NIGERIA: Lafarge Wapco may shut down over cement glut

Lafarge Wapco Cement Company Plc, like the Gboko Plant of Dangote Cement Plc, faces an imminent production shutdown as a result of mounting unsold stock, unless something positive happens in the industry that can lift the commodity’s sales profile in the next two months.

This was the company’s position on Friday, after a facility tour of its production plant, where huge piles of clinkers and fully produced cement (bagged and bulk) were shown to journalists.

At present, the company said production had been cut down by 50 per cent as a result of the glut in the local cement market.

The loading park of the company, which usually has 10 trucks at intervals of between 45 minutes and one hour, was empty for the three and a half hours that journalists were on the site, with workers loitering around for lack of loading activities

Addressing journalists after an on-the-site facility tour, Plant Manager, Lafarge Wapco, Mr. Lanre Opakunle, said the situation in the local cement market was pathetic.

Pointing at heaps of clinkers (the final cement product except for the non-addition of the binding agent), Opakunle said apart from the huge unsold stock in the company’s storage, the volume of unused clinkers for the day was 220,000 metric tonnes, from which 300,000 bags of cement could be produced.

He said reduced production had been causing the company 1,280 tonnes of cement per hour or 25,600 bags of cement in volume.

Opakunle said, “In all, the current lull in the cement market has reduced the productive capacity of the company by 50 per cent. In our two plants, between six and seven trucks are normally on a loading queue, and if there is demand pressure, we run 10 parkers. However, in the last two or three weeks, sales have been extremely low, forcing production cut down by as much as 50 per cent.

“We just hope that things will turn around quickly because it takes only four days’ production worth of clinkers to fill our storage facilities. I think there is an urgent need for a proactive measure to be taken, especially as regards product importation,”

He said initially, the management thought it was the normal rainy season market slur, but it recently became clear that the situation had taken a threatening dimension when huge stock of unsold products began to pile up, even after the rains had receded.

“For instance, since morning (as at 2pm on Friday), we have done just 180 tonnes or six trucks; whereas, we should normally have done about 1,400 tonnes. A truck has 600 bags. You can calculate how many bags of cement we are having idling away without the market to push them into,” Opakunle said.

The management of Dangote Cement Plc had two weeks ago announced the shutdown of its four million-metric tonne per annum Gboko plant as a result of what it claimed was a glut in the market.

A statement by its spokesman, Mr. Anthony Chiejina, had said the move was necessitated by the glut in the market occasioned by the recent reign of free importation of cement into the country.

He said this was in spite of the success currentlyP being recorded with the exponential increase in local production of cement, but had been compounded by “continued importation of subsidised cement into the country.”