East and West Africa Cement Companies Report November 2011

� Secondly, cement prices in SSA, then ranging between USD 100 - USD 300 per tonne were clearly
the highest the world over. While production costs are also relatively high, improvements in
efficiencies will guarantee wider margins and as such cement manufacturers have been making
huge capital investments to install newer and more efficient plants capable of unlocking cost
savings and economies of scale benefits.
Cement imports in SSA
The cement supply shortfall in SSA was met by imports
from surplus regions and a total of c22mt is estimated to
have been imported in 2010. West Africa had the biggest
appetite, with net imports of c6mt for 2010 compared to
c4.8mt and 4.3mt for Southern and East Africa,
respectively. Imports accounted for c43% of West
Africa’s total consumption, 10% for East Africa and 2% for
Southern Africa.
Being the biggest importer, and hence the biggest deficit
region, West Africa is targeting the largest capacity
addition compared to the rest of SSA. East Africa comes
second, way ahead of Southern Africa which has
comparatively the same import demand owing to the
relatively lower cement manufacturing base.
Capacity addition in SSA
Cement manufacturers in SSA are planning to increase
capacity from c43mtpa as of 2010 to 75mtpa in 2015,
firstly, to fill the gap being satisfied by imports and
secondly, to profit from the anticipated fast growing
cement consumption. Once all the planned capacity is on
line, West Africa will sit on 34.7mtpa, East Africa will
have 20.0mtpa while Southern Africa will have 20.8mtpa.
Supply Side Dynamics
East Africa
Prior to July 2008, the EAC classified cement as a strategic commodity and as such levied 55% duty on
imports in a bid to protect local industries. When the region was faced with shortages owing to
prolonged plant breakdowns, the duty barrier was removed. A commitment was however made to
progressively increase the duty up to 35% once the supply bottlenecks were resolved. The EAC has since
climbed down on that commitment and reduced the cap to 25% making imports more competitive in
relation to locally produced cement.
Cement imports into East Africa came largely from Asia and the Middle East. While productions costs
are relatively lower, owing particularly to low energy costs, subsidies in exporting countries like
Pakistan brought unfair competition to local producers. However, newer cement plants in East Africa
are availing efficiencies that allow local producers to compete with the Asian exporters.
East Africa’s grinding capacity is expected to grow significantly, while clinker capacity remains
significantly lower, as such clinker imports are likely to remain high. As of 2015, grinding capacity is
forecast to reach 20mtpa while clinker capacity will only be 8.2mtpa.
8
million tonne s per ayer
Cement Imports and exports in SSA (2010 estimates)
10.0
8.0
6.0
4.0
2.0
-
(2.0)
(4.0)
Central Africa East Africa West Africa South Africa
Imports (Mt) Exports (Mt)
Capacity additions in SSA
90
80
70
60
50
40
30
20
10
0
12.9
16.7
13.7
12.9
15.9
16.85 17
15.9
18.07
28.6 28.95 31.45
Source: IAS/Cemfocus
18.5
19.24
20
20.81
43.95 43.95
2010 2011 2012 2013 2014 2015
West Africa Southern Africa
Source: IAS, Cemfocus , Cemnet