Dangote Cement Plc, Nigeria’s biggest company by market capitalization, shut its Gboko plant in the central region of the country because imported, cheap cement is being sold in the area served by the unit.
“There is massive importation and dumping of low-quality, cheap cement imported into the Enugu and Port Harcourt area” in southeastern Nigeria, said Anthony Chiejina, a spokesman for Dangote. That led to rising levels of unsold cement at the plant, which has an annual capacity of 4 million metric tons.
The closing is temporary and a resumption date isn’t known, Chiejina said. Workers have been sent home and were told they would be recalled “once the situation improves,” he said.
The impact of the shutdown on Dangote “may not be significant,” said Pabina Yinkere, head of research at Vetiva Capital Management. “Gboko is the smallest of Dangote’s plants, and it was not running at full capacity,” he said. The company will be able to move built-up clinker at Gboko to its plants in Obajana and Ibese for finishing, he said.
The glut was caused by a reduction in building and construction activities due to high rainfall and flooding, Yinkere said. As the dry season sets in, construction will resume “and everything will normalize,” he said.
Nigeria, Africa’s most populous country, had its worst flooding in decades this year after its two biggest rivers, the Niger and the Benue, overflowed their banks as dams let out water following a year of heavy rains. Farms, homes and roads were washed away and at least 363 people were killed and about 2 million people were displaced by floods from July to October, according to the country’s emergency agency.
Dangote, Africa’s biggest producer of the building material, will raise output to 46.3 million metric tons by 2015 as it expands across Africa, it said on April 5. Output in Nigeria, sub-Saharan Africa’s second-largest economy, will advance to 32 million tons by 2015 from 20 million tons this year, according to the company, owned by billionaire Chairman Aliko Dangote.
Dangote forecasts an annual profit of 146 billion naira ($928 million) this year from 124.9 billion naira in 2011, it said Nov. 1. The company’s net income for the first nine months of this year increased by 15 percent to 106.5 billion naira, it said. Revenue advanced to 208.3 billion naira from 173.8 billion naira.
Dangote’s stock has risen 21 percent this year compared with a 28 percent increase in the Nigerian Stock Exchange All-Share Index.