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Dangote shuts Nigerian cement plant over glut  print

Published on December 5, 2012 by   ·   16 Comments

Dangote Cement Plc has suspended production of cement at its four million metric tons per annum Gboko Plant, as a result of glut in the cement market.

Dangote Cement: Gboko plant shutdown

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The staff in the plant located in Benue state, central Nigeria, have also been asked to proceed on compulsory leave.

The Group Head, Corporate Communication, Dangote Group, Anthony Chiejina who confirmed this in Lagos said the move was necessitated by the glut in the market. The glut he said was caused by the high volume of local production and the influx of imported cement, which comes in cheaper than the locally produced ones.

According to 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 it was therefore disheartening to note that despite the glut in the local cement market, some cement importation, though reduced, has continued, thus calling to question the rigorous implementation of the backward integration policy, introduced to encourage local production.

Giving the reason for the choice of BCC for a temporary shutdown, the Dangote Group image maker noted that “…with the dumping of subsidized imported cement in the South Eastern market, there is no way our Gboko Cement plant can survive. In fact, staff 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.

Chiejina said other manufacturers are also experiencing the same problem of low sale and high inventory and called for urgent solutions to the development.

Besides, he advised that government should vigorously implement the provisions of the cement backward integration policy that are needed to protect local manufacturers from dumping.

According to him, one potent solution is for government to consider the total ban on importation of cement in view of the fact that local production now surpasses demand for cement and in the interim also increase duty and levy on imported cement to the maximum level.

If the backward integration policy is to succeed fully, Chiejina said government should help increase demand for cement by encouraging the use of concrete roads because concrete roads are more durable and much more longer lasting. Concrete roads, he further said, will save substantial outflow of foreign exchange, while reducing imports of asphalt.

He said: “Nigerians should be proud of what the cement sector has done by making the country self-sufficient and our Ibese plant is ready to start exporting as soon as we receive ECOWAS permit.”

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 importation of cement despite the increased local production. He expressed concern over the situation in the cement industry and urged for concerted efforts to save the local manufacturers.

The value of Dangote cement, which accounts for almost a quarter of the capitalisation of the Nigeria Stock Exchange did not lose any value in today’s trading. Rather, there was huge dumping of the stock with 3, 585,345 units sold at the same price of N121.50.The units sold accounted for a fifth of the activity at the market today, with total value of stock traded hitting N2.13 billion ($13.59 million)

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Posted by on December 5, 2012, 7:13 pm. Filed under Business, Business News, National, News, Property, Today's Headlines. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

16 Comments for “Dangote shuts Nigerian cement plant over glut”

  1. Idris

    This Dangote of a man controls over 80% market share of Nigeria’s cement industry. Yet he still wants government to shut the gates to impoortation so that he can have complete monopoly and milk Nigerians dry. Haba!!!

  2. Olu Ade

    I CAN NOT UNDERSTAND THIS LOGIC OF CEMENT PRODUCTION GLUT IN NIGERIA !!.IF THERE ARE TRULY CEMENT GLUT GLUT IN THE MARKET,THEN HOW COME THE PRICE OF CEMENT IS STILL PRETTY HIGH?.LET THE MARKET DETERMINE THE CEMENT PRICES DON’T BLAME IT ON IMPORTATION.PLEASE TELL MR DANGOTE TO LOWER HIS PRICES IN ORDER TO COMPETE,DON’T ASK THE GOVT TO TWIST ARM THE OTHERS,AFTER ALL ,DANGOTE HAS ENOUGH MONEY TO COMPETE ! THIS IS THE CASE OF THE SURVIVAL OF THE FEATEST !!.AFRICA RICHEST MAN PLEASE GIVE THE NIGERIANS PEOPLE A BREAK,YOU CASN NOT ALL THE TIME RUN TO THE GOVT TO BREAK OUR BACKS IN EVERY THING LIKE SUGAR,FLOURS ETC HABA MALLAM YOU WANT TO CONTROL EVERYTHING IN ORDER TO GAIN MORE MORE MONEY TO COMPETE WITH BILL GATE AS NUMBER TWO RICHEST MAN IN THE WORLD !!

  3. Annoynimous

    It seems that Dangote wants Nigerians dead! Why is he talking about importation of cement to Nigeria when he is the major beneficiary of the commodity sales in Nigeria. He wants us dead? He controls all essential commodities -sugar , flour , veg oil, transport etc habba! GEJ never listen to the calous businessman that is feasting on Nigerian blood. Let him close down all his cement plants , Nigeria will still survive without Dan-goat-eeh!

