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Dangote Cement Faces Disruptions in Ethiopia Over Jobs Plan

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Dangote Cement - Investors King
  • Dangote Cement Faces Disruptions in Ethiopia Over Jobs Plan

Ethiopian regional officials are demanding foreign cement producers including Dangote Cement Plc hand control of some parts of their businesses to groups of unemployed youths.

The Nigerian company, controlled by Africa’s richest man, Aliko Dangote, and others such as Saudi billionaire Mohammed al-Amoudi’s Derba MIDROC Cement Plc, should allow the youth to run their pumice mines, according to a draft contract drawn up by Oromia state’s East Shewa Zone administration this month. Pumice is an additive used in cement manufacturing and its extraction is overseen by local bureaucrats, rather than Ethiopia’s central government.

“The youth have to get the advantage from the resource, and side-by-side the companies must get advantage from this resource,” Yohan Tesso, head of East Shewa’s urban employment creation and food security office, said by phone. “It’s a win-win.”

Prime Minister Hailemariam Desalegn’s administration is trying to reduce youth unemployment five months after it declared a state of emergency to deal with violent protests by Oromo communities over alleged land dispossession, political marginalization and repression by the state. Dangote Cement was among several businesses attacked during the unrest, which caused foreign investment to slump.

Oromia has 1.2 million unemployed youth, according to the Addis Ababa-based Walta Information Center news service, which cited a local youth affairs office. The state is targeting the creation of 950,000 new jobs for young people, it said.

The local administration “recently” halted Dangote and Derba’s operations amid discussions about the proposals, the Addis Ababa-based newspaper The Reporter said on March 11, citing Derba’s chief executive officer and chairman of the Ethiopia Cement Producers’ Association, Haile Assegidie. He said proposals to give control of pumice to youth cooperatives came without warning, according to the paper. Calls to Haile’s mobile phone on March 16 didn’t connect.

The disruptions haven’t forced Dangote to stop output, CEO Onne van der Weijde said in an interview. The company’s plant in Mugher, about 90 kilometers (56 miles) north of Addis Ababa, has the capacity to produce 2.5 million metric tons a year of cement, according to Dangote’s website.

The Nigerian company is discussing the proposal with Oromo officials and may be willing to sign a contract “as long as that doesn’t involve higher costs and lower quality and the quantity can still be delivered,” he said. “They shouldn’t force us to do it and then charge a high fee for getting something that we were doing ourselves before.”

Prices being discussed are from 20-30 birr ($0.89-$1.33) per metric ton of pumice, Van der Weijde said. The contract refers to 20 birr.

‘No Right’

Teweld Abay, a director of mineral marketing in Ethiopia’s federal mines ministry, said that while he was aware of East Shewa’s plans, the local administration hadn’t communicated them to the ministry.

“We don’t believe they have a right to ask these cement companies to sign this contract,” Teweld said by phone. “But if these companies sign this contract, then it’s their responsibility.”

The Reporter quoted Industry Minister Alemu Sime as saying his ministry had reached “a general consensus on the importance of the youth job-creation initiative with the cement factories.” Factories raised a “valid” concern that there could be an interruption in the supply of raw materials, he was cited as saying.

Abdisa Jaleta, planning and monitoring officer at the East Shewa urban employment creation and food security office, confirmed an English translation of the contract obtained by Bloomberg is authentic. It identified the pumice supplier as Youth Micro Enterprises Plc.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Decline for Third Consecutive Day on Weaker Economic Data and Inventory Concerns

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Crude Oil

Oil prices extended their decline for the third consecutive day on Wednesday as concerns over weaker economic data and increasing commercial inventories in the United States weighed on oil outlook.

Brent oil, against which Nigerian oil is priced, dropped by 51 cents to $89.51 per barrel, while U.S. West Texas Intermediate crude oil fell by 41 cents to $84.95 a barrel.

The softening of oil prices this week reflects the impact of economic headwinds on global demand, dampening the gains typically seen from geopolitical tensions.

Market observers are closely monitoring how Israel might respond to Iran’s recent attack, though analysts suggest that this event may not significantly affect Iran’s oil exports.

John Evans, an oil broker at PVM, remarked on the situation, noting that oil prices are readjusting after factoring in a “war premium” and facing setbacks in hopes for interest rate cuts.

The anticipation for interest rate cuts received a blow as top U.S. Federal Reserve officials, including Chair Jerome Powell, refrained from providing guidance on the timing of such cuts. This dashed investors’ expectations for significant reductions in borrowing costs this year.

