Angola expansion points to fast growing market

Portugal’s Secil leapt on to the African cement news pages this week with its announced intention to increase production at its Lobito plant in Angola from 0.28Mta to 1.8Mta.

This will be a significant boost to the Angolan cement capacity, which currently stands at around 5Mta. The US$150m Secil Lobito expansion project will take three years to complete. The plant is 51 per cent owned by Secil and the Angolan state cement company holds the remaining 49 per cent of shares. After years of civil war Angola is now rebuilding at a fast rate on the back of its booming oil industry. Crude oil production, which eclipsed 2.21mbpd in 2012, is also driving GDP. The IMF forecasts Angola’s GDP to grow by 5.5 per cent in 2013 following a 6.8 per cent rise this year.

The civil war wiped out about 70 per cent of the country’s infrastructure and the government is annually spending US$4bn or 14 per cent of its GDP to replace what was destroyed. Some US$1.2bn of public funds alone is being invested in the expansion of Lobito Port.

Housebuilding is also a government priority, but the lavish US$200,000 apartments at its Kilamba development are way out of reach for the two-thirds of Angolans who earn just US$2/day. Nevertheless, there have been government initiatives to cater for the disadvantaged, following on from the 2010 pledge by President José Eduardo dos Santos to build a million new homes for the poor. It all adds up to a thriving construction sector, which is forecast to grow by 14.2 per cent in 2013, according to Business Monitor International.

The Secil Lobito expansion builds on the industry’s recently completed capacity, including Cimenfort’s 0.72Mta factory, in the southern province of Benguela, which was commissioned in April 2012. Other projects underway include: China International Fund’s proposal to build a second 1.8Mta line at Bom Jesus and a greenfield 1.4Mta plant now under construction by the state-owned Fabrica de Cimento do Kwanza Sul at Sumbe.

There are also planned projects at Lobito, where Palanca Cement SA aims to build a 0.6Mta unit rising to 1.2Mta or 1.6Mta by the third phase, and at Catumbela, where Cimentos Nacionais de Angola Ltd is hoping to establish a 0.7Mta factory.

In March 2011, Nova Cimangola announced that it will establish a 2Mta greenfield plant in Luanda with an investment of US$365m. Due to come on-stream in 2013, the new factory will increase the company’s overall capacity to 3.8Mta. Cimenfort also aims to raise capacity at its new plant to 1.2Mta in the second phase with a new roller press currently being installed at the site.

Presently, Angola’s per capita cement consumption is relatively low at just 150.7kg. About 80-90 per cent of cement is distributed in 50kg bags but all cement importers also have silos for bulk deliveries. Markets can be reached by road and rail. Ex-works cement prices vary between US$130-180/t in Luanda.

Imports are derived from China and other Asian countries, although Secil only ships from its own factories in Portugal. According to local sources, imports will total approximately 1.86Mta in 2012.

Angola has an estimated shortfall of some 4.2Mta of cement, according to Dr Kiala Ngone Gabriel, Secretary of State for Industry, although this may be a little on the excessive side considering the current level of imports. However, he projects that the country could potentially meet demand by 2015, and by 2017 could be producing as much as 12Mta of cement.