A cement war is quietly brewing across the West African sub-region using Togo as a plank. This follows the mega project executions by the Burkinabe’s Inoussa Kanazoé who wants a piece of the market by taking on the regional market leader Dangote Cement in a market many believe is one of the most lucrative in West Africa. Cim Métal Group of Burkina Faso led by CEO Inoussa Kanazoé entered the Togolese market through a subsidiary last year even though its products such as CimFaso and Cimasso were already established in Burkina Faso, as well as CimIvoire in Côte d’Ivoire. But the establishment of the Lomé plant with a capacity of 2.5m tonnes of cement – representing an investment of 65bn CFA francs ($125m) – was a huge step in the manufacturing of cement and other consumer products (rice, sugar, oil, etc.), which helped him make his first mark in the sector with support from its technical partnership with German manufacturer Gebr. Pfeiffer.
With funds from the West African Development Bank (Banque Ouest-Africaine de Développement, BOAD) which contributed 25bn CFA francs to the investment in Togo, the company has become a player in the West African cement industry with investments in Burkina Faso and Côte d’Ivoire estimated at more than 200bn CFA francs.
Under the banner of the Cimenterie de la Côte Ouest-Africaine (Cimco), this new investment in the Togolese market is a part of an ambitious regional growth plans aimed at further mobilizing 110bn CFA francs, 60bn of which will be devoted to installing a new cement plant in Bamako.
Cimco is in competition with its peers in Lomé, starting with Cimtogo, a subsidiary of the German group Heidelberg Cement, the Indian company West African Cement (WACEM) and, above all, the Nigerian giant Dangote Cement.
“We are so small, and yet we are going up against Dangote,” says an executive of Cim Métal Group, which is not very forthcoming about its strategy in Togo. Strengthened by the achievements of its Plan National de Développement, the country has been able to encourage new investment. Cim Métal Group‘s project comes as Dangote, accused by its competitors Heidelberg and WACEM of undercutting prices in the Togolese market, has announced its intention to invest in a cement plant in the country. The plant was the subject of an investment agreement with the government in November 2019.
Alongside a phosphate mega-project Dangote has been injecting $60m into a 1.5m tonne cement plant in Lomé since last year. Its annual production would be enough to supply the local market’s current demand. The plant will be supplied with clinker – an ingredient for cement, of which Heidelberg is the sole local producer – from Nigeria.
The German company Heidelberg, which spent $30m to expand its factory in Lomé, is also in the midst of a major development plan in Togo that began in 2017. Its 250,000tn crushing and packaging plant was built in Awandjelo, near Kara, the main city in the north of the country, for 7.5bn CFA francs.
The group spent $250m on a clinker plant in 2014. With a capacity of 1.5m tonnes, this plant – one of the largest industrial investments ever made in Togo – is fully integrated. It has limestone and clay quarries to supply the raw materials for clinker.
While competition in Burkina Faso promises to be tough due to overproduction – an estimated at 6.7m tonnes is produced per annum, compared to demand of around 3m – Cim Métal Group should be able to use synergies between its units to maintain profitability “within an extremely unfavourable international context following the increase in raw material and freight prices,” according to a sector insider.
The apparent upturn in the sector, which has given rise to numerous investments in recent years in a number of countries in the region, is being put to the test by significant overcapacity.
In Côte d’Ivoire, the situation is stark: there are 12 operational plants that have the capacity to produce around 15m tonnes per annum. For 2019, Ivorian demand was estimated at 5.5m tonnes.