Billions of naira investments in the cement industry are gradually paying off as Dangote, BUA and Lafarge benefit from expansion and weak infrastructure base in Africa’s biggest economy.
BUA released a third-quarter financial statement recently, declaring revenue of N156.6billion– an increase of 21 percent from N129.4billion in the corresponding period of 2019. Profit after tax (PAT) grew by 24 percent to N53.57billion from the corresponding period in 2019.
This did not happen overnight. BUA Group opened a 1.5 million metric tonnes Kalambaina cement plant in Sokoto State, which gulped $350 million to build in 2018. The ultramodern plant has huge limestone deposits and is proximate to Niger Republic, which enhances its export potential. The cement plant started four to five years ago when BUA engaged Sinoma in the deal.
The plant has a 32-megawatt multi-fuel captive power plant and a coal mill.
The Group has also invested in the Okpella plant, taking BUA’s total production capacity to 8 million MT.
“In view of our ongoing expansion activities alongside working capital requirements, we have concluded on plans to approach the bond market. This decision to approach the market forms part of the considerations put before shareholders at our last Annual General Meeting (AGM) in October, thus enabling us to take advantage of the low interest rate environment, in addition to the discontinuance of funding sources through related-parties transactions,” Yusuf Binji, managing director/CEO of BUA Cement, said at the release of the third quarter (Q3) 2020 result.
On the other hand, Dangote Cement’s 2020 half-year (H1) revenue stood at N476.9 billion as against N467.73 billion reported in June 2019. Profit stood at N126.14 billion in first half of 2020 as against N119.24 billion in the corresponding period of 2019.
“I am particularly pleased to announce that Dangote Cement shipped its first clinker cargo to Senegal from our new cement terminal in Apapa, Lagos. It has been a long journey for Nigeria, from being one of the largest bulk importers of cement, to being self-sufficient in cement production, and now an exporter of clinker,” Michel Puchercos, managing director of Dangote Cement, said in July 2020 at the release of the H1 2020 result.
“We are on track to ensure West and Central Africa are cement and clinker independent, with Nigeria as the main supply hub. We want to continue developing regional and continental trade between the ECOWAS countries and beyond,” he further said.
Dangote Cement has pumped billions in investment in its plants, with Obajana Plant in Kogi State being the largest in Africa. It has a $1 billion investment in the Okpella Plant and has pumped huge funds in Itori, Ogun State, plant, expanding capacity to over 35 million MT. Dangote Cement has a strong presence in many African countries. Dangote Cement’s investments are located in Cameroon (1.5 million mtpa clinker grinding), Congo (1.5 million mtpa), Ghana (1.5 million mtpa import), Ethiopia (2.5 million mtpa), Senegal (1.5 million mtpa), Sierra Leone (0.7 million mtpa import), South Africa (2.8 million mtpa), Tanzania (3.0 million mtpa), and Zambia (1.5 million mtpa), among others.
Also, Lafarge Africa Plc reported a revenue of N59.34 billion in Q3 of 2020 compared with N45.17 billion in the corresponding period of 2019— a 31.4 percent increase in revenue. Lafarge Africa is not as aggressive in investment as others, but it aims to become a leader in the concrete value chain.
In November 2017, Lafarge Africa issued and listed 85.26 million ordinary shares of 50 kobo each in the name of minority shareholders of Ashaka Cement (AshakaCem) Plc. This was after the conclusion of share exchange agreement seeking to consolidate the Gombe-based Ashaka Cement as a wholly-owned subsidiary of Lafarge Africa.
In 2012, Lafarge Wapco invested €6 million in a ready-mix plant.
In 2014, Lafarge Cement Wapco disclosed plans to invest $1.37bn to boost cement production in Nigeria in three to four years.
The group also invested in United Cement Company’s Mfamosing plant in Akamkpa local Government Area of Cross River.
Huge infrastructure gap in Nigeria has provided opportunity for local cement makers, fuelling expansion in capacity and operations.
Nigeria has a population of 200 million growing at 2.6 percent, but the infrastructure stock does not grow to match this rising population.
According to the National Infrastructure Master Plan, Nigeria needs to spend $3 trillion and five percent of GDP annually to bridge the infrastructure gap.
From roads to bridges, down to power and railways, the country’s infrastructure has recorded significant depletion in the last 20 years, owing to poor maintenance culture, lack of sufficient funds and corruption, but these have become an opportunity for cement makers.
