Infrastructure craze to bolster Africa's cement industry growth

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Infrastructure craze to bolster Africa's cement industry growth

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"West Africa’s cement industry has witnessed strong output growth driven by the Dangote Cement Group’s aggressive local and regional expansion initiatives". Frost & Sullivan has conducted an......

"West Africa’s cement industry has witnessed strong output growth driven by the Dangote Cement Group’s aggressive local and regional expansion initiatives". Frost & Sullivan has conducted an in-depth comparison of the East, West and Southern African cement industries and gives and overview of who the top key cement producing economies are.

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  • 1. Manufacturing Unit Strategic Outlook of sub-Saharan Africa’s Cement Industry November, 2013 © 2013 Frost & Sullivan. All rights reserved. This document contains confidential information and is the sole property of Frost & Sullivan. 1
  • 2. Contents Sub-Saharan Africa’s Cement Industry 2 Sub-Saharan African Cement Industry’s Mega Trends 6 Sub-Saharan African Cement Industry Forecasts 12 Key Conclusions 16 Appendix I: Who is Frost & Sullivan? 18 Appendix II: Manufacturing Unit Scope & Coverage 21 Contacts 24 2
  • 3. Country Scope – West Africa, Southern Africa and East Africa Frost & Sullivan has conducted exhaustive cement industry research within Africa’s key cement producing economies WEST AFRICA 1) Nigeria 2) Ghana 3) Togo 4) Benin 5) Mauritania 6) Ivory Coast 7) Sierra Leone 8) Guinea 9) Burkina Faso 10) Liberia 11) Niger NORTH AFRICA 1) Egypt EAST AFRICA 1) 2) 3) 4) 5) Kenya Uganda Tanzania Rwanda Burundi OTHER COUNTRIES SOUTHERN AFRICA 1) 2) 3) 4) 5) 6) 7) South Africa Zimbabwe Zambia Botswana Lesotho Namibia Swaziland 1) Countries where in-depth cement industry has not been conducted thus far For the purposes of this presentation, Frost & Sullivan selected the top three cement producing economies within Southern, East & West Africa 3
  • 4. Sub-Saharan Africa’s Cement Industry West Africa’s cement industry has witnessed strong output growth driven by the Dangote Cement Group’s aggressive local and regional expansion initiatives Cement Industry: Supply in Million Tons (Sub-Saharan Africa), 2012 *SOUTHERN AFRICA (2012 base year information) * WEST AFRICA (2011 base year information) South Africa 13.1 Mt Nigeria 18.5 Mt Zimbabwe 1.5 Mt Ghana 3.3 Mt Zambia 1.4 Mt Benin 1.1 Mt TOTAL 15.9 Mt TOTAL 22.9 Mt West Africa 47% Southern Africa 32% East Africa 21% *EAST AFRICA (2010 base year information) Kenya 4.3 Mt Tanzania 3.6 Mt Uganda 2.2 Mt TOTAL 10.1 Mt 2012 Output = 48.9 Mt COMMON THEMES ACROSS THE PROFILED REGIONS 1) Leading cement producers are ramping up capacity 2) Top two (2) cement producing countries within each of the profiled regions plan to export more over the next 10 years 3) Local cement producers impacted by lower priced Asian imports 4
  • 5. Sub-Saharan Africa’s Cement Industry Rapid urbanisation, industrialisation and the need to expand economic infrastructure are key factors that have contributed to growth of sub-Saharan Africa’s cement industry Cement Industry: Market Dynamics (Sub-Saharan Africa), 2012 – 2018 MARKET DRIVERS INDUSTRY CHALLENGES Increasing distribution costs Rapid urbanisation & industrialisation Infrastructure expansion Rising merger & acquisition risk Higher demand for housing Increasing per capita cement consumption Ageing production infrastructure Stricter environmental legislation on carbon emissions Influx of lower priced Asian imports Price sensitive customer base Potential to export into the rest of the continent Political stability MARKET RESTRAINTS Increasing operating costs Electricity shortages Limited limestone deposits Risk of oversupply Profit margin pressures 5