  4. albert

    Nawao, you see how is He is manipulating the country. He control sugar , flour , cement, the Nigerian Stock Exchange and so on.He control both the market prices of cement and the Dangote cement shares{ despite dumping of the stock

  5. naubiko

    Why don’t we move this man to Aso Rock to control everything else.

  6. samuel

    how much is a cement bag now in the market?how does the ordinary Nigerian benefit from this so called “glut”?

  7. Areafather

    With all his billions .what does he want ?

  8. Quite a pity. Thou Dangote is just lucky that government favors his venture because one thing for such if in a fair play ground he will flat away as he cannot meet up with competition… as he only strive with monopoly

  9. Adolph

    The writer told us all that is wrong with cement inportation, and how it has created a glut in the market, but he did not tell us the current price of cement in the market.
    If there is a glut which I doubt(propaganda), that will be good news for the long suffering consumers over the years. The producer has no choice but to adapt to market forces. So Dangote will have to dish that monopoly hat, face the market forces in a real competitive pricing policy, for the era of easy billions may be comming to an end.

  10. Walter O,

    In essence they can’t compete. Please federal gov’t must take note of this, we are not safe in the hands of these so called businessmen in Nigeria. What we have in Nigeria business environment are mere opportunists.

  11. TANTABARA

    With back word integration policy,the govt most protect local industries,if not its the masses that wil suffer in the long run.The Obasanjo Admistration came up with the policy to support local manufacturing n employment generation,but we know that without govt support local manufacturers cannot compete with their international conterparts,bcos of comparative cost advantage.

    Give the poor state of infrastrucure,insecurity and the political enviroment,the govt most be proactive given them incentives such as tax cut and waivers but in return the producers most reduce the market price of their protect.

    But in a situation where by govt adopt backword integration and at the same time issue out import licences to then local producers are not protected and it will definately led to what just happened in the Dangote BCC Plants and other plants to follow[see also the example of the textile industries].

    Dangote,Ironically a member of the National Economic council,National Economic Summit and the President of NSE among others made a statement during the commisioning of the Obajana cement plant in which he stated that If the government go ahead and import bag cement,it will definately kill the local industries and that the only alternative is for them[local manufacturers] to short down and that the impact will be thousand of people losing their jobs…Now at least 2000 staffs will loss their job in BCC only.

  12. Seun

    The man is the epitome of greed.

    Criminally Greedy. If it is cheaper to import cement, then we don’t need him, let him shut down his plants. These guys are wicked. They want to make 120% profit and be everywhere.

    That’s why America is into outsourcing. It’s a zero sum game. Produce were it’s cheaper. Must we buy cement at 2,000 to please Dangote and encourage local production? Common!

  13. I weep for Naija

    A bag of cement is sold at N2,000.00 and a worker can only buy 9 bags with his minimum wage in a country where this richest man in Africa (or black race) says there is glut as a result sent his workers home. This is sheer blackmail and I know our creator will judge all of us according to our deeds on earth.
    The simple logic is for cement to sale at a normal price of N550 per bag if indeed there is a glut.

  14. @Tantabara,i suppose you’ve read the reaction of others before posting yours,if not what people are saying is that Dangote should not be a shylock in his bussiness dealings rather he should be humane like Mike Adenuga(GLO) who forced others to come down from their oppresive and exploitative price regime.No doubt Dangote has invested a lot to bring those factories on stream but he should not expect to recoup his investment overnight.

  15. Olu Ade

    DANGOTE IS SHUTTING DOWN SO AS TO PUT PRESSURE ON DEMAND.HE IS WELL VERSED IN MONOPOLY IDEALOGY.HE WANTS THE FEDERAL GOVT AS HIS TOOL TO MANIPULATE THE IMPORT DUTIES AT THE PORTS.MY ADVISE IS IF YOU CAN NOT STAND THE HEAT PLEASE GET OUT OF THE KITCHEN,WE ARE CONDITIONED TO HARDSHIP.YOUR FELLOW KANO MAN ABACHA GAVE US A LOT OF HARDSHIP DURING HIS TIME AND NOW YOU ARE TRYING TO DO SAME.EVEN WHEN MICROSOFT TRIED IT (monopoly) IN U.S.A HE WAS CHARGED TO COURT FOR MONOPOLY,PLEASE IF YOU CAN NOT HELP DON’T TRY TO RAPE US OFF.IF YOU CAN NOT BE PART OF THE SOUTION,DON’T BE PART OF THE PROBLEM.WE UNDERSTAND ALL YOUR GAMES.

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