TANZANIA: ´CHEAP´ CEMENT IMPORTS HURT DOMESTIC PRODUCERS

LOW priced imported cement has continued to bedevil locally produced products, despite the rise in demand.

Tanga Cement Company Limited (TCCL), has, however, reported that it has managed to survive despite the

odds due to good quality of its products and customer care.

According to the audited results for the year ended December, last year, demand for cement products for both

the local and export market remained high.

But the unfolding scenario was captured by cement importers. “Consequently, sales volumes as well as the

selling prices achieved by local firms remained lower than expected compared to the preceding period of the

year ended December 2012,” Tanga Cement which trades at the Dar es Salaam Stock Exchange (DSE) as

Simba said in the statement.

TCCL net profit for the year dropped to 32.45bn/- compared to 34.49bn/- registered in the period ending 2012.

Similarly, total revenues declined to 182.78bn/- in the period under review compared to 195.6bn/- of the

preceding year.

However, a major milestone achieved during the year was acquisition of an additional 40 per cent shareholding in the CDEAL, giving the company full ownership of the sales and distribution arm of the business ensuring improved integration and strategic alignment with TCCL.

Improving operational efficiencies and containing production costs were a major focus in the year 2013, with

significant achievement noted during the second half of the year.

For example, the cost of sales as one of the cost items, the company managed to pull down to 120bn/-

compared to about 129.8bn/- of the year 2012.

Also, during the period under review, the company secured supply of coal from local sources and entered into

negotiation for long term purchase agreement for clinker, thus adding to cost reduction efforts.

Furthermore, with the completion of the new kiln, the company is expected to enhance its competitiveness

advantage by increasing clinker production capacity to 750,000 tonnes per annum, which is more than doubling

the present capacity

BANGLADESH: Businesses for reducing import duty on cement.

Businesses at a meeting here today urged the government to reduce high import duty on cement, which will save a lot of money of the cement users who are paying over Tk 200 extra per bag in the local market.

It would also aid smooth growth of the real estate sector and make residential flats affordable to the lower

middle class people, they observed.

The prices of flats were now remaining beyond the reach of 90 per cent of people mainly because of the

excessive prices of construction materials like cement and bricks, the businesses also said.

"The cement buyers are paying Tk 400 to Tk 450 a bag while the import cost will be below Tk 200 a bag. The

government is directly discouraging import of cement. It is good. But why will the buyers pay exorbitant prices for cement, which is the main raw material for construction," said AM Mahbub Chowdhury, vice president of the Chittagong Metropolitan Chamber of Commerce and Industry.

He said the cement industry in the country was being "controlled by a syndicate of local cement producers who successfully used the government or its finance ministry to impose unusual duty and other charges on import of the product."

"This is one of the main reasons why the real estate developers have been raising the flat prices beyond the reach of the commoners. This is not a fair deal from the finance ministry or the National Board of Revenue.

We would urge the government to lift all barriers to import of cement in the era of free market economy," he

said.

Turkey-Bangladesh Chamber of Commerce and Industry Earlier secretary general Murat Karaca said Turkey is one of the leading exporters of construction materials, especially cement.

He said that his country could export cement to Bangladesh at prices in the range of US $ 2.00 or around Tk

150 per bag.

The businesses of Turkey would also like to set up cement factories in Bangladesh, especially in Chittagong, under joint ventures with the local entrepreneurs, he said in the meeting.

Murat Karaca was accorded a reception at the Chittagong Metropolitan Chamber of Commerce and Industry

in the afternoon, as Mr. Karaca arrived in the city to invite the local businesses to attend the Turkey World

Trade Bridge (TWTB 2014) to be held from June 6 to 22 in Istanbul.

The Confederation of Businessmen and Industrialists of Turkiye (TUSCON) will organise the 17-day trade fair.

On the sidelines of the reception, Mr. Karaca told the FE that Turkey had a big reserve of clinker, the main raw material for cement, and the businesses of Turkey expressed eagerness to set up cement plants in

Bangladesh, especially in the port city of Chittagong under joint ventures.

Mr. Karaca further said that the Republic of Turkey with the population only half the size of that in Bangladesh was importing goods worth US $ 240 billion while the share of Bangladesh in his country's imports stood at around $ 2 million.

"Both the countries maintain an excellent bilateral relation and Bangladesh can enhance its volume of exports to Turkey and import cement from there at much lower prices than that locally available," he said.

