According to Nigerian media reports, just a week after Dangote Cement's new Mugher plant in Ethiopia was ignited, the company announced plans to double its capacity and upgrade the project by the end of 2015.
This means more or less the development potential of Ethiopia's cement industry. Currently, Ethiopia has a population of about 90 million. According to the World Cement Encyclopedia 2015, Ethiopia had an annual cement production capacity of 9.7 million tons before the new Dangote 2.5 million tons per year cement plant came online. Even if the new Dangote plant is included, and even if the capacity is 100% fully utilized, the national cement consumption is 135 kg per capita. This is a very low level of international consumption, so new capacity continues to grow. In recent years, a large number of projects have been rumored and brewed in Ethiopia, but many projects that have been reported have not been built.
Industry Minister Mebrahtu Meles mentioned that there were 18 enterprises engaged in cement production at the 7th Africa Cement Summit in Addis Ababa in April 2015. Meles said the country already has an annual cement production capacity of 11.2 million tons (including the Dangote plant), which is expected to increase to 17.15 million tons in the future. However, at present, the capacity utilization rate of these cement plants is below 50%, and the total annual cement output is only 5.47 million tons. This capacity utilization rate is far below the international level of 60% and above. Cement consumption in 2014 was 62 kg per capita.
In response to the incident, the Ministry of Industry and Information Technology revealed that they are formulating a national cement industry development strategy for 2015-2025. The strategy will address issues such as shortage of locally produced packaging materials, poor transportation, high production costs and limited markets. The main strategic objectives include: promoting the demand for cement, increasing the demand for cement through the construction of concrete roads to reach 12.22 million by 2020; and increasing the utilization rate of production capacity to 75% by 2017 and 80% by 2025.
In Ethiopia, Dangote is not alone in adding new capacity. Habesha Cement's 1.4 million tonne per annum cement plant near Addis Ababa is due to come on stream in 2016. Habesha Cement also has an international outlook. South African cement producer PPC acquired a 50% stake in Habesha Cement in autumn 2014 after the project ran into financial difficulties.
The new Dangote plant precedes the country's new cement industry strategy, but the upgrade project shows the confidence of the market and the government. In order to achieve the strategic objectives, the state needs to improve the capacity utilization rate of cement enterprises and increase more production capacity. While previous statements have weakened, the current target depends on Habesha Cement building the cement plant and increasing its capacity utilization from 50% to at least 75%.
South African weekly M & & GAfrica describes a "racial quarantine" in African infrastructure, with 44 of Africa's 58 countries sharing only 25% of African infrastructure. Due to insufficient investment in infrastructure, the construction cost in Africa is relatively high, which makes it difficult to utilize cement production capacity. Ethiopia is one of the richer countries in Africa in terms of GDP, but it has the same problem. Generally speaking, it is difficult to achieve the goal of cement industry.
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