Cement sector groans under massive importation

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By EMEKA OKOROANYANWU and ADEWALE SANYAOLU

When the Federal Government introduced the backward integration policy in the cement sector in 2002, little did it know that the industry would blossom into a multi-billion naira industry it is today, with investments hitting $9.5 billion.

The policy, apart from stimulating massive local investment in cement manufacturing, also aims to make Nigeria to be self-sufficient in cement production, as well as have enough to export. But the recent announcement by Dangote Cement Plc., that it has shut one of its local plants, came to many Nigerians and industry players as a rude shock.

The development has, thus, put the over $9.5 billion investment in the sector under threat, as a result of massive importation and dumping, leading to glutted warehouses. Indeed, the current development negates the initiative of the backward integration policy of the Federal Government targeted at encouraging local production of cement in a sector where productive capacity and local demand had just been matched, as announced by local manufacturers.

It will be recalled that mass importation of cement had its leeway, following the decision of a Court of Appeal, sitting in Owerri, in July last year, which gave a leading player the right to import cement, with Dangote Group alleging that the local cement importer had dumped a sizeable quantity of cheap imported cement into the country, causing poor sales by local cement manufacturers.

Already, about 2,500 permanent and casual workers of the Dangote Cement plant in Gboko, Benue State, have been temporarily laid off, as the company awaits improved business environment to re-commence operations.

A recent visit by Daily Sun to Dangote Cement Plc. plants in Gboko, Benue State; Obajana, Kogi State, and Lafarge Cement WAPCO recently, depicts a picture of a sector groaning for survival, as a result of the glut and dumping, thereby leading to stocked warehouse of raw materials and finished products, idle lorry loads of cement at the firm’s trailer parking bay and an empty loading bay – a section, which used to be a beehive of activities.

Special Adviser to the President, Dangote Group Plc., Alhaji Aliko Dangote, Mr. Joseph Makoju, boasted that Nigeria is producing cement in excess of demand at the moment, regretting that instead of grinding clinker for production, they are now stocked in huge volumes. Makoju argued that if government was to allow imports, maximum duty on import should be introduced and enforced to the latter. Again, he stated that government should focus more on infrastructure development such as roads and bridges, while also utilizing more cement in road construction activities.

The special adviser disclosed further that while local manufacturers are exporting their excess capacity, cement is being dumped into the country at reduced costs. On the way out of the doldrums, he said manufacturers have commenced the process of making representations to government in order to save the situation, because investors want some form of protection, especially from imports, adding that manufacturers are creating value, giving employment and building capacity.

Plant Manager of Lafarge Cement WAPCO, Mr. Lanre Opakunle, explained that the development has forced the company to scale down its operation by 50 per cent because the firm cannot continue to produce without patronage, especially when cost of production is on the upscale. Opakunle lamented that at the moment, the firm has over 220,000 tonnes of clinker – an essential raw material used in the production of cement, in inventory, regretting that the volume of clinker currently in stock was capable of producing over 300,000 tonnes of cement. Besides, he hinted that all its three plants – Sagamu, Ewekoro II and Lakatabu – has a combined production capacity of 10,000 tons per day, adding that at the moment, the combined production of the three plants is far less than its capacity. “At the moment, our silos are full.

And once this happens, we will have no option than to move out and stock some of the raw materials elsewhere, which is additional cost on our part. Currently, we are grappling with high cost of production, especially for Gas. And, as you know, it is not all cost that you can pass to the consumer. But at the same time, there is a limit to what we can absorb,” he said.

The development in Lafarge Cement WAPCO further confirms the claim of Dangote Cement Plc., which recently announced the suspension of production of cement at its four million metric tonnes per annum Gboko Plant, as a result of glut in the cement market.

The glut, the company said, was caused by the high volume of imported cement, which comes in cheaper than locally produced ones. Also, speaking, the Production Manager,Lafarge Cement WAPCO, Mr. Sulaiman Agbedejobi, disclosed that the development has assumed a worrisome dimension with production capacity only attaining 180 tonnes as at 2pm on Friday, when ordinarily 1,200 tonnes would have been achieved if all things are right.

