Nigeria: Cement War – Dangote, WAPCO Hit Back At Ibeto

Nigeria’s cement manufacturers and top economists have chided the Ibeto Cement Company over its resolve to continue to import cement into the country despite the capacity of Nigerian manufacturers to meet local demand.

A statement by the head, corporate communications, Dangote Group, Mr. Anthony Chiejina, noted yesterday that leading cement manufacturers in the country – Dangote Cement Plc and Lafarge WAPCO Cement Plc – were alarmed at the glut created by cement importers.

The development has forced the Dangote Group to halt production in its almost four million metric tonnes Gboko plant in Benue State, the statement disclosed.

In the same vein, the management of Lafarge WAPCO Cement Plc has cut its production as glut intensifies in the subsector. Plant manager, Lafarge’s Ewekoro cement plant, Mr. Lanre Opakunle, said 50 percent of Lafarge’s Shagamu plant had been shut down.

He said that the company’s Ewekoro plant had cut production by 40 percent in response to the glut in the market, adding that, at the moment, the various Lafarge factories had excess cement and clinker inventory at their plants of about 300,000 metric tonnes, which cannot be absorbed by the Nigerian market because it is already over supplied.

According to him, the firm had been running the Ewekoro plant on skeletal schedule to prevent its total shutdown.

The local manufacturers said that if the glut continues, it may force hundreds of thousands of Nigerians out of jobs.

Cement manufacturers, under the aegis of Cement Manufacturers Association of Nigeria (CMAN), have also said unless the federal government fulfills its promise of halting importation, the cement sub-sector of the economy might go the way of the textile sector.

CMAN chairman, Joseph Makoju, said the 18.5 million tonnes of cement production target reached by local manufacturers was being threatened.

“Yet the 18.5 million tonnes is representing just 65 percent of the present total installed capacity of the industry. Between 2002 and May 2012, a total of $6 billion in new investment was made by local manufacturers, while the ongoing expansion and new plants are estimated to cost another $3.5 billion. Due to continuous rapid growth, the nation no longer requires cement imports, as local demand is being effectively met and even surpassed,” he explained.

He gave reason why the price of cement was still high for consumers, attributing it to the high cost of haulage and energy.

“Energy cost accounts for over 35 percent of production cost and the price of low pour fuel oil (LPFO) has jumped up from N25 per litre in 2009 to N107.76 per litre as at November 2012, an increase of 331 percent,” he said.

Makoju, who also doubles as a special adviser to Dangote Group’s chairman, Alhaji Aliko Dangote, said that Dangote’s Gboko plant was not shut for turn-around-maintenance (TAM) as alleged.

The importation of cement, according to him, is a very cheap and attractive business but detrimental to the economy, with just 20 per cent duty, a levy of 15 per cent and clinker at 10 per cent, thus making the landing cost of imported cement very cheap at $35 or just over N5, 000 per tonne.

Group head, corporate communications, Dangote Group, Anthony Chiejina, lamented in a statement that the above scenario was making life difficult for local manufacturers.

“The inventory of finished products is beginning to build up at our plants. Don’t forget that projects from our investments of about N280 billion in additional capacity are already on stream, with lines 3 and 4 at Ibese and line 4 at Obajana coming on stream early this year,” he said.

Chiejina further stated that for the backward integration policy to succeed fully, government should help to increase the demand for cement by encouraging the use of concrete roads.

Concrete roads, he said, were more durable and would save substantial outflow of foreign exchange, while reducing the asphalt import.

Speaking on the development, a renowned financial expert, Bismark Rewane, who is the chief executive of Financial Derivatives, expressed worry that government was yet to stop the importation of cement despite increased local production.

He expressed concern over the situation in the cement industry and called for concerted efforts to save local manufacturers.

LEADERSHIP learnt that the Dangote Group alone has caused the employment of over 100,000 persons in direct and indirect labour.

Minister of Trade and Investment Olusegun Aganga had said that the backward integration policy was meant to halt cement importation and work towards fulfilling President Goodluck Jonathan’s determination to make Nigeria a major cement exporting country in 2013.