It is clear that Nigeria has many problems to resolve. For example, the country’s civilian government is striving to prevent the country from once again breaking apart along ethnic and religious lines following a spate of recent attacks. On a financial level, although oil provides 95% of Nigeria’s foreign exchange earnings and 80% of budgetary revenues, a recent report by energy consultants Wood Mackenzie indicated that Nigeria’s oil production will begin falling soon unless the government can reduce political uncertainty, corruption and criminality. Furthermore, in February of this year, the Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, presented some sobering thoughts about the unemployment situation in Nigeria. The country’s economy grew at a rate of over 7% for the past five years, but unemployment actually doubled during the same period. He said: “According to data from the National Bureau of Statistics, the unemployment rate in 2011 was 29.3%. Unemployment in Yobe is 60.6% and in Kano it is 67%. This is a serious problem when a country is growing at 7% and yet cannot provide jobs for its citizens.” The CBN Governor wants the country to move from primary to secondary production and build industries that rely on little technology but which are high in productivity.
However, here is another side of the story: one in which, as is often the case with developing countries, the cement industry is leading the way in industrial expansion and creating much needed employment. As mentioned, over the past few years the economy has been growing at about 7% pa, but the cement market has increased by 11%. This growth is not surprising given that the Federal Government has said that some US$30 million is required to provide adequate housing for the many homeless Nigerians. The country currently needs to build about 60 million housing units.
The inauguration of Dangote Cement’s 6 million tpa Ibese plant in February, at a cost of US$1 billion, marked a significant landmark in the history of Nigeria’s cement industry. Not only did it help to raise the country’s installed production capacity to 22.50 million t, it ensured that it is now self-sufficient in domestic cement production, and should no longer need to import cement. The plant, which was built by China’s Sinoma International Engineering, also incorporates a 105 MW power plant with a 22 km gas pipeline. Siemens International Turbomachinery supplied the three gas turbines that now power the plant.
In 2004, the Dangote Group, encouraged by what is known as the government’s backward integration policy, i.e., insisting that cement must be produced internally rather than rely on imports, set about planning, designing and building new plants. The Group’s 5 million tpa Obajana Cement plant came on stream in 2006, and was the largest single cement plant in Africa. That title has been overtaken by the Ibese plant. Work on doubling the capacity of the plant has already begun. The expansion projects have created 6000 – 7000 jobs. In addition to the Ibese and Benue plants, the Dangote Group also operates five cement terminals in the country.
In December 2011, the country’s second largest cement producer, Lafarge WAPCO, was also instrumental in the same goal towards the country’s self-sufficiency when it inaugurated its new 2.5 million tpa Ewekoro II plant in Ogun State, thereby doubling the overall capacity of the plant. Here, some 3000 were employed during the three year construction process, approximately 70% of whom were Nigerians. The entire Ewekoro site now employs about 1000, 95% of whom are Nigerian. This plant was built by China’s CBMI Construction Company. In June 2011, a new 90 MW power plant, supplied by Wärtsilla, was commissioned to power both Ewekoro I and Ewekoro II. The 6 x 15 MW units will operate with a dual firing system (gas and or AGO/LPFO). Lafarge WAPCO is working on a biomass project aimed at reducing emissions by substituting 30% of fossil fuel with wood from its own plantation or by third parties.
After the commissioning of the Ewekoro II plant, Lafarge’s Group Chairman, Bruno Lafont, held an interactive session with journalists. In reply to the question, ‘How do you see Nigeria from an investor perspective?’, Lafont replied: “Nigeria is a very important country for Lafarge. We have seen it for a long time, and it is going to become even more important in the years to come.” When asked about the Group’s immediate goals, Lafont said: “We will continue to support and accompany the growth programme of the country. We will contribute to the 17 million new affordable homes being announced for the year 2020. I think we have a contribution to make to reduce the cost of construction and to provide homes with energy-efficient solutions, not only in terms of sold, sustainable products but also to be able to consume less energy while being more effective and affordable.” Lafont confirmed that his Group was studying further investment options in Nigeria but said it was too early to say exactly where the next project will be.
It is not only the two big players that are expanding their production facilities. In Edo State, southern Nigeria, BUA Cement, part of BUA International Ltd, is building a 6000 tpd plant. The company owns and operates the country’s first floating cement terminal, and last year acquired two local cement producers, Edo Cement and Sokoto Cement. FLSmidth won the order from BUA Cement to supply EV crushers for raw material preparation, an ATOX mill for raw meal grinding, a five-stage, in-line calciner preheater, two-support kiln, Cross-Bar 16x50 clinker cooler, UMS mills for cement grinding and four packing plants.
Two months ago, the management of Quacem Ltd revealed plans to begin local cement production. Over the years the company has been bagging and distributing cement to Alwa Ibom and the southern region. The Managing Director, Itak Ekarika, has said that the company would source limestone from Akamkpa in Cross River State and turn it into clinker. From the plant, clinker would be transported to Ikot Abasi where it would be converted into the finished product.
Much has been written about Chinese investments in Africa, and the topic could form a whole series of articles. Africa is a large continent and it is well known that there is much activity by Chinese companies in many countries. Last month the Chinese Minister of Industry and Information Technology, Li Yizhung, disclosed that China’s investment portfolio in Nigeria had reached US$7 billion. He said that Chinese-Nigerian trade is now US$4.7 billion and currently there are over 30 Chinese companies operating successfully in the country. Expectations are high that African goods would also be exported to his country’s markets in the years ahead. All this is encouraging for Nigeria, but it should be remembered that rising output of the country’s high grade crude, highly prized by competing Chinese and US buyers, could go into reverse and severely damage Nigeria’s development plans. This brings us back to where we began, i.e., repeating that the Nigerian government has the enormous and unenviable task of reducing political uncertainty, corruption and criminality in Africa’s most populated country, and that is some challenge!
Written by Paul Maxwell-Cook. This article is an abridged version of the full article, which appeared in the May 2012 issue of World Cement.
This article is an abridged version of the full article, which appeared in the May 2012 issue of World Cement. Subscribers can access the full article here.
Read the article online at: https://www.worldcement.com/africa-middle-east/24042012/cement_industry_nigeria_dangote_lafarge/