Ghacem to Expand Plant By a Million Tons

In order to increase its capacity especially towards the construction of the Bui Dam and meet the increasing demand of cement in the future, Ghana Cement Limited (Ghacem) is embarking on a feasibility studies to increase production capacity by one million tons annually by January 2010.

This was revealed to the public by the Managing Director of Ghacem, Mr. Morten Gade in Accra last Friday.

He said that Ghacem as the leader in the local cement industry, has a total production capacity of 2.4 million tons annually between while its competitor has a production capacity of 1.1 million tons.

Total installed cement capacity in Ghana excluding the import terminal in Tema for finished cement is therefore 3.5 million tons per annum which is more than sufficient to meet the annual demand in Ghana of 2.8 million tons.

Ghacem alone sold a total of 1. 7 million tons last year representing 60% market share.

Clinker which is the main component in cement production is needed in sufficient quality and quantity to defend an investment cost of more than USD 100 million for just 1 million ton annual capacity.

In addition, he said one need to secure reliable supplies of thermal energy, like natural gas, coal, pet coke or HFO to fire the kiln.

"Unfortunately, we have so far not found deposits of limestone in sufficient quality and quantity to invest in local clinker production," he said. However, Mr. Gade said Ghacem is still actively searching for local limestone with the objective of producing clinker domestically or in the region.

He explained that from July 2005 to the end of last year the clinker costs increased by USD 19/ton. Out of this increase USD17 was due to increased sea-freight. "This cost we would have saved if we produced clinker locally".

Mr. Gade noted that in the same period from July 2005 until today, Ghacem ex-gate price has only increased with USD15/ton, meaning Ghacem has increased the ex-gate price with less than the increased costs of raw materials.

On the price of cement, the Managing Director said the fact still remains that power is imperative to the production and supply of cement to the market and therefore the shortfall in energy supplies has a direct impact on the optimum production and distribution of cement to the market.

Ghacem as all other industries was advised to reduce the electricity consumption with 25% compared to last year. The cement industry has had to produce under-capacity, creating a shortage of cement on the market due to inadequate power supply from the national grid. In a circumstance like this, the market forces of demand and supply, ever at play on the market, have catapulted the retail price of cement.

Unfortunately, he said retail prices are something the cement producers have little control over. However, he said 'we are constantly appealing to the distributors and retailers to think long term and not take undue advantage of the temporary shortage of cement on the market'.

In order to assure the public that the price hikes are the result of the dynamics in the retail market, GHACEM has had to publish its ex-factory and ex-depot prices, which we sell to our accredited distributors.

With even the current shortfall of energy supplies, GHACEM has been able to produce more cement so far this year compared to the same period last year. However, the total cement production in Ghana has not been sufficient to meet the increased demand this year due to the electricity situation.

To alleviate the burden of our cherished Akosombo Dam and particularly boost our production of cement, he said GHACEM recently commissioned 6 diesel-generators that will produce a total output of 5.1 megawatts of power. However, these generators are sufficient to compensate for the 25% enforced reduction in electricity consumption from the national grid, and will subject to availability of diesel, enable us to produce at full capacity.

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