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Caution crashes capacity in cement, ceramics to 49%

Caution crashes capacity in cement, ceramics to 49%

Cautious approach in project execution may have led to a significant drop in capacity utilisation in the non-metallic products sub-sector, which includes cement, ceramics, chalk and glass industries, Manufacturers Association of Nigeria (MAN) has said.

Capacity utilisation in the sub-sector dropped to 49.2 percent in the first half of 2014, from 53.8 percent in the corresponding period of 2013, and 69.9 percent in the second half of 2013.

“This drop might be due to cautious disposition by people and governments in their approach to projects, some of which have not witnessed the same level of massive execution that were embarked upon in the last year of 2013,” MAN said, in its review of performance of all the sub-sectors, in the first half of 2014.

Real Sector Watch reported on February 2 that performance of production value (output) in this sector within the same period also fell steeply by 40 percent, from N143.87 billion recorded in the first half of 2013 to N86.61 billion.

There was also a much more significant drop in the production value in the first half of 2014, when compared with that of the second half of 2013, where output was worth N215.8 billion. Comparatively, this represents a 60 percent fall and demonstrates that recent positive records in the sub-sector may have tumbled.

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Manufacturers attribute this output dip to challenges posed by incessant power outages in the country, especially in industrial zones.

“Also the internal strife, linked to religious uprising in the Northern parts of the country contributed to lowering production as markets were curtailed due to sales and movement challenges across some parts of the country,” MAN said.

But some market watchers see these drops as a combination of many factors such as crisis in the cement industry over grading, poor performances of other industries (except cement) within the non-metallic products group and tougher business environment.

Cement makers in Nigeria are Dangote Cement, Lafarge Africa, the United Cement Company, BUA, Ashaka Cement and Atlas.

Ceramics industry, which is part of the non-metallics products group, is led by West African Ceramics Limited. The industry has very few players that are struggling to compete with Asian imports, findings show.

It is also bedevilled by lack of incentives for potential investors, poor state of solid minerals sector which should serve as raw materials and influx of cheap, sub-standard products from Asia, among others.

According to Patrick Oaikhinan, CEO, Epina Technologies Limited, the critical problem in the ceramics industry is absence of skilled manpower to exploit feldspar, quartz, silica and other minerals needed in the whole of non-metallic products sector.

“There is lack of significant number of professionals with appropriate skills and expertise to exploit these minerals,” Oaikhinan said, saying “what I think we need now are the enabling laws to encourage investors and a strategy to ensure that there is a ceramics institute.”

The glass industry is made up of players such as Frigoglass, Beta Glass, Technoglass and Isoglass, among others. Critical problems associated with this industry are lower patronage, influx of imported products, high rate of loss due to fragility and undeveloped solid minerals sector, which has made it difficult to use local quartz and other raw materials.

ODINAKA ANUDU