This text takes a more in-depth take a look at how the native cement business is dealing with challenges….
The cement Trade is arguably one of many largest contributors to the nation’s GDP. Because of this, it’s crucial for presidency/stakeholders to assist the sector with insurance policies and stringent measures put in place to safeguard it from collapse.
The business nevertheless continues to grapple with excessive value of manufacturing, unfair commerce practices, low utilization price of the cement product and unfair competitors.
There’s a basic development of the imported items and all of the manufactured merchandise processed with imported uncooked supplies undergo.
As chances are you’ll bear in mind, the freight charges have elevated loads because the second half of 2020, sadly, the identical development was noticed firstly of the yr 2021.
Clinker is the primary part within the manufacturing means of cement, it represents about 80% of the composition, and all this materials is imported with many of the cement producers importing from faraway nations just like the Center East and Asia with extra value of transport.
Along with that, because of Oil worth enhance, clinker producers have reviewed their costs upwards to compensate the rise of their value of manufacturing. The mixture of those elements led to a rise of the clinker (CFR, Ghana) value by virtually 16$US per ton through the first quarter of 2021.
Consequently, the cement value elevated by virtually 14%.
Throughout this primary yr of the COVID disaster, as a result of slowdown within the native economies worldwide, the monetary sources reached the underside, the circulation of cash and cashflow went to their minimal ranges as a result of interruption of many companies and the closure of factories.
As a consequence of this example, the nations all all over the world used their very own shares of grain, meals, coal, cement, clinker, iron, metal, iron ore as a result of they might not have the money to run their companies.
Now, with the softening of the COVID restrictions and with the consolation of getting vaccines, many of the factories resumed operations, individuals began going out, procuring, travelling. Thus, the economies began recovering and producing funds. All of the nations which have used virtually all their shares now reconstituting their reserves of grain, coal, Iron-ore, cement, clinker and meals. China who virtually consumed ”their battle interval shares” is now restocking virtually 200% greater than their traditional stage. This example led to a rise of about 150% within the cargoes transported by sea.
Between 2012 and 2018, part of the delivery fleet went to scraps because of a really dangerous freight market and, since 2018, few new constructed vessels entered the market. This example disbalanced the freight market and led to lacks in satisfying the cargo enhance and demand for ships.
International locations began making massive investments in various vitality sources, which suggests extra metal, cement, clinker, coal, iron, timber-logs, iron ore are wanted for the initiatives. As a consequence, the demand for freight will enhance. Lastly, oil worth enhance additionally had a unfavorable impression on the freight.
Although limestone reserves exist in Ghana, volumes are restricted; therefore the cement business continues to rely largely on clinker imports. Moreover, there may be investments in capability capped now in comparison with some years again, with new cement gamers constantly coming into the market.
Native producers maintain arguing that the viability of opening up extra new cement factories shouldn’t be economically sustainable for competitors however slightly has the impetus to encourage sure producers from compromising with high quality.
Native producers have subsequently agitated for a ban on the issuance of permits to corporations that wish to arrange new cement processing crops within the nation.
Statistics have it that, the present cement producers in Ghana have a mixed utilization price of about 44%, a sign that, there’s a whole sufficient cement capability in Ghana. Until date, there are eight (8) cement manufacturing corporations positioned at 10(ten) totally different areas all through the nation with a complete put in manufacturing capability of 11 million tons/each year. There may be one cement bagging plant that additionally has an put in capability of about 1.0 million tons/each year. That provides, a mixed put in capability (manufacturing and bagging) of about 12.1million tons/each year. The typical consumption of cement within the nation can also be about 7million tons/each year which demonstrates an enormous extra capability of about 5million tons/each year.
Some growth initiatives together with: a Bagging plant in Tema by Dzata cement Ghana restricted and a Manufacturing plant in Takoradi by Dangote Cement Ghana are additionally underway so as to add as much as the present capability.
The ECOWAS Commerce Liberalization which permits free motion of products and folks inside the Area has compounded the unfair commerce practices by some gamers who import cement from neighbouring nations having fun with ‘Export grant growth scheme’ that gives subsidies to those importers giving them benefit.
It’s crucial that the Ghana Worldwide Commerce Fee Act 926 is allowed to work to guard native industries together with cement business are protected against unfair commerce practices.
