Displaying items by tag: Nigeria
Getting into Africa
13 March 2013If you have any spare cement this week – send it to Ghana!
First, HeidelbergCement announced plans for a new cement mill on the coast at Takoradi. Then, Dangote officially started to export cement to the west African nation.
HeidelbergCement's strategy in the region is telling because it is starting to head inland. The press release on Ghana indicated that the German-based cement producer intends to expand its capacity to 4.4Mt/yr by late 2014. This follows a recent announcement that HeidelbergCement are building their first grinding plant in Burkina Faso, directly north of Ghana. Previously the producer imported cement there. Now it intends to build a US$50m plant with a production capacity of 0.65Mt/yr.
Since most of HeidelbergCement's existing infrastructure in the region is based on the coast, building a plant in a landlocked nation - Burkina Faso - is a huge vote of investor confidence in west Africa. "In particular the countries of sub-Saharan Africa have a very high growth potential due to their early stage of industrialisation and rich natural resources," said Dr Bernd Scheifele, chairman of the managing board of HeidelbergCement in the statement accompanying the Ghana expansion.
The move also provides a clue as to how competitive the cement market is becoming in territories near the coast in Africa. Currently HeidelbergCement holds a mostly coastal presence in western Africa, in Benin, Democratic Republic of the Congo, Gabon, Ghana, Liberia, Sierra Leone and Togo. It has four cement plants and nine grinding plants. Its cement business made a year-on-year increase in revenue of 12% to Euro612m in 2012.
Roughly calculated, HeidelbergCement is paying US$77/t in Burkina Faso compared to US$38/t in Ghana to build its new production capacity. HeidelbergCement must be paying double for a reason.
Meanwhile, Dangote Cement announced on the same day (11 March 2013) that a fleet of cement trucks were heading to Ghana. Already the Nigerian cement producer holds a cement terminal with a bagging capacity of 1.5Mt/yr in the country. Dangote intends to start exporting 5000t/week of cement. Its eventual target is 5000t/day when the logistics are in place, or up to 1.8Mt/yr. Not a bad start in unloading Dangote's self-declared overcapacity of 20Mt/yr in Nigeria upon the neighbouring nations in the Economic Community of West African States (ECOWAS).
Edo Cement to commission 3Mt/yr plant in 2014
27 February 2013Nigeria: Edo Cement Company's new US$500m plant in Okpella, with a cement production capacity of 3Mt/yr, will be ready for commissioning in early 2014, the chairman of parent company BUA Group has said.
Alhaji Abdulsamad Rabiu made the announcement at the signing of a US$35m contract agreement between BUA Group and Siemens to build a new gas turbine power plant for the plant. The contract, which was signed with Siemens at BUA's London office, was for Siemens to supply three SGT 500 turbines manufactured by Siemens Industrial Turbo Machinery AB in Finspang, Sweden with a total capacity of about 45MW. These will supply power to the Edo Cement plant, which is currently under construction.
"I am particularly very impressed so far by the civil construction work done by Julius Berger. 70% of the cement plant equipment has been shipped and is currently on site and the pace of work is very comprehensive and impressive. By early 2014 the cement factory will be ready for use," commented Rabiu on the plant's progress.
UNICEM to double cement capacity to 5Mt/yr by 2016
13 February 2013Nigeria: Flour Mills of Nigeria plans to borrow up to US$500m to finance a 2.5Mt/yr upgrade at its 2.5Mt/yr UNICEM joint venture cement plant in Calabar, according to its chief finance officer. Flour Mills operates in the Nigerian cement market as Burham Cement and it shares its joint venture with Holcim and Lafarge.
In an interview with Reuters, Jacques Vauthier announced that the conglomerate had appointed financial advisers and banks to raise a term loan from the local market for the construction of the plant. He said that the details of the loan were still being finalised. The new cement plant will be completed by the first quarter of 2016.
Vauthier acknowledged the cement glut in 2012 and blamed it on cheap imports from Asia. He added that sales were picking up again and he expected its cement subsidiary Unicem to end 2013 with a year-on-year growth rate that is in double-digits.
This news story was updated on 11 November 2013 with the exisiting capacity of the UNICEM cement plant
Loesche announces orders for Sinoma and Dangote in Africa
13 February 2013Nigeria: German vertical roller mill (VRM) producer Loesche GmbH has been awarded a contract for five new VRMs from China's Sinoma International Engineering, which is building a two kiln extension to the existing Dangote Cement Ibese plant. Loesche previously delivered equipment for the first and second lines at the same plant.
The five VRMs to be supplied are two 450t/hr Loesche Mill Type LM69.9 mills for raw material and three 310t/hr cement LM 63.3+3C cement mills. As with previous work at Ibese, the high moisture of the material of up to 20%, the sticky nature of the raw material and the low grindability of the raw material represent special challenges for the project.
In addition to the mills and the mill motors, Loesche will deliver metal detectors and hopper discharge feeders. The supply of the equipment will be split between Loesche, which is supplying key parts, and a Chinese-manufactured portion arranged by Sinoma International under supervision of Loesche. Delivery is scheduled at the end of 2013.
