Dangote Cement's South African subsidiary, Sephaku Cement, has sought protection from cheaper imports after South Africa's trade regulator found evidence that cement from Mozambique and Vietnam is being dumped into the Southern African Customs Union market. The International Trade Administration Commission of South Africa found prima facie evidence that the imports were hurting local producers. Sephaku Cement and Afrimat provided sufficient evidence to justify an investigation into the alleged dumping.
The investigation found dumping margins of about 90% for cement imported from Mozambique and 37% for Vietnamese cement. If the commission's investigation confirms that the imports are being sold below their normal value and are causing material injury to domestic producers, anti-dumping duties may be imposed. The applicants provided evidence of declines in market share, sales volumes, profitability, and employment, which they linked to the alleged dumped imports.
Sephaku Cement is part of Dangote Cement, Nigeria's largest cement producer, which acquired the South African company for about R3bn in 2008. The case puts Dangote's South African operation at the centre of a wider dispute over rising cement imports and the future of local production. The investigation comes as Mozambique expands its cement production capacity, with the Mozambican government and Chinese partners agreeing to invest $333m in two new cement plants.
The issue has gained importance due to a proposed change in ownership of another major South African cement producer, AfriSam, which is subject to a R2.5bn takeover bid by West China Cement. PPC has warned that the deal could encourage AfriSam to rely more heavily on cement produced in Mozambique, where West China Cement has spare capacity, rather than manufacture locally.
South African cement producers are facing high energy costs, which have made local manufacturing more expensive. PPC is investing R3bn in a new Western Cape plant with a capacity to produce 1.5 million tonnes of cement a year. The industry has also raised concerns about substandard cement products in the market, with the National Regulator for Compulsory Specifications finding that some products sold in hardware stores failed to meet required strength standards.
ITAC's finding is not a final determination that dumping has occurred. The commission's investigation will establish whether dumping took place, whether local producers suffered material injury, and whether the alleged dumped imports caused that injury. The investigation will also consider the impact of the alleged dumping on the local cement industry.
The outcome of the investigation could have significant implications for the South African cement industry. If anti-dumping duties are imposed, it could help level the playing field for local producers. However, if the investigation finds that dumping did not occur, it could lead to increased imports and further pressure on local producers. The industry is eagerly awaiting the outcome of the investigation.
Key points
- - The International Trade Administration Commission of South Africa found prima facie evidence of cement dumping from Mozambique and Vietnam. - The alleged dumping has caused material injury to local producers, including declines in market share, sales volumes, profitability, and employment. - The investigation's outcome could have significant implications for the South African cement industry, including the potential imposition of anti-dumping duties.
