NIGERIA: ICD buys $300 mln stake in Nigeria's Dangote Cement

Sovereign fund Investment Corp of Dubai (ICD) has bought a 1.4 percent stake in Dangote Cement, Nigeria's biggest company by market capitalisation, for $300 million, a Dangote spokesman said on Monday.

Dangote Cement spokesman Carl Franklin confirmed the sale, but provided no further details.

Stockbrokers in Lagos told Reuters 243 million shares of Dangote Cement were transferred to ICD, which holds stakes in some of the emirate's top companies, at 200 naira each, a 12 percent premium to Dangote Cement's price of around 223 naira on Monday.

"ICD is diversifying its portfolio ... into the West African market through a minority stake in Dangote Cement. We believe this bodes well for future investments into Nigeria from the Middle East," Akinbamidele Akintola, an Africa equity sales executive at Renaissance Capital, said.

Dangote Cement, owned by Africa's richest man Aliko Dangote, is expanding and plans to roll out cement plants across Africa to reach an annual 62 million tonnes capacity by 2017, up from a projected 42 million tonnes this year.

It reported pretax profit of 107.1 billion naira ($659.4 million) in the first half, down 0.57 percent from a year ago, on revenues of 208.9 billion naira.

Shares in Dangote cement, which make up a third of Nigeria's stock market and hit a record high of 250 naira in July, traded flat at 223 naira on Monday, valuing Nigeria's biggest company at about 3.97 trillion naira ($24.5 billion).

Dangote Cement faces competition in Africa from French cement maker Lafarge which is combining its Nigerian and South African businesses to accelerate growth on the continent.

Last year, Dangote Industries sold a 1.5 percent of its 95 percent stake in Africa's biggest cement producer to South Africa's Public Investment Corporation (PIC) for $289.3 million.

Middle East companies are expanding in Africa. Last week, Qatar National Bank (QNB) bought a 12.5 percent stake in pan-African lender Ecobank for about $200 million.

DUBAI: Dubai sea freight volumes rebound but rates remain stagnant

The signs are there. Sea cargo volumes into Dubai have had a noticeable spike in December and, more importantly from the industry's perspective, been maintaining these levels since. At the same time, the cargo rates have not moved in direct proportion to the volume gains.

This would, according to industry sources, provide the much-needed impetus to sustain the recent momentum. "Since December, there has been no noticeable gain on rates," Shamsudeen Ahmad, who heads the Middle East operations of Germany's Leschaco Freight Solutions, said. "Typically, when demand goes up, it's accompanied by capacity shortages on the main lines — that has not happened in this instance and is a key factor in the rate stability.

"It could be that the shipping industry is still trying to come to grips with the massive capacities that were created before the downturn. A lot of consolidation has since taken place and still continues."

Drop in cargo rates

During the downturn, cargo rates fell 20 per cent, depending on the sector and the regions to which the goods were headed. In some instances, the declines were as much as 30 per cent.

"I don't feel there will be a significant rate increase in the short- to medium-term," Ahmad said. "The increases will be normal ones on account of a firming up of fuel prices, etc."

According to Raghu Menon, who heads the Sharjah-based logistics firm Hexxomatrix, "The general perception is that global freight rates won't improve much until 2014 despite shipping lines announcing increases.

"For instance, MSC Mediterranean Shipping Company has advised clients the bunker contribution to be applied to cargo from any origin in Europe to the Middle East as of March 1 will change from $435 (Dh1,597) per TEU to $465 per TEU."

Also, a shipping line increased rates on its India-Middle East-East Africa sector by $200 per TEU from February, while from March 1, rates for India and the Middle East to Africa will rise by $150 per TEU.

"By and large, from the fourth quarter onwards, a better balance between new capacity and demand has led to a modest recovery in cargo throughput," Menon said.

Marked increases in cargo throughput into the local ports, as well as transshipment volumes from here to the rest of the region will work to the UAE's advantage and further cement its status as the undisputed regional hub.

The cargo industry, for one, is taking a lot of heart from the recent weeks. "A lot of companies were OK with the fourth quarter and the freight forwarding volumes are getting better… at least they are not going down," Ahmad said.

"The movements from the Far East are strong, as so are those from Europe."

For the UAE's cargo industry, that makes for an ideal state to be in.

Middle East foray

Leschaco, the German logistics solution provider which has been around since 1879, has set up an operational base in Dubai. This marks the company's first direct venture into the region, until now serviced through affiliates.

"The company has completed a network expansion in the Far East and South America and for historical reasons has been strong in Europe," Shamsudeen Ahmad, managing director for the regional operations, said. "The Middle East represented a big gap in the chain and now that has been covered."