  • 6. Contents Sub-Saharan Africa’s Cement Industry 2 Sub-Saharan African Cement Industry’s Mega Trends 6 Sub-Saharan African Cement Industry Forecasts 12 Key Conclusions 16 Appendix I: Who is Frost & Sullivan? 18 Appendix II: Manufacturing Unit Scope & Coverage 21 Contacts 24 6
  • 7. Top 4 Mega Trends Impacting sub-Saharan Africa’s cement industry Future infrastructure & urbanisation will sustain the long-term growth of the region’s cement industry Regional Integration Future Infrastructure Urbanisation New Business Models Photo Credits: Dreamstime Source: Frost & Sullivan analysis. 7
  • 8. Top Mega Trends in Africa: Urbanisation With an Annual Average Growth of 3.4%, Population in Several Sub-Saharan African Cities Will Rise by 25% by 2025. By 2050, 60% of Africa’s Population Will be Urbanised Urban Population Forecast by Region, 1995-2025 Algiers 3.6 million Urban Populations, Africa, 2025 Alexandria 5.6 million Casablanca 4.1 million 250,000 225,000 Urban Population (‘000) 200,000 Addis Ababa 4.7 million 175,000 Dakar 4.3 million 150,000 125,000 Abidjan 6.3 million Accra 3.5 million 75,000 50,000 25,000 Ibadan 3.2 million Douala 3.1 million Nairobi 6.2 million Luanda 8.0 million 100,000 Dares Salaam 6.2 million 0 1995 2000 2005 2010 2015 2020 2025 Eastern Africa Middle Africa Southern Africa Western Africa Migration Northern Africa City with population > 5.0 million, 2025 Cape Town 3.8 million Urban Population, 2025 Johannesburg/ Pretoria/ Ekurhuleni 8.0 million Durban 3.2 million Regions with Key Cities Source: Africa Progress Report, 2010; Frost & Sullivan analysis. 8
  • 9. Top Mega Trends in Africa: Future Infrastructure About 810 Billion USD of spending is needed over the next five years to upgrade, rehabilitate and expand Africa’s infrastructure Transport Energy $174 billion $139 billion Legend: Investment ($ billion) < 0.5 • High value investments (>$1 billion) • Focus on road, rail and port networks 0.5 – 1.0 1.0 – 5.0 • Historical reliance on thermal/hydropower • Increased focus on driving renewables 5.0 – 10.0 0.0 – 15.0 >15.0 Water Total investment in ongoing infrastructure projects in Sub-Saharan Africa (excluding ICT & Telecoms) amounts to $378 billion Source: Frost and Sullivan analysis *based on active projects in 2012 $20 billion • Secondary Focus for Govts • Could pose major risk in medium/longterm Social $45 billion • Driven by Millenium Development Goals • High reliance on Development Aid 9
  • 10. Top Mega Trends in Africa: Regional Integration Corridors Will Unlock Economic Potential of Landlocked Countries; Freight Movement Through Road Set to be a Key Economic Driver Across the Continent Proposed Trans-African Road Corridors, 2012 95% 85% 2: Algiers-Lagos Algiers-Lagos is also substantially complete (there is a 200km unpaved desert section) > in addition security risks are high 1: Cairo – Dakar Substantially complete, although the border between Algeria and Morocco is closed 40% 1 6: Ndjamena-Djibouti 2 85% 3 largely still at the feasibility stage, and requires considerable investment in the rehabilitation of the central portions 4 5: Dakar-Ndjamena Mostly complete, with some road paving still required in the central portion. However the area is also currently considered to be a high security risk zone 5 6 7 4: Cairo-Gabarone-Cape Town 8 9 85% 4 40% Reaching completion in the Southern half (which is alternatively a Southern – Eastern African link known as the ‘North South corridor’. However the North half of the corridor remains largely impassable. 7: Dakar-Lagos Substantially complete, with some portions of the link still requiring paving 20% 3: Tripoli-Windhoek-Cape Town Largely incomplete with major sections missing in Northern and Central Africa and Angola KEY: 3 95% Percentage Completion Current road corridors Proposed/unpaved road corridors 10
  • 11. Top Mega Trends in Africa: New Business Models Discretionary income will rise by 50% by 2020 Unshackling Governance Political Revolution will make Africa stronger Radical Returns Investors awake to sustainable growth opportunities Powerful purchasing Intelligent replenishment Discretionary income will rise by 50% over the next decade Bringing home both financial and human capital Mega Consumption $1.4 Trillion Rise of African ` urban consumer will continue to fuel growth 11
