Ghana continues to grapple with the increase in cement prices.
According to local cement manufacturers, the prices of the product keeps going up because of the continuous hike in the international price of raw materials such as clinker, which is a major component in the production of cement.
Cement is a mixture of clinker, gypsum and filler (Limestone). Clinker constitutes 80% of the cement, gypsum 5% and limestone (and others constitute) 15%. Clinker and gypsum are imported from the international market.
Executive Secretary of the Chamber of Cement Manufacturers Ghana (COCMAG), Rev. Dr. George Dawson-Ahmoah gave the clarification in an interview with the media following a publication by the Business and Financial Times (B&FT) on Monday, August 2, 2021, which raised concerns over the continuous increase in cement prices.
Rev. Dr. Dawson-Ahmoah admitted that, as reported by B&FT, the surge in the price of raw materials within 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’ challenge, 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 materials prices, which could reach 100% of the increase. That will continue to affect the cement price, unfortunately,” he added.
“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 35-45,000 US$ (15,000 USD$/day before 2020). This is called demurrage. Today, the vessels are waiting 10 days on average to offload the clinker against 1 or 2 days in the previous years, that is huge. This penalty must be paid in foreign currency to the foreign shipowners. This situation worsened in April 2021due to the congestion of the bulk terminals/berths and the exclusion by GPHA of the cement manufacturers to use berths 1 and 2.”
He said several petitions to the Ghana Ports and Habour Authority to have the concerns addressed proved futile.
“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 has tried to find lasting solutions to contain these impacts and have held productive meetings to that effect.
“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 increasing the price of cement.
“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 for 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”.
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 the 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 hold discussion for resolving these challenges.
“We had hoped to 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. We want to assure the public that it is not intentional for cement manufacturers to increase cement prices.”