SOUTH AFRICA: Analysts foresee higher production costs as cement grade war persists

As the battle for cement grade applications rages on, research analysts have foreseen higher production costs on the part of cement makers, which will translate into higher cement prices and lower product availability.

According to them, the restriction in the manufacture and use of 32.5N grade of cement will create further unwarranted and unexpected problems in the industry, stressing that all stakeholders should be more concerned with poor construction practices, the most common of which is the addition of water to improve workability of the concrete. Stakeholders and regulatory bodies need be perturbed by inappropriate mixes and/or excessive extension, both of which occur as a result of ignorance and possibly fraudulent intent on the part of builders, they add.

“The key implication on manufacturers is they will need to increase the amount of clinker in their product, and blend in a lot less additives. In addition, the purer clinker would need to be milled even finer than before, implying higher fuel electricity costs than previously. This clearly puts those manufacturers close to full capacity utilisation at greater risk, as it would negatively impact on available volumes. Higher electricity tariffs become more relevant in this scenario as well,” says Oyindamola Olanrewaju, research analyst at Renaissance Capital (RenCap), a research and investment banking firm.

There have been complaints in some quarters right from early part of the year that 32.5 grade is largely responsible for building collapses around the country. Recently, the House of Representatives ad hoc committee on cement composition and pigmentation held a public hearing, consequent upon which the Standards Organisation of Nigeria (SON) issued a directive that cement with strength rating 52.5R be used for bridges; 42.5R for casting of columns, beams, slabs and for moulding blocks, and 32.5 can used for plastering only.

The war has become so fierce that the anti-32.5 group, which includes Dangote Cement (DangCem) and Cement Standardisation Advocacy Group, among others, insist that the pro-32.5 group which includes Lafarge WAPCO, United Cement Company of Nigeria (UniCem) and Ashaka Cement (AshakaCem) do so for pecuniary reasons and do not have the interest of the country at heart.

But Lafarge Cement WAPCO and others insist that professionals at different fora have maintained that 32.5 grade has never been associated with building collapses, adding that the new standard advertised by SON on the pages of newspapers has not been made available to them. Lafarge claims that “a leading manufacturer in Nigeria and proponent of restriction produces 32.5 cement grade in South Africa under the brand name Sephaku, and recommends the same for various construction activities including concrete work and block making.’’

Currently, there are several court actions challenging the link between building collapse and cement quality as well as processes followed by SON in arriving at the new standard, says Lafarge.

Adding its voice to the confusion in the industry, Renaissance Capital says, after its research, “we do not believe that 32.5N cement in itself is the cause of collapsing buildings, and do not expect the restriction in its manufacture and use to address the underlying problem without creating further problems. Low strength rated cement is not of its own a cause of collapsing buildings and its elimination will not necessarily result in better quality buildings, in our view. The only impact we see is higher cost of cement production which will inevitably be passed onto the end user in the form of higher cement prices, and lower availability of cement.’’

On the connection between cement and concrete, the investment banker says the composition of the cement used in making concrete drives the compressive strength of the concrete and the relevant application, adding that a 25 percent strength gain between seven and 28 days is often observed with 100 percent Ordinary Portland Cement (OPC) vs. other mixtures. RenCap says strength gain depends on the type of mixture, its constituents, the use of standard curing, among others.

Victor O. Oyenuga, immediate past president of the Nigerian Institution of Structural Engineers, agrees with RenCap, stressing that inability to carry out soil tests and involve professionals, as well as poor construction practices, among others, are factors causing building collapses, not 32.5 grade.