According to a statement by the Group Head, Corporate Communications, Dangote Group, Mr. Tony Chiejina, production figure for the first eleven months of the year shows increased local production level with supply now surpassing demand. Total supply of cement to the market at the end of November, according to him, when compared to the same period last year, has shown a record increase of 11.4 per cent, the highest ever. He said that the production figure for the first 11 months of the year showed increased local production level with supply now surpassing demand. “With the dumping of subsidized imported cement in the South Eastern market, there is no way our Gboko Cement plant can survive.

In fact, employees have been put on forced leave pending when the situation improves. “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. At the moment, Dangote said it has inventory of 950,000 tonnes of cement and clinker. But stakeholders regretted that the development is happening at too early stage in the investments circle, when the investors are yet to recoup significant part of their investment.

Besides, they maintained that importation of cement to the detriment of the local economy has been very attractive because it comes with paltry duty of 20 percent and levy of 15 per cent and clinker at 10 percent, a development that makes the landing cost of imported cement to be very cheap with a bag going for as low as $35/T FOB.

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19 Comments

  1. Stop all these deceites, we can not allow you to hold the country at ransom, We need competence. Importation carry on

  2. It’s high time we stop all these lies.Now can we ask how much then is one bag of cement?For the past two weeks I have been paying two thousand Naira for a 50kg cement bag.If there is much cement in the market why hasn’t the price of 50kg come down to one thousand naira?Must we allow Dangote alone the monopoly of determining our destiny in the Building/construction sector?As am writing am paying two thousand Naira for a 50kg Dangote cement bag here in Lagos.Enough of these deceit.

  3. Elementary economics shows that if there is a glut the price will fall. In Nigeria it is not so. Rather Dangote closed down factory so as to create artificial scarcity to maintain his price. They said that the market is flooded with cheaper cement. Pls is ther any brand of cement that is sold at cheaper price in Nigeria?

  4. Udam Ochiaghandigbo on

    Is Sun Newspaper now the new Daily Trust? I ask this question because my comments were deleted maybe because I seriously criticised the writers of the above article.

  5. Dangota stop lobbying for the closure of cement importation because of your selfish interest mind your own production, Nigerians pay more than every other parts of the world including first world because of gluttons like you, Nigerians are watching.

  6. BUNKUM AND BALONEY. WHERE IS THE GLUT ? HAS THE S-CALLED GLUT REDUCED THE PRICE OF CEMENT ? AS AT AT DATE NOT EVEN THE MIDDLE INCOME EARNERS CAN AFFORD TO BUILD HOUSES OF THEIR OWN.

    DANGOTE AND CO SHOULD FOIST OLIGOPOLY ON US; NO ONE MAN OR TWO MEN SHOULD BE GIVEN THE POWER OF LIFE AND DEARTH IN NIGERIA. THAT IS NOT COMPETITION, IT IS SOMETHING ELSE.

  7. BUNKUM AND BALONEY. WHERE IS THE GLUT ? HAS THE S-CALLED GLUT REDUCED THE PRICE OF CEMENT ? AS AT AT DATE NOT EVEN THE MIDDLE INCOME EARNERS CAN AFFORD TO BUILD HOUSES OF THEIR OWN.

    DANGOTE AND CO SHOULD NOT FOIST OLIGOPOLY ON US; NO ONE MAN OR TWO MEN SHOULD BE GIVEN THE POWER OF LIFE AND DEARTH IN NIGERIA. THAT IS NOT COMPETITION, IT IS SOMETHING ELSE.

  8. Kalu J. Okafor on

    THIS STATEMENT SUMS UP ALL ” But stakeholders regretted that the development is happening at too early stage in the investments circle, when the investors are yet to recoup significant part of their investment. THEY WANT TO RECOUP THEIR INVESTMENT IN SUCH A SHORT TIME WITHOUT CARING ABOUT THE CONSEQUENCES ON CONSUMERS. IF THERE REALLY IS A GLUT, THE NORMAL THING SHOULD BE FALL IN PRICE. HAS THAT HAPPENED? WHY IS IMPORTED CEMENT CHEAPER THAN LOCALLY PRODUCED CEMENT?. IF THEY CANNOT PRODUCE AT REASONABLE PRICES, THEY SHOULD CLOSE. DANGOTE HAS EXPLOITED NIGERIANS ENOUGH. HE IS ONLY INTERESTED IN BEING THE RICHEST BLACK AFRICAN. IF IMPORTATION OF CEMENT IS CHEAPER, WHY ARE WE DEPRIVING NIGERIANS. WHERE IS THE COMPARATIVE ADVANTAGE HERE? NIGERIANS ARE NOT ALL ALMAJIRIS.

