Dangote Shuts Nigerian Cement Plant Over Glut

Aliko Dangote

VENTURES AFRICA – Dangote Cement Plc has temporarily suspended production activities at its Gboko Plant which accounts for four million metric tonnes yearly while staffs are asked to proceed on compulsory leave as a result of glut in the cement market.

According to The Group Head, Corporate Communication, Dangote Group, Anthony Chiejina; the move to close down the plant located in Benue state, central Nigeria; was necessitated by the glut in the market arising from the success currently being recorded with the exponential increase in local production of cement and further compounded by continued importation of subsidised cement into the country.

“…with the dumping of subsidised imported cement in the South eastern market, there is no way our Gboko Cement plant can survive. In fact, members of staff have been put on forced leave pending when the situation improves,” Chiejina told BBC.

“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 the production figures for the first 11 months of the year showed an increase in local production level with supply surpassing demands.

The cement giant’s spokesman said when compared to the same period last year, the total supply of cement at the end of November this year shows an increase of 11.4 percent – the highest recorded since.

He complained that though cement importation has reduced in the country, the activity still continues thereby creating a glut in the local cement market. This, he said calls to question the rigorous implementation of the backward integration policy introduced to encourage local production.

Although, the Cement image-maker admitted that other local manufacturer are in the same fix as Dangote cement in experiencing low sale and high inventory; he urged the government to vigorously implement the provisions of the cement backward integration policy needed to protect local manufacturers from dumping.

He posits that 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.

Chiejina also recommended that the Nigerian government should help increase demand for cement by encouraging the use of concrete roads because concrete roads are more durable and much longer lasting.

Concrete roads will save substantial outflow of foreign exchange, while reducing imports of asphalt, he said.