Nigeria’s biggest cement producer to cut 20% output due to flood of Asian imports

Wednesday, 12 December 2012 00:07 - - {{hitsCtrl.values.hits}}

Reuters: Nigeria’s biggest cement maker Dangote Cement said it had shut down a fifth of its production capacity because of a glut in the market caused by imported cement from Asia.

Dangote Cement has around 20 million tons of production capacity across four cement plants in Nigeria. But it has temporarily closed its 4 million ton plant at Gboko, central Nigeria, due to low sales and high inventories, spokesman Anthony Chiejina said.

“The move was necessitated by a glut in the market ... compounded by continued importation of subsidised cement into the country,” he said.

“The inventory of finished products is beginning to build up at our plants,” Chiejina said in a statement announcing the plant’s temporary closure.

Dangote Cement, owned by Africa’s richest man Aliko Dangote, makes up more than a third of the Nigeria stock exchange.

Chiejina said the impact on profits was not yet clear, as it depended on how long the factory stayed shut.

“I don’t expect it to last for long,” he said, adding that Dangote was hoping the government would ban imports to encourage local production, an idea floated by officials in the past.

Last month Dangote Cement said it expected full-year pretax profit to hit 143 billion naira ($910 m) on strong local demand, compared with 118 billion naira last year.

Dangote Cement has expanded aggressively in recent years, supplying a construction boom in Africa’s second-biggest economy and most populous nation.

It plans to grow its Nigeria production to 29 million tons by 2015 and is also building cement plants across Africa.

Cheap imports from Asia are seen as the biggest threat.

“With the dumping of subsidised imported cement ... there is no way our Gboko cement plant can survive,” Chiejina said.