Ethiopia: Sinoma has also announced that it has contracted Loesche as the sole supplier of grinding technology for the construction of the Menagasha grinding plant, which is being constructed by Dangote. Delivery will be in early 2014.
Four Loesche mills will be included in the process; a 450t/hr LM 69.6 for raw material grinding, a 50t/hr LM 28.3D for coal grinding and two LM53.3+3C mills will be used for grinding clinker additives such as gypsum, limestone and pumice.
In addition to the mills and the mill motors, Loesche will deliver metal detectors and mill rotary feeders. The supply is a split-up of Loesche key parts and a Chinese manufactured portion arranged by Sinoma International under supervision of Loesche.
Both the plant elevation of 2600m above sea level and the very poor grindability of the cement raw material represents a special challenge for the layout of the grinding equipment in this case.
Dangote reopens Gboko plant
01 February 2013Nigeria: Nigeria's Dangote Cement re-opened its Gboko cement plant on 31 January 2013. The plant, which represents 20% of Dangote's production in the country due to its 4Mt/yr cement capacity was shut by the company in early December 2012, citing a glut in the market caused by imported cement from Asia.
"Since the shutdown of the Gboko Cement Plant, the government has been engaging local cement manufacturers in discussions and trying to find solutions to the challenges facing the industry," said Dangote in a statement. It added that the decision to re-open followed a meeting between President Goodluck Jonathan and the firm's chairman Aliko Dangote.
At the end of December 2012, Dangote Cement said that it expected its first quarter pre-tax profit to rise by 39% year-on-year to around US$267.8m. Dangote has expanded aggressively in recent years, supplying a construction boom in Africa's second-biggest economy and most populous nation. It plans to grow its Nigerian production to 29Mt/yr by 2015 and is also building cement plants across Africa, although cheap imports from Asia are seen as a threat to margins.
Sinoma places Dangote mill order with Loesche
17 January 2013Nigeria: German vertical roller mill (VRM) producer Loesche GmbH has been awarded a contract for five new VRMs from China's Sinoma International Engineering, which is building a two kiln extension to the existing Dangote Cement Ibese plant. Loesche previously delivered equipment for the first and second lines at the same plant.
The five VRMs to be supplied are two 450t/hr Loesche Mill Type LM69.9 for raw material and three 310t/hr cement LM 63.3+3C cement mills. As with previous work at Ibese, the high moisture of the material of up to 20%, the sticky nature of the raw material and the low grindability of the raw material represent special challenges for the project.
In addition to the mills and the mill motors, Loesche will deliver metal detectors and hopper discharge feeders. The supply of the equipment will be split between Loesche, which is supplying key parts, and a Chinese-manufactured portion arranged by Sinoma International under supervision of Loesche. Delivery is scheduled at the end of 2013.
Plant mothballing causes protests in Benue State
11 January 2013Nigeria: The people of Benue State have protested against the continued closure of Dangote Cement's Gboko plant. The plant has been temporary shut down as a result of an alleged cement 'glut,' which cement producers say is being caused by massive cement imports.
A statement from Dangote Group said that the chairman, Gboko Local Government, Nahan Zinda decried the continued closure of the Dangote plant, saying that his local government is losing vast sums of revenue and that the closure was having knock-on effects in other areas of the economy, including trading stalls outside the factory. Zinda called on the federal government to expedite action by doing all it takes for the factory to reopen.
"Since the company was closed, cement prices have risen," said Zinda. "Our people have been jobless and suffering. It may also lead to anti-social behaviours. Our women, who have petty businesses outside the gate, are also complaining bitterly," he said.
Grace John, who spoke on behalf of women traders in Gboko, said that social and commercial activities have virtually come to a halt and that life was becoming difficult. She appealed for the quick reopening of the plant in the interest of women traders.
Benue State Commissioner of Finance Conrad Werbga said, "Importation impacts negatively on the economy. It causes lots of ripples. It comes with attendant negative consequences for our nation. The federal government must do all it could to reverse the trend."
All parties will be keen to keep disruption caused by the plant closure to a minimum. On 17 August 2011, a dispute between a trader and cement plant worker rapidly escalated to a full-scale riot, with 20 deaths and widespread looting in Gboko.
Nigeria’s overly neat cement industry
09 January 2013Nigeria's Minister of Trade and Investment, Olusegun Aganga brought together warring parties from Dangote and Ibeto Cement this week to discuss their very public spat about the state of the country's cement industry.
Claims that Nigeria is facing a 'glut' of cement have been building since the Cement Manufacturing Association of Nigeria (CMAN) declared that Nigeria was 'self-sufficient' in cement in late 2012. So when leading cement importer Ibeto Cement questioned this narrative, leading cement producers Dangote and Lafarge hit back. Aganga then announced a review of the country's industry.
Despite Nigeria's potential to consume cement, something is stopping it. Yet, as Ibeto Cement rightly asked, if Nigeria is producing too much cement why isn't the price falling?
