Senegal cement battle looms

Senegal cement battle looms
24 March 2014

Aliko Dangote, Nigeria's powerful industrial conglomerate owner, is facing a battle to get his Senegalese cement plant up and running due to legal action and stiff competition. Vicat and its Sococim subsidiary in Senegal are ready to protect market share in west Africa by taking on Aliko Dangote. 

Dangote's Senegalese plant, one of the largest in Africa, is scheduled to start operation "within 90 days", Aramine Mbacke, the CEO of Dangote Senegal, told Financial Afrik magazine earlier this month. It will produce 3Mta of cement, three-fifths of which will go onto the local market, he said. The operation is being launched amid increased competition between Sococim, which has a 65 per cent market share, and Ciments du Sahel, which makes up the rest. The combined output of the two companies is around 6Mta while Senegal's market demand is 2Mta. As a result, Sococim and Ciments du Sahel are already producing below capacity.

Vicat is taking the Nigerian government to a regional arbitration court in Côte d'Ivoire. The France-based company claims that the Dangote plant there represents a "distortion of competition" in a country where the market is already saturated. Now the fight is being taken to Senegal where Dangote's plant, first conceived four years ago, was due to start production in June.
"This is the first time in the history of Senegal that we have seen a plant built in violation of all the rules," said Boubacar Camara, president of Sococim. "A cement plant is dangerous, you need permits, prior authorisation and you also have to conduct an environmental impact study. That hasn't been done," Camara told AFP. For example, the water-cooling technology used in the US$630m (EUR457m) plant would require a daily withdrawal of 4500m3 of groundwater, a precious commodity in an arid Sahelian country like Senegal, according to Camara.
"It's a race against the clock. Once production begins, it will be much more difficult to intervene," Camara told AFP. "Given the conditions in which he has installed his plant, Dangote could come and set whatever prices he likes."
Dangote has said the operation would create 4000 jobs and, in any case, the state has no power to oppose it, a source close to the Senegalese Ministry of Mines told AFP. "Initially, there were certain procedural irregularities that Dangote fixed," said the source, adding that "the main problem was the environmental impact".
French president François Hollande wrote to his Senegalese counterpart Macky Sall in January about the plant "to raise awareness of the difficulties faced by Sococim", according to a source in the Senegalese presidency. Sall responded to the effect that "the rule of law and the Senegalese courts" must be allowed to decide whether the project could go ahead, the source told AFP.

Published under Cement News