  • 12. Contents Sub-Saharan Africa’s Cement Industry 2 Sub-Saharan African Cement Industry’s Mega Trends 6 Sub-Saharan African Cement Industry Forecasts 12 Key Conclusions 16 Appendix I: Who is Frost & Sullivan? 18 Appendix II: Manufacturing Unit Scope & Coverage 21 Contacts 24 12
  • 13. Sub-Saharan Africa’s Cement Industry Assuming a stable economic environment the profiled countries’ cement output is expected to increase by more than 30 million tons during the forecast period 48.9 40.0 32% 30.0 20.0 21% 15.0 10.0 20.0 10.0 5.0 47% 4.3 40.9 15% 22% 20.0 10.0 3.3 2.2 1.5 63% 0.0 1.4 1.1 85.2 23% 17% 60% Southern Africa East Africa West Africa 2012 Country Output in Million tons CEMENT INDUSTRY DEMAND FORECASTS (SUB-SAHARAN AFRICA), 2012 – 2018: CAGR 7.5% 20.0 70.0 60.0 15.0 50.0 40.0 10.0 18.0 30.0 12.5 20.0 5.0 10.0 3.8 3.7 3.2 2.2 0.0 1.8 1.2 1.1 0.0 Demand (Million tons) Demand (Million tons) 30.0 3.6 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2018 2012 Southern Africa East Africa West Africa 40.0 13.1 0.0 0.0 50.0 18.5 Demand (Million tons) Output (Million tons) 50.0 Output (Million tons) CEMENT INDUSTRY OUTPUT FORECASTS (SUB-SAHARAN AFRICA), 2012 – 2018: CAGR 9.7% 62.9 15% 22% 63% 2018 2012 Southern Africa Southern Africa East Africa East Africa West Africa 2012 Country Demand in Million tons West Africa 13
  • 14. Sub-Saharan Africa’s Cement Industry When compared to the other region’s, West Africa is expected to witness the largest output growth during the forecast, followed by East Africa and Southern Africa Cement Industry: Supply Forecasts (sub-Saharan Africa), 2012 – 2018 80 60 40 67.5 48.9 72.6 75.6 79.3 85.2 54.0 20 60 Supply (Million tons) Supply (Million tons) 100 Cement Industry: Supply Forecasts (West Africa), 2012 - 2018 Regional cement supply is forecast to grow at a CAGR of 9.7% during the years 2012 - 2018 50 2013 2014 2015 Year 2016 2017 30 20 22.9 42.2 47.2 26.7 10 2018 Southern Africa cement industry supply forecasts CAGR (2012 – 2018) = 3.1% 16.0 2013 2014 18.3 18.8 19.1 16 2017 2018 Source: Frost & Sullivan 14 14.6 12.7 11.2 10 5 2016 East Africa cement industry supply forecasts CAGR (2012 – 2018) = 6.4% 12 10 2015 Year Cement Industry: Supply Forecasts (East Africa), 2012 – 2018 Supply (Million tons) 15.9 16.9 17.7 2012 Source: Frost & Sullivan Cement Industry: Supply Forecasts (Southern Africa), 2012 – 2018 Supply (Million tons) 38.9 44.5 0 2012 15 51.5 40 0 20 West African cement industry supply forecast CAGR (2012 – 2018) = 14.5% 12.8 2015 2016 13.3 11.7 10.1 8 6 4 2 0 2012 2013 2014 2015 2016 2017 2018 Year Source: Frost & Sullivan 0 2012 2013 2014 Year 2017 2018 Source: Frost & Sullivan 14
  • 15. Sub-Saharan Africa’s Cement Industry Key expansion initiatives by the sector’s key industry participants over the next few years PRODUCTION CAPACITY (Million tons) EXPANSION INITIATIVES 2011 – 2018 EXPENDITURE Dangote Cement Group 19.8 Mt (8 plants) Yes (in-country & sub-region) USD 7.25 billion (16.2 Mt expansion) Lafarge WAPCO 4.4 Mt (3 plants) Yes (in-country) USD 800 – 900 million (3.1 Mt expansion) Ashaka Cement 1.2 Mt (1 plant) Yes (in-country) USD 700 million – 800 million (1.0 Mt expansion) Cement Company of Northern Nigeria (CCNN) 0.5 Mt (1 plant) Yes (in-country) USD 170 – 200 million (0.5 Mt expansion) United Cement Company of Nigeria Limited (UNICEM) 2.5 Mt (1 plant) Yes (in-country) USD 150 – 200 million (0.5 Mt expansion) Pretoria Portland Cement 6.9 Mt (8 plants) Yes (in-country & sub-region) USD 7.5 billion (0.6 Mt & regional expansion initiatives) Lafarge South Africa 3.6 Mt (3 plants) Yes (in-country & sub-region) Did not provide NPC Cimpor 1.6 Mt (3 plants) Yes (in-country) Did not provide AfriSam 4.8 Mt (2 plants) Yes (in-country & sub-region) USD 2 – 3 billion (1.2 Mt & regional acquisitions) East African Portland Cement 1.4 Mt (1 plant) Yes (in-country) Did not provide (to add new clinker capacity) Mombasa Cement 1.0 Mt (1 plant) Yes (in-country) USD 5 – 10 million (0.5 Mt expansion) National Cement 1.0 Mt (1 plant) Yes (in-country) USD 120 150 million (1.5 Mt expansion) COMPANY WEST AFRICA: NIGERIA SOUTHERN AFRICA: SOUTH AFRICA EAST AFRICA: KENYA 15
