FG threatens to open border for cement importation.

If cement manufacturers in Nigeria do not cooperate with the federal government’s efforts to reduce cement consumption in the country, the federal government has threatened to open the borders to cement imports.

It was also mentioned that, despite being cognizant of the country’s macroeconomic challenges, it finds the repeated disproportionate increases in cement prices to be unacceptable and irrational, and that some of the critical components used to make construction materials, particularly cement, are sourced locally.

Arc Ahmed Dangiwa, Minister of Housing and Urban Development, made the announcement and stated that domestically sourced cement input materials—including clay, silica sand, gypsum, and limestone—should not be dollar-rated.

During an emergency meeting with cement and building materials makers in Abuja on Tuesday, February 20, Dangiwa made this known.

He said that manufacturers shouldn’t be making excuses about things like the price of gas, since gas is a raw material that can be found within the country, and that manufacturers shouldn’t make excuses about things like the need to buy more mining equipment, since most of that equipment has been in use for decades.

The minister warned that local cement producers would suffer greatly if the government decided to reopen the border to mass importation, despite the fact that the closure had helped keep cement costs low.

In his call for manufacturers to show more patriotism, Dangiwa cited BUA cement as an example of a company that has been and continues to be willing to negotiate a lower price for their cement than the N7000 and N8000 that the manufacturers had previously agreed upon.

“The issues you speak of—many countries are facing the same challenges and some even worse than that,” the minister said to the manufacturers. “But as patriotic people, we have to unite behind anytime there is a crisis to improve the situation,” he added.

We are aware of our domestic petrol production, thus the only thing you can say about the petrol price is that it might not be sufficient. We still produce petrol in Nigeria, even if petrol prices account for half of our production costs; the problem is that some manufacturers take advantage of the situation. You still make use of the mining equipment you purchased years after you first got it.

Maybe it was cheaper when you bought it, but now you’re trying to justify the high price by claiming that the dollar is weak. We need to take a good, hard look at this. Since the government banned cement imports, supply and demand should work in your favour. In an effort to give you greater power to generate, they halted imports.

On the other hand, if the government allowed massive cement imports, the price would plummet, leaving you with no company and fewer jobs created. You have to look at things like this—the government’s efforts to make sure things go well.

Rabiu Umar, Group Chief Commercial Officer of Dangote Cement, had earlier in his address laid the blame for the cement price hike at the feet of the high cost of gas and mining equipment.

As a nation, we are all Nigerians, and we are all bearing the brunt of this crisis, he declared. The common assumption that most of the cement-making ingredients are readily available in the area is one that I’d like to disprove. Although we do have limestone, gypsum, and coal on hand, the truth is that cement requires a considerable amount of commodities tied to foreign exchange.

Gas accounts for over half of the overall production cost at most Nigerian cement plants; the price of gas is dollar-indexed. Half of your manufacturing costs should be dollar-indexed, which implies that your total expenditure should also move in the direction of a change in the dollar.

Importing mining equipment is necessary for us to mine the limestone, and it accounts for a significant portion of the manufacturing cost. A lot of that machinery requires initial investment and ongoing maintenance. We are not receiving enough gas to generate enough to sell on the market, which is another concern related to the gas. Next, we’ll go over the gas’s quality and pricing, since those two factors are interconnected.

Concerning the situation at the border towns, the depreciation of the naira has greatly increased the allure for individuals from surrounding countries to illegally import cement and export it. Obviously, that has raised demand, which has decreased supply across the country and thus pushed prices higher.

The Cement Manufactures of Nigeria was also held responsible by the minister for the lack of regulation of cement prices in the country. This is due to the fact that Salako James, the executive secretary of the association, had previously informed the minister that the association does not discuss or decide on the prices of individual companies, but is simply informed of market prices, just like every Nigerian.

According to Dangiwa, the government will form a committee with representatives from the country’s cement manufacturers, trade groups, and the ministry to figure out how to bring down the price of cement.