80% of production costs linked to foreign exchange dynamics - Cement Manufacturers

Frédéric Albrecht, the Chairman of the Chamber of Cement Manufacturers (COCMAG), says 80 per cent of the production costs of cement manufacturing are linked to the foreign exchange.

He said the importation of 80 per cent of the raw material used in manufacturing cement made a compelling case for them to adjust factory prices to reflect the prevailing exchange rate in the country.

The Chairman said this during the consultative stakeholders’ forum organised by the Ghana Chamber of Construction to deliberate on the proposed legislative instrument on cement pricing regulation.

The forum included presentations from industry experts, interactive discussions, and opportunities for networking with fellow industry professionals.

The forum also provided an opportunity for stakeholders to share their experiences, insights, and recommendations on the proposed Legislative Instruments (LI) on cement pricing.

Thus, foreign exchange had a substantial impact on cement prices, and the currency’s depreciation against the primary trading currency forced producers to raise the price of cement. 

“80 per cent of our cost structure is directly linked to hard currenies, including dollars and euros,” he said.

He said the importation of raw materials, including clinker and gypsum, was done in foreign currencies. 

Other foreign exchange costs, including port charges, purchasing prices and applicable taxes, also impact the prices.

The Chairman said when these factors increased, then they would also be forced to increase the factory price of cement.

He said the attempt to pass an LI to regulate prices would not address the incessant increment in cement prices since there were close to a thousand (1000) people in the cement manufacturing and distribution value chain.

Mr. Albrecht also said the Bill lacked the required pricing mechanisms for manufacturers to publish their prices as it was required of them. 

The Ghana Standard Authority (Pricing of Cement) Regulators Bill 2024 aims to streamline the regulation of the pricing of cement for wholesale and retail distribution.

The Bill also aims to prevent gouging in the pricing of cement and promote competitive practices within the cement industry. 

The proposed Bill, spearheaded by the Ministry of Trade and Industry, comes against the backdrop of an incessant increment in cement prices and other building materials.

Cement prices commenced the year selling at GHS 85. 00, but the prices increased to GHS 110 at the end of June, 2024.

Mr. Emmanuel Cherry, Chief Executive Officer for the Ghana Chamber of Construction Industry, urged the government to address the prevailing challenge of the cedi depreciation in order to address the incessant increment in cement prices.

He advised the government to seek the opinions of all relevant stakeholders in the construction value chain and incorporate their views on how to improve the Bill.