Hard facts about the Nigerian cement industry are elusive. This is what we know. Nigeria's population is apparently 170m. Its cement industry has the capacity to produce 28Mt/yr (Global Cement Directory 2013). Its production level was 18.5Mt/yr in 2012 according to CMAN. However figures compiled by the United States Geological Survey placed production much lower at 11.6Mt in 2011. Consumption is believed to be 17-20Mt/yr. In 2011 it was 17Mt. Ibete Cement, the sole importer into the country, is allowed to import up to 1.5Mt/yr.
Nigeria's main producers include Dangote (19Mt/yr capacity, 70% of the market), Lafarge WAPCO (4.6Mt/yr, 17%), Unicem (2.5Mt/yr, 9%) and Ashaka Cement (2Mt/yr, 7%).
Hype about Nigeria's potential as a cement-producing nation hinges upon its low per capita consumption (110kg) compared to some of its African neighbours and indicators of expected growth such as a housing deficit of 16 million homes.
CMAN boss Joseph Makoju addressed this head-on, blaming the high cost of haulage and energy. He said that the energy cost accounts for over 35% of the production cost and that the price of low pour fuel oil (LPFO) had risen by over 300% from US$0.16/l in 2009 to US$0.69/l in November 2012. It should be pointed out that Makoju is also the special adviser to the president of Dangote Group, Aliko Dangote. Unsurprisingly he has advised the Federal Government to impose higher taxes on imported cement to discourage imports.
The production boom of recent years has been threatened by a weakening increase in demand. The gap between production and lower consumption estimates is around 1.5Mt. Dangote and Lafarge WAPCO's combined unsold stock at the end of 2012 was also just below 1.5Mt. Both figures are suspiciously close to the amount Ibeto is allowed to import annually. As usual, the easiest target is the cement importer. Dangote's political clout as a key Nigerian company, large-scale employer and all round African success-story will doubtless help its argument.
Yet if imports are really more competitive than Nigeria's domestic product how can the country possibly hope to export cement? Also this week Liberia announced it has relaxed its tariffs on cement. As luck would have it Dangote is building a new cement plant in the country. Sounds ideal for tricky import negotiations.
Nigerian minister announces industry review
09 January 2013Nigeria: Nigeria's Minister of Trade and Investment, Olusegun Aganga has announced that he will conduct an independent assessment of the country's cement industry to make it more competitive. The move follows a dispute between importer Ibeto Cement Company and leading producer Dangote Cement.
According to Aganga, at a meeting for stakeholders from the cement industry held on 7 January 2013 in Abuja, by the end of the entire review the Federal Government will draw up with a new strategy for the industry with three goals. The first is to bring down the price of cement in the country, the second is increase consumption of cement and the third is work on policies to open up the export market.
Aganga defended Nigeria's 10-year implementation of the Backward Integration Policy (BIP). According to Aganga the BIP has resulted in about US$6bn of investment in the sector, with a growth from 2Mt/yr to 28Mt/yr, and it has saved the country foreign exchange of about US$1.4bn/yr. The Nigerian cement industry provides direct and indirect employment for about two million people.
"We have achieved everything we set for ourselves 10 years ago when the BIP was introduced; we want to take the next step as part of our strategy on the way forward," said Aganga.
Nigerian producers hit back at Ibeto
03 January 2013Nigeria: Cement manufacturers have hit back at Ibeto Cement Company over its resolve to continue to import cement into Nigeria, despite the capacity of local manufacturers to meet demand.
A statement by Dangote Cement's head of corporate communications Anthony Chiejina said that Dangote and Lafarge WAPCO Cement were worried about the glut created by, according to him, importers.
Cement manufacturers, under the aegis of Cement Manufacturers Association of Nigeria (CMAN), have also said that unless the federal government fulfils its promise of halting importation the cement sub-sector of the economy might go into serious decline, with inventories building up at plants and reduced production. Cement producers are strongly lobbying for the development of concrete roads in Nigeria.
CMAN chairman, Joseph Makoju, said that the domestic cement production level of 18.5Mt/yr was being threatened. "The target of 18.5Mt/yr represents just 65% of the present total installed capacity of the industry," he explained. "Between 2002 and May 2012 a total of US$6bn in new investment was made by local manufacturers, while the ongoing expansion and new plants are estimated to have cost another US$3.5bn. Due to continuous rapid growth the nation no longer requires cement imports as local demand is being effectively met and even surpassed."
The reported oversupply in the the Nigerian market has already forced Dangote to halt production in its 4Mt/yr Gboko plant in Benue State and has prompted Lafarge WAPCO to reduce production. According to the plant manager at Lafarge's Ewekoro cement plant, Lanre Opakunle, 50% of Lafarge's Shagamu plant had been shut down. The Ewekoro plant has reportedly been running on a skeletal staff to prevent it from being closed completely. The manufacturers stress that, if the cement glut continues, it may force 'hundreds of thousands' of Nigerians out of jobs.