Medcem adds more grinding capacity to Cameroon
Medcem Cameroon (Eren Holdings Group) announced this week that it will officially open its 0.6Mta Douala grinding plant today, Friday, 16 December 2016. It is just one of a number of new capacity projects that have been scheduled to boost Cameroon’s cement market in the next few years and yet the cement price remains high for this African nation.
Cement prices might have been expected to start fluctuating when Dangote Cement brought its 1.5Mta Douala grinding plant in March 2015. Last May cement prices were at XOF4400-4600 (US$7-US$7.30) for a 50kg bag – similar to Mali but much lower than Burkina Faso (XOF5750-6000).
An additional 0.5Mta of cement capacity came on-stream in October 2015 when Ciments de l’Afrique (CIMAF) started up its Bonaberi grinding plant in Douala port. Moreover, plans have also been announced to double the existing capacity of this plant.
Furthermore, before the end of 2015 it was also announced that Swiss-based Mira Company would build a 1Mta cement plant in Douala as well under agreement from the Cameroon government. This new facility is scheduled to be operational by the end of 2016 and has been built by Shandong Design and Research Institute.
In what is already starting to become a congested market, LafargeHolcim Group-owned Société les Cimenteries du Cameroun (CIMENCAM) makes up the fifth producer with a production capacity of 1.7Mta. However, CIMENCAM also announced in October 2016 that it would commission its new 2Mta Nomayos grinding unit in mid-2018.
Stalled projects
However, not all announced projects make it to the commissioning stage. The town of Limbe, where a deep seaport is to be constructed, is also supposed to be the home to a 0.8Mta cement factory being built by Korean construction companies for G Power Cement. Work began in March 2013 on the site, but recent reports detail the site being overgrown with vegetation.
Afko Cement is a further Korean operation at Ngeme, which was originally proposed in 2008. However, this 1Mta plant has been delayed due to inadequate funding.
Pricing outlook
The build-up of capacity, currently estimated at 4Mta, could be expected to bring prices down, particularly with cement demand in 2016 estimated at between 2.5-2.8Mta, but this has not happened yet. By June 2016, a 50kg cement bag was selling at XOF4800 when Minister of Trade, Maglorie Mbarga Atangana accused producers of conspiring to maintain the high prices of cement.
Producers have pointed to the cost of importing clinker in defence of the present cement price levels and the government has offered some protection to local manufacturers by banning finished cement imports in January. The capital of Yaounde had been receiving products of several foreign brands, including Conch Cement, according to local media reports.
Medcem Cameroon has set its retail price for cement for a 50kg bag at XOF4550, therefore the Turkish company's arrival will not disturb the current pricing regime, although the pressure of competition may eventually force some change.
In the meantime, the road to lowering cement prices in Cameroom appears to include the building of clinker plants. To achieve this, the government has pinned its hopes on attracting investors to the Mintom limestone deposit which is estimated to contain 540Mm3 of limestone reserves suitable for clinker production.
