Joshua Yousouph
Following the proposed additional tariff to be imposed on “dangerous” goods imported into the country, experts in the Mining industry have raised concerns, stating that there will be an astronomical upsurge in the price of cement, granite, and other building materials from February 2022.
Shipping Position Daily recalls that one of the shipping lines; CMA CGM last week said it is imposing an additional cost on what it termed “dangerous goods” being shipped into all countries in West Africa. According to the shipping line, the new tariff takes effect from February 15, 2022.
But, reacting to the development, the chairman, Mining, Solid Minerals and Allied Services Group of the Lagos Chamber of Commerce and Industry (LCCI), Otunba Babatunde Alatise, noted that the additional freight cost will affect the prices of materials used in the production of high explosives, civil works, and mining such as Ammonium Nitrate.
He also said prices of building materials such as cement and granite will be on the high side due to the global scarcity of Ammonium Nitrate, a major material for this product.
Alatise blamed the additional tariff by the shipping lines on the high risk faced by shipping vessels due to the piracy and sea banditry in Nigeria’s territorial waters. He, however, said if such a tariff is imposed, customers will have to face the heat or in the worst case, miners and manufacturers will have to stop work.
In his words: “Shipping rate has gone up more than 100 per cent in recent times. Aside from the 100 per cent increase, most vessels don’t want to come to Nigeria or Nigeria’s territorial waters because of piracy. The Nigerian mining industry is going to experience a huge increase in prices of everyday commodities that regards mining. The price of cement and granite aggregate is going to go up shortly, because the products that we use for high explosives and civil works, bringing those products in has become astronomically expensive and they have to pass them up to the customers.
“For example, we bring in the normal raw materials for the production of high explosives before in regular containers which used to cost about $4000 to $4,500. Now we have to use IMO 5.0 vessels to bring them in and those vessels go for $3,000. The base material for high explosives which is technical Ammonium Nitrate is scarce internationally. Something we were selling for N500 naira is now for N1,200. Prices have gone up because so many things are happening. We have no choice but to pass the cost to the customers. So when you see things like Cement, Granite, and building material going up, don’t be surprised because we will just pass it on to the customers and there’s nothing we can do” he lamented.
Also speaking, the Deputy President, Calabar Chamber of Commerce, Industry, Mines & Agriculture, Mr David Etim, said that additional shipping charges can be traced to the high cost of the insurance premium paid by shipping lines, which is later on passed on to the consignee due to the insecurity in Nigerian territorial waters. He noted that there is a high risk of shipping these “dangerous” cargoes into an unsafe territory which has made the cost of insurance high for the shipping lines.
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“The truth of the matter is that because of piracy and sea banditry, the Bin of Laden is an official document that can be easily tracked and know what is onboard each vessel. A mining company in Nigeria buys dynamite from Turkey. That Bill of Laden is declared; which is a public document that states that there is Dynamite on the ship coming. Now that ship is coming to an area that is today one of the hottest areas of piracy and sea banditry. That vessel carrying Dynamite is in double jeopardy. The insurance they are going to pay for that voyage where they are going to carry that Dynamite is going to increase exponentially because they are carrying a dangerous material into a dangerous zone. They are going to suffer extraordinary insurance charges. Because of that, they will also transfer that cost to the consignee. They are not going to pay for it from their own profit. That is the logic behind that charge.
Etim however called on the government to ensure that Nigeria’s territorial waters are safe from piracy and sea banditry to reduce the cost of insurance and encourage business owners and manufacturers in the country.
“If we want those charges to be removed, then we owe it a responsibility to make our waters safe. We are paying the premium for the insecurity in our waters. That is the situation. You can’t really blame the shipping lines for increasing charges. What we are doing is that they are embedding their additional insurance premium and other costs that they have to pay to come to your waters in their service charges and transferring it to the customer. It is as simple as that”, he noted.
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