Going forward, the company could consider investing in a warehousing base for third-party logistics as well as to expand the network to include Saudi Arabia and Qatar.

"We definitely foresee a major role in being a third-party logistics player, but that would be the second step," Ahmad said.

Stable freight rates

In recent weeks, freight rate levels out of Asia have remained stable despite the surge in traffic before the Chinese New Year in mid-January. According to the World Container Index (WCI), the average spot rate quoted by carriers for cargo from Shanghai to Los Angeles on January 26 remained at $1,820 per TEU, the same as the week before, but still well above the $1,420 quoted just before Christmas.

Rates from the Indian subcontinent to the US east coast will increase by $320 per TEU, $400 per TEU and $450 per 40 foot container.

DUBAI: Emirates Cement Company rebrands as Lafarge

Company aims to capture markets outside the region

Dubai: For Lafarge, surviving in an extremely competitive environment means innovation. This includes rebranding the company in the UAE and adding new products.

Formerly known as Emirates Cement Company, a joint venture with the Dubai Group, a member of Dubai Holding, and the Fujairah Government, it is now running under the name Lafarge Emirates Cement.

The company owns its own quarry and crusher and opened its first factory along Emirates Road in Dubai at the end of 2007 with a capacity of 3 million tonnes. Although it still churns out about the same amount of cement today, one third to 40 per cent is dedicated to exports, said CEO Antoine Duclaux.

"We're still happy with the volume of sales in the region. But at the time, like all manufacturers, the objective was to sell domestically in Dubai, which we did. But now like most big players we export to Oman and some other captive markets, like Kuwait and Iraq and we are also targeting the Indian Ocean islands, like Mayotte and Mauritius."

In comparison to Iraq's double-digit growth, Qatar's consumption has dropped. Saudi Arabia's demand is high but imports there face transport and pricing restrictions due to the local cement industry being subsidised, Duclaux explained.

"To survive in an extremely competitive market the only way is to innovate via products and services," he said.

Lafarge's cement, sold in bulk and bags, has been rebranded Classic (Portland cement) and Flexi (Portland with limestone). Shield (sulphate-resistant Portland cement) will be available next week.

"We benefit from the research and development carried out in Europe. Not all players have that," said Duclaux. Lafarge recently announced it developed a cement product that reduces CO2 emissions by 25 per cent.

"The product still needs to be industrialised but there could be certainly an opportunity, along with other new products and services, to introduce it into the market here. We're all for sustainable construction and have been involved with Masdar," Duclaux added.

DUBAI: Times are tough for cement firms as prices fall and demand drops

Lafarge ceo calls on authorities for assistance to get back on track

Tough times for cement producers

Dubai Cement companies serving the Dubai market are being buffeted by low prices and are seeking to sell their products elsewhere in the Gulf and Middle East to bolster their balance sheets.

Demand for cement in the emirate has dropped from more than 20 million tonnes in 2008 to 13 million tonnes today, a senior industry executive said.

Antoine Duclaux, CEO of Lafarge Emirates Cement, has called on the authorities to assist the industry.

“Investors in the cement industry put $4 billion (Dh14.6 billion) into the sector over the past 10 years. The government enjoyed good relationships with the players, but current profitability is zero and in some cases negative. Something has to be done; some will be leaving,” he told Gulf News.

The UAE has 20 cement companies — 10 large ones and 10 grinders. On the ready mix side, 45 players with a capacity of 23 million cubic metres a year in 400 plants across the country are competing for a smaller pool of clients.

“They are all still in the game but with difficulties. Prices had to be adjusted so profitability is poor. Many export to Oman, given the growth. But cement sales in Oman are also challenging,” Duclaux added.

Price per tonne

The price of cement peaked at Dh400 per tonne in 2008, prompting the government to cap it at Dh360. The price today is around Dh200 per tonne for cement ex-factory and ready mix products fetch about the same value proportionately in cubic metres.

“The ready mix sector will face consolidation. We expect some adjustments and need help from the authorities if they want the industry here,” Duclaux added.

The ready mix sector though has an advantage in as much as it is more mobile, Terry Mason, company manager for Lafarge Readymix Gulf, told Gulf News.

The company has three ready mix plants, one each in Dubai, Sharjah and Ajman, with a total capacity of 1.5 million cubic metres a year.

It is looking at new opportunities by sending products and machinery to Oman, Saudi Arabia, Kuwait, Jordan and Iraq.

“Here we’re working now with the same few guys. Although the market has picked up a bit, one can’t plan ahead,” Mason added.

The Lafarge Cement Factory in Dubai. Demand for cement in the emirate has dropped from more than 20 million tonnes in 2008 to 13 million tonnes now, a senior industry executive said.