Ethiopia Targets 10-Fold Increase in Cement Production by 2015

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Ethiopia's demand for cement could be met with local production output by the end of 2012, as 22 cement plant projects move to completion. Cement production will double by the end of 2011, with the opening of a new plant and the completion of expansion projects at two others. Ethiopia has been importing about 1 million tons of cement annually, and the need for imports also will fall away next year.

The country's annual cement output will grow from the current 2.7 million tons to 13.5 million tons when these plants come into production. The industry's target is an annual production of 27 million tons by 2015.

This dramatic increase in demand and production is the result of a construction boom driven by state investment in low-cost housing, infrastructure development, roads, dams and educational institutions. The economy has expanded at an average rate of 11% annually over the past seven years, according to International Monetary Fund data, and the country's government is targeting a growth rate of up to 14.9% over the next five years.

The country's industry ministry has issued licenses to 36 companies to enable it to reach the 2015 targets. Companies licensed include Lafarge S.A. (OTC:LFRGY) (Paris, France), the world's largest cement producer, and Dangote Cement (Lagos, Nigeria), Nigeria's largest company by market value. In the next two months, the expansion projects at the state's Mugher Cement Enterprise and the ruling party's Messebo Building Materials will provide an additional 1 million tons of production.

Derba Midroc Cement (Addis Ababa, Ethiopia) is planning to commission operations at its new, $351 million, 2.5 million-ton-per-year plant this September and reach full production in the first quarter of 2012. The World Bank's International Finance Corporation provided $45 million in funds for the project. Derba Transport, a group affiliate, has placed a $141 million order for 1,000 Volvo 40-ton trucks to deliver cement to customers.

Ethiopia has the second-largest population in Africa, with 82 million people. (Nigeria has 148 million, while Egypt has 79 million.) But its current per capita cement consumption is only 35 kilograms a year. Even if the 2015 target is met, the per capita figure of 300 kilograms will be below the world average of 390 kilograms, and miniscule when compared with countries like China or the United Arab Emirates, which have four-figure per capita consumption rates.

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