Maputo — The fall in the price of cement on the Mozambican market was what the government expected, after the Chinese investment in a new factory, Dugongo Cimentos, in the southernmost district of Matutuine, the Minister of Industry and Trade, has told reporters.
According to a report in Monday's issue of the Maputo daily "Noticias", he was replying to questions about a letter from seven cement companies calling on the government to intervene to keep the price of cement high. They accused Dugongo of "unfair competition", and of violating Mozambican legislation on competition.
Bur Mesqita replied that, with the large amounts of cement currently on the market, a fall in the price was to be expected.
"We, as a government, know what we're doing", he said. "We have our regulations and we have a responsibility to the business sector and to the Mozambican people. We have been saying, with regard to cement and to other industries, that we have to assess the costs of production in order to arrive at adequate profit margins and a reliable final price".
Despite the rage of some of Dugongo's competitors, the fact of the matter was that the economy was reacting to the supply of cement with a reduction in prices.
"Unlike the other companies, Dugongo uses Mozambican raw materials", Mesquita added, "and it also sells to its competitors". (Dugongo is the only company in Mozambique that makes clinker, which is essential for cement production, and so the other companies must either buy clinker from Dugongo or import it).
"We must analyse matters calmly, and we shall soon have conclusions", said Mesquita. "But certainly, if the people are satisfied, we shall analyse carefully".
According to a report in Monday's issue of the independent newssheet "Carta de Mocambique", Dugongo cement is sold for between 220 and 255 meticais (between 3.5 and 4.1 US dollars) for a 50 kilo sack, while the price for cement from its competitors is between 260 and 280 meticais. Before the Dugongo factory began production, a 50 kilo sack of cement could cost as much as 720 meticais.
Not surprisingly, public opinion is overwhelmingly in favour of Dugongo and opposed to any attempts by its competitors to impose high prices.