  9. dangota shld stop talking like a fool. if he thinks imported cement is disturbing his cement from selling,then he should slash down d price of his cement and see if that wont stop importation. if importers sell a bag of cement for 1k and dangote sells for 700,u think the importers will still be importing? this is d reality. dangota shldnt be scared of competition,cos he cant always eat his cake n have it.

  10. I know we’re a country of sycophants, the press and media organisations are a good means of circulating falsehood as i’ve been in such position before where all it takes for one to get his lies out is a brown envelop to the editor and the truth will be buried in the trash can which i do believe is the case here, because there are no evidence to suggest that there is a glut in the market as the market price of cement has gone up by 5% since this falsehood came out.
    What this is all about is nothing short of a surprise to the richest man in Africa that the poor man is still surviving he want to use his connections in the presidency to stop other importers and rival producers to stop production thereby having the monopoly of supply, I hope the president and people in authority will not let themselves as usual fall into such deceit

    Those who wrote this piece are just being economical with the truth as companies do shut down for (TAM) which is the case here and they should not forget that what goes round comes around as they will end up buying from the same market at the end of the day, I urge them to desist from being the medium or the willing tool in which the Dangote group uses to stifle the remaining life out of the common man.

    Ozo Okwy Okeke writes from London UK

  11. People like Ibeto and others will strive wether dangote like it or not. And the price of cement must fall by God Grace Amen

  12. How long are Nigerians going to tolorate this man. His monopolistic tendencies has held much of Nigeria – Nigerians in ransom for so long. This can not be allowed to continue. Competition should reduce price. Lobbying the government or donating to government of the day to enhance their business standing is no longer tolorable in this present time and age. Other people and company should be allowed to vie and compete at the same level. How long would Dangote monopolise rice, salt, suger, cement etc. Is Nigerian import market only for him and his cronies?

  13. It is important that Nigeria encourages local production
    of cement since we have raw materials for cement production in abundance. We need to protect the cement market from dumping by cement importers. This will do a whole world of good as it will create jobs for Nigerians. I advise all cement importers to change their business model and commence production of cement locally. The more cement manufacturers we have in Nigeria, the better for our country. This is the right thing to do.

  14. Good write up man. The ever- do- well- Dangote, the schemer is at it again. Good talks from his boys. But please, one question – what are the names of these imported cement? Are they in the markrt or only imagined? What are their prices? Do they go for as low as N1000? If they do, where do we find them? Why is Dangote losing sleep over the closure of his cement factories because of imported cement, Nigerians deserve a great measure of competitiveness and choice in the commodities they spend their monies on. It mustn’t be Dangote all the time. I bought cement in Dec. for N1980. I look forward to buying it at most N1000 this time aroung. If all Dangote shops will close for Nigerians to hieve a sigh of relief as far as cement is concerned and start building their own houses,so be it.

  15. it is all about deceit. dangote is enjoying an unhealthy monopoly in most of his business interests with the help of govt. dangote some years back promised that the price of 50kg cement will crash to N500 but as we speak we all know it is a deceit. dangote enjoys rebates and all manners of waivers from govt yet the price kept going up. how does an average nigerian own a house of his/her own with the cut-throat price dangote is giving us. they are up to mischief. if it will take importation to crash the price, so be it. but i ve not seen such low priced cement bag. somebody should tell me where to find one.

  16. THE PRICE OF A BAG OF CEMENT SHOULD BE SOLD FOR FIVE HUNDRED NAIRA ONLY. ANYTHING ABOVE THIS IS COSTLY. DANGOTE STOP CREATING ARTIFICIAL SCARCITY. AND HAVING MONOPOLY OVER COMMODITIES. IT IS NOT TO THE GENERAL GOOD OF NIGERIANS WHO ARE ALREADY IMPOVERISHED.

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