ETHIOPIA: cement output surpasses local demand

Ethiopia’s annual cement output has reached 12.12 million tons, more than double the current local demand the Ministry of Industry (MoI) said.

Ministry Public Relations Head, Melaku Taye, told WIC that cement-output increased significantly after several new factories began production during the past couple of years. 

According to Melaku, there are 18 cement factories engaged in cement production across the country. Ethiopia’s cement demand shows from 20 to 25 per cent increase annually. 

Activities are underway to export surplus cement product. National Cement Factory has already begun export to neighboring countries, namely Somaliland and Djibouti, he said. 

Ethiopia plans to increase cement production to 27 million tons and the per capita cement consumption from the current 35Kg per person to 300Kg per person by the end of the Growth and Transformation Plan (GTP) period.

INDIA: Sanghi Industries to invest Rs 250cr to raise cement production, buy ships

Sanghi Industries Ltd (SIL) will invest Rs 250 crore in next 18 months to increase capacity in cement production by 30% and for acquiring ships and setting up sea terminals. 

Out of this, manufacturers of Sanghi cement invest Rs 150 crore in acquiring vessels for logistics as well as in commissioning new sea terminals. The company will also spend Rs 100 crore to raise cement production capacity from 2.6 million tonnes per annum (mtpa) to 3.5 mtpa by end of 2015. 

"Currently, clinker production is higher than cement production at our plant. To correct the mismatch, we are investing Rs 100 crore in increasing the grinding capacity. This will take 14 months in commissioning," said Alok Sanghi, director, Sanghi Industries Ltd. The debottlenecking will increase the grinding capacity by 30% of the Abdasa plant in Kutch. 

SIL will acquire six vessels in next five years for transportation of its products into newer markets to reduce fuel cost and increase distribution capability. 

"We currently charter ships from market for distribution. We will acquire two vessels immediately and then two vessels every 18 months," added Sanghi. Company plans to procure ships from China to save cost and time. 

The company is also in the process of setting up jetties at Navlakhi port in Morbi district and at Mumbai. 

With an eye on new markets, SIL is also planning to set up jetties at Goa and Kochi ports. SIL exports 20% of its total production, mainly clinker to middle-east, Africa, Sri Lanka and Bangladesh. 

SIL has invested over Rs 2,000 crore on the Abdasa plant that began production in 2003. "We will have Rs 450 crore debts by the end of the current financial year," added Sanghi. 

The holding of the promoters in the company will be 66% by end of the current fiscal after promoters acquired 5% shares through creeping acquisition.

PHILIPPINES: Strong demand for cement boosts Lafarge Republic's net income

Lafarge Republic Inc (LRI) grew its earnings by nearly a third on robust demand for cement.

In a disclosure to the Philippine Stock Exchange, LRI said its consolidated profit hit P3.7 billion last year, a 30 percent improvement from the P2.8 billion reported in the prior year.

Sales rose by 16 percent, riding on the industry's expansion with nationwide demand reaching 19.4 million metric tons or 5.9 percent higher than in 2012.

“The infrastructure and other construction projects of the government, both at the national and local levels, coupled with the sustained demand from the private and commercial sectors contributed to this remarkable growth," said LRI president Renato C. Sunico.

The cement manufacturer noted that cost of sales increased mainly on account of costlier power and raw materials, including logistics expenses.

"We were able to moderate the increase by utilizing local coal in our kilns, which have lower prices, while at the same time increasing our use of alternative fuels. Continuing operational efficiencies also helped to partially offset the cost increase. Notwithstanding these initiatives, higher costs remain a key concern and challenge in the future," Sunico said.

Last year, LRI embarked on capacity expansion initiatives on expectations of continued increase in construction activity until next year.

The company is investing in a new cement mill in its Norzagaray manufacturing plant that will boost its annual capacity to 850,000 tons. It will start commercial operations by June 2015, or six months after the target commissioning date of a similar new mill in its Teresa manufacturing plant.Full year capacity in Luzon will increase by 1.7 million tons by 2015 because of these initiatives.

Likewise, LRI reopened its Danao plant to serve demand during peak periods and supply the Visayas and Mindanao regions. In addition, projects in its Iligan and Norzagaray plants provided an additional 500,000 tons per annum of cement production capacity.

"We continue to prepare for the forecasted continued growth in cement demand in 2014. LRI is committed in contributing to the economic growth thru innovative solutions in the construction industry, and most importantly to the building of sustainable and resilient cities for our people," Sunico said.