It’s worthy to say that, the African Continental Free Commerce Space (AFCTA) has come to remain and though it offers advantages for the native market the aforementioned challenges of unfair commerce practices and anti-damping needs to be checked with an eagle eye.
Authorities’s effort is a key think about sustaining the cement business and sustaining acceptable ranges of costs regardless of the inflation and the depreciation which is a attribute of the market. As instance: the stevedoring licenses granted to the industrials are contributing to cut back the price of imported uncooked supplies. Sadly, the jetty mission introduced by GPHA lately shall be disastrous for the cement business when it comes to prices and logistics administration. Not lower than 10$US per ton shall be added to the price of clinker (7-8$US per ton of cement or 2,3GHC/bag).
With the most recent improvement in tackling the Covid-19 pandemic which has seen the softening of the COVID restrictions, availability of vaccines and many of the factories resumed operations and the financial system haven began recovering and producing funds, it’s the hope that Authorities revisit the cement business by placing up stringent measures to safeguard the already current ones from collapse. Chamber of Cement producers, Ghana
The Chamber of Cement Producers, Ghana was formally inaugurated on Monday 2nd July, 2018 in Accra to guard the curiosity of its members by way of collaboration backed by a structure. Present membership/founding corporations are: GHACEM Restricted (Tema, Takoradi) Diamond Cement Group (Aflao, Buipe within the Northern Area and Takoradi) and CIMAF Ghana Restricted (Tema). The Chamber is presently beneath the chairmanship of Mr. Frederic Albrecht-Scott, the Managing Director, of CBI Ghana Restricted, producers of SUPACEM cement.
Media males caught up with Rev. Dr. George Dawson-Ahmoah, he’s the present Govt Secretary who performed an instrumental position for the cement business to get a Legislative Instrument (LI 2240), enacted in Parliament in 2016 to control the importation of bagged cement from China and elsewhere to keep away from incurring additional harm to the native cement Trade.
Rev. Dr. Dawson-Ahmoah seized the chance to enchantment to Authorities to as a matter of urgency implement all insurance policies earmarked to guard the cement business from collapse.
Dr. George Dawson-Ahmoah
“Authorities should work assiduously for the LI to be revered and applied pretty and never politicized by revoking and banning licenses for importation of bagged cement by considered the large surplus put in capability because it’s being accomplished in neighboring nations like Togo, Benin, Burkina Faso and Nigeria. It is usually vital to keep up and defend the already current corporations who’ve sufficient put in capability. The truth is, to get up and see new cement gamers nonetheless surfacing within the business daily is disheartening and we see it as Anti-Ghanaian and has the plain penalties of affecting employment, monetary contributions to the financial system, erosion of revenue margins and really lengthy return on funding”.
“We’re optimistic that the native cement business has sufficient capability to fulfill the demand with the varied expansions initiatives by producers which were accomplished to ensure the wanted capability within the nation”.
He cited GHACEM’s funding of about $52million for growth work at its Tema and Takoradi factories, Diamond Cement Group’s development of 60 million Euro new cement manufacturing unit in Takoradi and the funding of 60 million Euro into the development of a brand new cement manufacturing unit, CIMAF by Morocco.
We all know the Covid-19 pandemic affected economies worldwide, monetary sources reached the underside however Ghana, we’re optimistic can decrease the unfavorable impression of this pandemic by revisiting the port dues, stevedoring, customs duties, electrical energy and the taxes (NHIL, GETFUND) which represent greater than 30% of the clinker value. The Authorities is already supporting us by way of the benchmark worth on the clinker; nevertheless, if we may have extra assist on the above elements throughout this era of instability, the impression on cement worth amongst different uncooked supplies shall be clearly optimistic.
The market is exhibiting throughout this primary quarter an excellent development. The market was estimated in 2020 at 6.8 to 7 million tons, the very best efficiency ever achieved, recording a development of about 7% comparatively to 2019 which was a nasty yr for our business (-2%).
Nevertheless, as a result of uncertainty across the COVID ending, our expectation for 2021 is mitigated, however it’s doubtless that the identical development will proceed a minimum of for the primary semester as a result of ongoing initiatives initiated by the Authorities and to shut the yr with about 3-4% development.
No scarcity has been recorded. Some clinker vessels delayed coming into TEMA port as a consequence of the faraway origin (Center East, Asia) and as a result of lack of vessels out there, however with out impact on the cement manufacturing.