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Monday, September 20, 2021

Int’l price increase, lack of raw materials collapsing cement industry – COCMAG

Rev. Dr. George Dawson-Ahmoah

Ghana continues to grapple with increase in cement prices which, according to local cement manufacturers, is as a result of a continuous hike in international price and lack of raw materials.

Local cement manufacturers are suffering from a continuous hike in the cost of importing clinker which is a major component in the production of the cement product.

Cement is a mixture of Clinker, Gypsum and Filler (Limestone). Clinker constitutes 80% of the cement whereas Gypsum is 5% and Limestone (or other constituents) is 15%. Clinker and Gypsum are imported from the international market.

The Executive Secretary of the Chamber of Cement manufacturer’s Ghana (COCMAG), Rev. Dr George Dawson-Ahmoah, said this after a publication by the Business and Financial Times (B&FT) today, 2nd August 2021 on reasons for the continuous increase in cement prices.

Rev. Dr Dawson-Ahmoah admitted that as reported by the B&FT, the rise of raw materials price during the last 12 months has been a big challenge for the cement industry. “Indeed, clinker price (Clinker + Freight) increased by 55% during the first half of 2021 and it’s expected to even reach 98%.

“Consequently, despite the efforts to contain this raw materials crisis, the cement price has increased during the first half of 2021 by almost 20-25% and recently by another 5-10%. It is important to mention that this is even not considering the forecast of raw material prices which could reach 100% increase. That will continue to affect the cement price, unfortunately.

“Any importer has contractual terms to respect otherwise he will pay penalties. For cement manufacturers, each day the vessel is delaying at the anchorage or at the port generates a penalty of 35-45’000US$ (15,000USD$/day before 2020), this is called demurrage. Today, the vessels are waiting 10 days on average to offload the clinker against one or two days in the previous years, that is huge! Adding the fact that this penalty must be paid in foreign currency to the foreign ship owners. This situation worsened in April 2021 due to the congestion of the bulk terminals/berths and the exclusion by GPHA of the cement manufacturers to use berths 1 and 2. Many petitions and discussions have been initiated by the chamber of cement manufacturers but still under study by GPHA.

“In fact, we are having consistent discussions with Managers of GPHA in resolving these high demurrage charges due to the delays in the discharge of raw materials at the Port of Tema and we are hopeful for an amicable resolution.”

Rev. Dr. Dawson-Ahmoah disclosed that together with the Ministries of Trade & Industry and the Ministry of Transport, Ghana Shippers Authority, GPHA, the Chamber of Cement Manufacturers (COCMAG) has tried to find lasting solutions to contain these impacts, very productive meetings have been held and many ideas proposed: “We sincerely thank the ministries for their time and effort in engaging the Chamber to assist in easing the production cost of the cement product.”

 He said it was never the objective of manufacturers to benefit from huge profits through the increase of the cement product, as presented. “The current price increments are even not compensating the raw materials price impact. The COCMAG will also continue to work hand in hand with Government bodies to find solutions to minimize this impact on the consumer.

“The easiest way of doing business would have been to transfer production cost to the price of the product but this is not the intention of the manufacturers hence we are engaging in stakeholder consultation so we rather expect commendation from the Chamber. We must all get involved in resolving this cancer of high production cost that has culminated in high cement prices in the market,” he said.

Rev. Dr. George Dawson-Ahmoah, who doubles as the Chairman for AGI Tema, observed that not only is the cement industry experiencing this turmoil in production cost but same challenges are being faced by other construction industries in the Tema industrial area including the steel, metal, aluminum, roofing sheet and ceramic tiles and as such called on all stakeholders to continue to jaw jaw in resolving these challenges.

“We forecasted a return to the normal situation by June 2021, but the situation is even worse now! We think that if the COVID-19 pandemic is continuing, we could not predict the market. Now, there are some rumors that we could see an improvement before the end of the current year but what is sure, is that the cement Manufacturers assured the Chamber that as soon as the raw material prices show an improvement, the cement price will undoubtedly decrease since it is not of the interest of any party to keep this situation as such.

“We want to assure the larger public that it is not intentional for cement manufacturers to increase cement prices but rather the circumstances surrounding the high production cost which is hugely manipulated by international factors as discussed above,” he said.

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