Ghana's cement producers look to expand operations

With the construction industry growing at a lively pace, Ghana’s cement market has continued to expand, encouraging both local producers and importers to make investments for the future.

Key Players

Ghana’s primary market player Ghacem was founded by the government in 1967 in partnership with Norway’s Norcem AS. The participation of foreign investors in the company has continued since, and the current majority owner is Heidelberg Cement, one of the largest building materials companies in the world, with a 93.1% stake. The government holds a 5% stake, leaving J A Addison, founder of Ghacem, with 1.9%.

Ghacem runs two grinding facilities, one in Tema and one in Takoradi, which are both major ports. As of 2017, the latest year for which full figures were available, the company had capacity to produce 4.3m tonnes of cement per year.

Other market players include Diamond Cement Ghana, which was founded in 2002 and owns a plant at Aflao in the Volta Region. Diamond Cement Ghana is part of the Diamond Cement Group, which also operates factories in Takoradi and Buipe. The Savanna Diamond Cement factory in Buipe is a 440,000-tonnesper-annum (tpa) plant in operation since 2015.

Segment Development

Overall, Ghana has cement production capacity of more than 7.4m tpa, according to official figures. This exceeds domestic demand, which stood at around 5m tonnes in 2017; however, the growth of the construction sector has led to increases in consumption, which is benefitting local suppliers.

“There was significant growth in cement demand in 2017,” Morten Gade, managing director of Ghacem, told OBG. “It expanded by 14.5%, which is huge. While this has been tapering down, we expect a growth rate of 6.5% for 2018 and 6% for 2019.”

According to Gade, the growth is not as strong as had been hoped, partly due to government projects being slow to get off the ground and muted confidence in the private sector. Nonetheless, with a wave of infrastructure projects pushing forward in 2019 and broad economic growth sustained, the outlook for the cement industry may be brightening. The prioritising of road construction in the 2019 budget should help boost domestic cement production.

Expansion

Therefore, producers and importers have been looking to ramp up their presence on the Ghanaian market. In August 2017 President Nana Akufo-Addo laid the foundation for a new cement plant in the free zones enclave in Tema. Known as Supacem, the $55m plant produces 1m tonnes of cement per year and is operated by CBI Ghana, the local partner of LafargeHolcim, the world’s largest cement manufacturer.

In April 2018 Johann Claassen, CEO of PPC, South Africa’s biggest cement manufacturer, cited Ghana as one of the promising markets in Africa for cement, given a wave of infrastructure projects being approved by the government. Some players in Ghana have taken this as an indication that the company is eyeing Ghana as part of its drive for expansion across the continent.

Nigeria’s Dangote Cement, one of West Africa’s biggest companies, has also been expanding on the market. It has been present in Ghana since 2011 and operates a terminal and plant bagging and importing cement at Tema, with capacity of 1.5m tpa. The company is also investing $100m in a new grinding plant at Takoradi, which will process imported clinker. The facility will also have capacity of 1.5m tpa, and is expected to commence operations by the end of 2019.

Representatives from Dangote Cement have expressed that they do not perceive great risk from growing competition on the Ghanaian market. More broadly, however, the industry has raised concerns about low-cost imports, which have become a challenge for some manufacturers. In October 2018 the Cement Manufacturers Association of Ghana appealed to the Ghana Standards Authority to tighten quality checks on imported cement to ensure that local producers are not undercut by substandard products.