Similarly, Britain’s slower-than-expected inflation rate in March hinted at a delay in the Bank of England’s rate cut, while inflation across the euro zone suggested a potential rate cut by the European Central Bank in June.

Meanwhile, concerns about U.S. crude inventories persist, with a Reuters poll indicating a rise of about 1.4 million barrels last week. Official data from the Energy Information Administration is awaited, scheduled for release on Wednesday.

Adding to the mix, Tengizchevroil announced plans for maintenance at one of six production trains at the Tengiz oilfield in Kazakhstan in May, further influencing market sentiment.

As the oil market navigates through a landscape of economic indicators and geopolitical events, investors remain vigilant for cues that could dictate future price movements.

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Dangote Refinery Cuts Diesel Price to ₦1,000 Amid Economic Boost

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Aliko Dangote - Investors King

Dangote Petroleum Refinery has reduced the price of diesel from ₦1200 to ₦1,000 per litre.

This price adjustment is in response to the demand of oil marketers, who last week clamoured for a lower price.

Just three weeks ago, the refinery had already made waves by lowering the price of diesel to ₦1,200 per litre, a 30% reduction from the previous market price of around ₦1,600 per litre.

Now, with the latest reduction to ₦1,000 per litre, Dangote Refinery is demonstrating its commitment to providing accessible and affordable fuel to consumers across the country.

This move is expected to have far-reaching implications for Nigeria’s economy, particularly in tackling high inflation rates and promoting economic stability.

Aliko Dangote, Africa’s richest man and the owner of the refinery, expressed confidence that the reduction in diesel prices would contribute to a drop in inflation, offering hope for improved economic conditions.

Dangote stated that the Nigerian people have demonstrated patience amidst economic challenges, and he believes that this reduction in diesel prices is a step in the right direction.

He pointed out the aggressive devaluation of the naira, which has significantly impacted the country’s economy, and sees the price reduction as a positive development that will benefit Nigerians.

With this latest move, Dangote Refinery is not only reshaping the fuel market but also reaffirming its commitment to driving positive change and progress in Nigeria.

The reduction in diesel prices is expected to provide relief to consumers, businesses, and various sectors of the economy, paving the way for a brighter and more prosperous future.

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IEA Cuts 2024 Oil Demand Growth Forecast by 100,000 Barrels per Day

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Crude Oil

The International Energy Agency (IEA) has reduced its forecast for global oil demand growth in 2024 by 100,000 barrels per day (bpd).

The agency cited a sluggish start to the year in developed economies as a key factor contributing to the downward revision.

According to the latest Oil Market Report released by the IEA, global oil consumption has continued to experience a slowdown in growth momentum with first-quarter growth estimated at 1.6 million bpd.

This figure falls short of the IEA’s previous forecast by 120,000 bpd, indicating a more sluggish demand recovery than anticipated.

With much of the post-Covid rebound already realized, the IEA now projects global oil demand to grow by 1.2 million bpd in 2024.

Furthermore, growth is expected to decelerate further to 1.1 million bpd in the following year, reflecting ongoing challenges in the market.

This revision comes just a month after the IEA had raised its outlook for 2024 oil demand growth by 110,000 bpd from its February report.

At that time, the agency had expected demand growth to reach 1.3 million bpd for 2024, indicating a more optimistic outlook compared to the current revision.

The IEA’s latest demand growth estimates diverge significantly from those of the Organization of the Petroleum Exporting Countries (OPEC). While the IEA projects modest growth, OPEC maintains its forecast of robust global oil demand growth of 2.2 million bpd for 2024, consistent with its previous assessment.

However, uncertainties loom over the global oil market, particularly due to geopolitical tensions and supply disruptions.

The IEA has highlighted the impact of drone attacks from Ukraine on Russian refineries, which could potentially disrupt fuel markets globally.

Up to 600,000 bpd of Russia’s refinery capacity could be offline in the second quarter due to these attacks, according to the IEA’s assessment.

Furthermore, unplanned outages in Europe and tepid Chinese activity have contributed to a lowered forecast of global refinery throughputs for 2024.

The IEA now anticipates refinery throughputs to rise by 1 million bpd to 83.3 million bpd, reflecting the challenges facing the refining sector.

The situation has raised concerns among policymakers, with the United States expressing worries over the impact of Ukrainian drone strikes on Russian oil refineries.

There are fears that these attacks could lead to retaliatory measures from Russia and result in higher international oil prices.

As the global oil market navigates through these challenges, stakeholders will closely monitor developments and adjust their strategies accordingly to adapt to the evolving landscape.

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