  • 16. Contents Sub-Saharan Africa’s Cement Industry 2 Sub-Saharan African Cement Industry’s Mega Trends 6 Sub-Saharan African Cement Industry Forecasts 12 Key Conclusions 16 Appendix I: Who is Frost & Sullivan? 18 Appendix II: Manufacturing Unit Scope & Coverage 21 Contacts 24 16
  • 17. Key Conclusion Investment to expand and upgrade existing infrastructure to support cement sector growth over the next few years Rapid urbanisation will contribute to robust growth of sub-Saharan Africa’s cement industry Conclusions Future infrastructure development to also drive the sub-region’s cement demand growth Per capita cement consumption is expected to trend upwards driven by an anticipated rise in the regional populace’s HCE Regional governments are committed to plugging the sub-continent’s housing gap, which will boost cement consumption Sustained economic growth and sound fiscal and monetary policies will also contribute to sustained long-term growth of the cement sector 17
  • 18. Contents Sub-Saharan Africa’s Cement Industry 2 Sub-Saharan African Cement Industry’s Mega Trends 6 Sub-Saharan African Cement Industry Forecasts 12 Key Conclusions 16 Appendix I: Who is Frost & Sullivan? 18 Appendix II: Manufacturing Unit Scope & Coverage 21 Contacts 24 18
  • 19. Appendix I Who is Frost & Sullivan? Founded in 1961 Offer the exclusive Growth System including: • Growth Consulting and Growth Implementation Services • TEAM Research & Reports, Custom Research Over 2,000 Consultants & Analysts across 40+global locations 10,000+ clients worldwide including emerging companies, the global 1000, and the investment community African office based in Cape Town Staff compliment of 70+ exclusively focused on the African markets • • • • • • How We Support You       Megatrend and impact analysis on your business Growth and New Business Oppurtunity Assessments Business Plan & Change Management Implementation and Mid -Top Management Training Expansion and Partnership Selection Strategy Competitive Environment Analysis 19
  • 20. Appendix I Our Industry Coverage Automotive & Transportation Aerospace & Defense Measurement & Instrumentation Consumer Technologies Information & Communication Technologies Automotive Transportation & Logistics Energy & Power Systems Environment & Building Technologies Healthcare Minerals & Mining Chemicals, Materials & Food Manufacturing Industrial Automation & Process Control 20
  • 21. Contents Sub-Saharan Africa’s Cement Industry 2 Sub-Saharan African Cement Industry’s Mega Trends 6 Sub-Saharan African Cement Industry Forecasts 12 Key Conclusions 16 Appendix I: Who is Frost & Sullivan? 18 Appendix II: Manufacturing Unit Scope & Coverage 21 Contacts 24 21
  • 22. Appendix II Coverage & Scope Frost & Sullivan’s manufacturing sector scope within sub-Saharan Africa Manufacturing Production & Investment Forecasts 22
  • 23. Appendix II Research Titles List of Frost & Sullivan’s manufacturing intelligence titles within sub-Saharan Africa Completed ME studies North Africa • Steel Industry Planned ME studies Egypt • Cement industry West Africa • Cement industry East Africa • Beverages Industry Southern Africa • Cement Industry Zimbabwe • Mining & Manufacturing Industry South Africa • Steel industry • Power Industry • Food Industry • Beverages Industry • Chemicals & Petrochemicals Industry • Liquid Fuels Industry • Pulp & Paper Industry 23
  • 24. For further information please contact: James Fungai Maposa Consulting Manager – Industrial Tel: 0027 21 680 3203 E-mail: James.maposa@frost.com Guillaume de Bassompierre Director of Business Development – Africa Tel: 0027 21 680 3582 Mobile: 0027 71 684 0011 Email: Guillaume.Bassompierre@frost.com 24