Recent research reports on the cement facilities of Africa reveal that the total cement capacity reached 207 million t in 2010, with more than 190 functioning production units, about a quarter of which were integrated cement production units.
Nearly 45% of the continent’s capacity was controlled by the global cement majors, including Lafarge, Holcim, HeidelbergCement, and Italcementi.
North Africa remains dominant in production capacity, representing 55% of the total cement output potential. In West Africa several new additions have raised its share to almost 20%.
This article will report on some of the key players in the Sub-Saharan and East African cement industry.
Sub Saharan Africa:
There are reports that Ghana Cement (Ghacem) plans to inject around US$26 million into its core operations to meet the country’s growing cement demand. According to the company’s officials, the amount would be used to expand the company’s plant at Tema, to increase its production capacity from 1.2 million tpa to 2.2 million tpa.
The Managing Director of Ghacem, Morten Gade told press recently: “This new expansion project will no doubt further enhance Ghacem’s investment portfolio, which is tailored to meet the nation’s need for quality cement.”
It is reported that the company will maintain its 1.2 million tpa of cement production rate at its other plant facility at Takoradi, just southwest of Tema.
If successful, the completion of the expansion drive will see the majority shareholders of Ghacem, the Heidelberg Group increase its annual production capacity to 3.4 million tpa.
Experts believe that currently, Ghana has an untapped cement market potential of 3 million tpa and competition for this market share is on the increase.
“We are anticipating growth in the cement market. Our expansion will make the company solid on the ground to meet the growing demand of cement in the country,” Dr. Dawson-Amoah, Corporate Director of Ghacem reported in a recent interview with local media.
The expansion works, according to company officials, are scheduled to commence in the second quarter of 2011 and is anticipated to be completed in a little over a year’s time.
In the northeast, Gombe-based Ashaka Cement plc, has recently announced a net profit of N3 billion in December 2010, a noteworthy 218% increase from the previous N944 million.
The company’s sales figures grew to N19.15 billion from N17.19 billion, an 11.40% hike. Additionally, there was a significant improvement in the company’s key performance indices.
Analysts say the company’s performance shows considerable improvement in liquidity, as reports of a 60% drop for trade debtors to N35 million, from N88 million in 2009 surfaced; while the company’s cash and bank balances rose significantly from N850 million to N3.19 billion (276% increase) in the same period. The company has also reportedly risen from a cash negative position of N3.1 billion to a cash positive position of N16 billion, resulting in a good position for future expansion in the competitive industry.
Despite its quite healthy cash position, Ashaka Cement plc is proposing a cash dividend of N0.3/share in July 27, 2011. According to analysts, the company’s expansion investments explain its conservative dividend position.
Allegedly, Ashaka Cement is investing in a kiln expansion project, which is expected to increase the company’s capacity to 1.25 million t. The new kiln is expected to be operational by 2012, and will add 400 000 t to the company’s production.
According to Bloomberg, Nigeria’s largest traded company, and one of biggest cement producers, Dangote Cement Plc saw its shares fall by N2.5 or 2% recently after plans to invest US$3.9 billion constructing plants in countries including Ethiopia, Tanzania, the Democratic Republic of Congo and Gabon were announced.
Dare Fajimolu, a Lagos-based cement analyst with CSL Stockbrokers Ltd. explained, “Investors are waiting for more news and explanations on whether the units will report separately or if it will remain a consolidated company].”
The cement sales peaked in 2007 in the country at 14.1 million t before declining by 4.6% in 2008. There was a further 12.5% slump in 2009 following the global financial crisis, before the decline eased to a 7.8% drop last year. There was however, a massive 36% increase in the value of building plans passed in January 2011 after declining by 8.5% in 2010.
There is hope now therefore that the demand for cement and the outlook for the construction sector, which has been shedding jobs, might see some improvement.
Additionally, this data only applies to building plans passed in municipal areas, so major capital expenditure, such as power stations (Medupi and Kusile) and dams (which are large users of cement) have not been included in the statistics.
South Africa’s largest cement producer, PPC Cement, reported recently that due to difficult trading conditions, its financial results for the six months ending March 31 were expected to decrease by more than 30% compared to those for same period last year.
The company added that further guidance would be provided once the management accounts for the reporting period had been completed and reviewed. PPC is expected to release its interim results for the six months ended March 31 on or about May 17.
Investors from Cemtech and the Sanghi group of India have seen the construction of their joint venture, the Pokot Cement Factory, at a cost of KES12 billion, delayed for more than eight months since Prime Minister Raila Odinga commissioned the project. Reports are unclear as to why the construction of the planned 1.2 million tpa capacity cement plant, with its proposed 64 MW power plant to support the national power grid, have been halted.
In recent news, the country’s President Jakaya Kikwete has said that Tanzania will not retract its foreign investment-friendly policies despite grievances from local cement manufacturers.
“Our policies are very predictable and we are not contemplating any change,” Kikwete told participants at the 9th African Investment Forum.
Three years ago, the import duties on cement were abolished, and the President reiterated that these were temporary measures, initiated to weather the storm of price hikes. The decision back in 2008 was fuelled by a rise in demand for cement that local producers could not meet.
Local cement manufacturers have, however, been complaining that the decision enabled colossal cement imports, mostly from Pakistan and India, undercutting the local producers.
Recently, the Burundian President Nkurunziza, who doubles as the chairman of EAC Heads of State Summit, stated the region was in a dire need of investments in agriculture, infrastructure development and energy. He added that the relatively underdeveloped infrastructure and unreliable energy supply is seriously hindering the economic growth of the 130 million people strong region.His Zanzibar counterpart, Dr Shein, noted that EAC needs investments in almost every sector. “We need water, infrastructure, education, health and many more… we welcome investments in all these areas,” he said.
Read the article online at: https://www.worldcement.com/africa-middle-east/20042011/sub-saharan_cement_industry_news_update/