufacturing in the early 1990s. Japan-based Taiheiyo Cement took over in 2001 and later made the decision to upgrade the site in 2017. It then contracted China-based Anhui Conch and Sinoma (Handan) Construction for the project in 2021 and groundbreaking took place in mid-2022. Commercial operation of the new line was previously scheduled from May 2024. TCPI has also invested around US$140m in related projects such as its Jetty and Marine Belt Conveyor project, which links the Cebu plant to the coast via a conveyor. Other parts of this expenditure encompass the Luzon Distribution Terminal Project at Calaca in Batangas and general port development in San Fernando.

The Department of Trade and Industry (DTI) was keen to promote this example of a foreign-owned company investing in local manufacturing. DTI Secretary Fred Pascual pointed out that Japan is the country’s “second-largest trading partner and third-largest source of foreign investment.” He also linked the project to the national Build Better More infrastructure development programme and the Tatak Pinoy Act that was introduced in early 2024 to promote local industry. Along these lines, Republic Cement was awarded the Domestic Bidder’s Certificate of Preference this week. It is the first cement company to receive it. The initiative promotes the use of local manufactured materials in government projects as part of the Tatak Pinoy Act. As one might expect, the Cement Manufacturers Association of the Philippines (CEMAP) supports the Tatak Pinoy Act. It voiced its support for the legislation in June 2024 when the DTI started to implement it. It noted that cement imports were just under 7Mt/yr in 2023 despite the anti-dumping duties imposed on a number of Vietnam-based producers and traders. This compares to a local production capacity of nearly 50Mt/yr.

CEMAP mentioned that new production lines from both TCPI and Solid Cement were expected in 2024. The latter project is a new production line being built at Solid Cement’s Antipolo plant near Manilla in Rizal province. Cemex Philippines held a groundbreaking ceremony for the 1.5Mt/yr line at its subsidiary back in 2019. However, Cemex said it was selling its Philippines-based business to DMCI Holdings and related companies in April 2024. As part of this process Cemex sold its local cement brands to the Consunji family, the owners of DMCI Holdings, in June 2024. Regulatory approval of the divestment is still pending but the sale of the brands suggest that the transaction is progressing. Completion is expected by the end of 2024. Operation of the new line at the Antipolo plant is anticipated from September 2024.

Another forthcoming plant project was announced by PHINMA Corporation in June 2024. It signed a joint venture deal with investment company Anflo Group to build a 2Mt/yr cement plant in Davao del Norte. The project is scheduled to be operational by 2026. Cement from the plant will be marketed under the Union Cement brand. The sums involved suggest a grinding plant but PHINMA’s cement division, Philcement Corporation, is involved with both manufacture and importation. PHINMA also signed a deal to buy Petra Cement in May 2024. The latter company runs a 0.5Mt/yr cement grinding plant in Zamboanga del Norte. PHINMA re-entered the cement market in the late 2010s when it bought the Union Cement brand and built a cement processing plant at Mariveles, Bataan in 2020.

The battles between cement producers and importers continue to play out in the Philippines as the country’s infrastructure plans gather pace. Yet the balance seems to be tilting more towards the favour of the local manufacturers at the moment, as new capacity gets proposed and built. Anti-dumping duties on imports, particularly those from Vietnam, have now been followed up with local procurement rules in the guise of the Tatak Pinoy Act. Whether this is enough remains to be seen. This kind of environment and the departure of Cemex may also start to revive questions about whether any other foreign-owned cement companies might be considering their options too.

Pakistan: The All-Pakistan Cement Distributors Association (APCDA) has asked the government to take heed of their strike call issued on 13 July 2024. The association is threatening action in response to new taxes and ordinances. These include a new sales tax, an increase in the 236-H income tax from 1% to 2.5% and the introduction of point-of-sale systems. APCDA said that the measures together made it ‘extremely difficult’ for cement dealers to operate. It called for exemptions or inclusion in a different presumptive tax regime in order to prevent industry collapse.

The News International newspaper has reported that association chair Chaudhry Sajid said that the new taxes will have to be passed on as additional costs for customers. He criticised the classification of cement as a fast-moving consumer good, as not all dealers are sufficiently ‘tech-savvy’ to adopt the requisite digital systems.

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.