Dugongo rebuts accusations of unfair competition

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Mozambique: Dugongo rebuts accusations of unfair competition – Carta
Mozambique: Dugongo rebuts accusations of unfair competition – Carta

Africa-PressMozambique. Evaristo Chilingue

Forty-four days after companies in the cement sector accused Mozambique Dugongo Cimentos company of unfair competition, the Chinese-owned company has publicly rebutted its competitors’ arguments, asserting that it came to Mozambique to help the industry reduce production costs.

The explanations emerged in Maputo this Thursday during a debate organized by the Confederation of Economic Associations of Mozambique (CTA).

“Mozambique Dugongo Cimentos did not come to destabilise the cement market in Mozambique. On the contrary, we want to help other companies reduce their imports of raw material, because, in addition to cement, we produce clinker, which is the main raw material of cement. If, on the one hand, they are our competitors and, on the other hand, they are our customers, we could never rationally carry out a campaign to finish off our own customers,” Dugongo Cimentos chairman Victor Timoteo said.

Timóteo noted that the company had set its price according to the exchange rate in force at the time of the start of operations, which ranged from 55 to 60 meticais to the US dollar, and not at the 74 meticais to the dollar obtaining at the beginning of the year.

“In addition, we adjusted our price to the value per ton in the regional market, which is between US$85 to US$100. Our pricing was based on that, because in addition to the domestic market, we also compete in the region,” Timoteo also observed.

Based on this explanation, if the metical depreciates against the US dollar, the probability is that the cement price will rise. But the tendency is for a permanent depreciation of the metical against the US dollar.

On June 15, seven cement Mozambican production companies (Adil Cement, África Cement Factory, Cimentos de Maputo, Cimento Nacional, Limak Cement Factory, Royal Cement and Suneira Cement) submitted a letter to the Ministry of Industry and Commerce accusing Mozambique Dugongo Cimentos of charging prices that violate Law No. 10/2013, which establishes the legal regime of competition in the country applicable to private and public companies and which covers all economic activities carried out.

In the document, the managers of the seven companies asked the government to intervene, claiming that they were being seriously harmed by the prices applied by Dgongo Cimentos, whose plant is located in Matutuine district, Maputo province. Minister Carlos Mesquita never replied to the document.

Since Dugongo Cimentos started operations in May, several companies have closed, including Cimento Nacional Lda. in Maputo province. Cement used to cost 750 meticais per 50 kg bag, but is currently selling at between 220 and 255 meticais.

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