Hope of a crash in cement price in the country has been raised following projections by indigenous manufacturers that output will soon hit about 30 million metric tonnes per annum.
The figure is above the current national average demand of 15.5 million metric tonnes per annum. The indigenous manufacturers are supplying about 11.5 million metric tonnes, with importation making up the number.
The projections of output rise are hinged on the success of the various expansion projects being undertaken by the manufacturers, with some of the projects scheduled for take-off towards the end of 2011 and early 2012.
A 50-kilogramme bag of cement currently sells for about N1,650 in the market, though the Federal Government had targeted that it should not be more than N1,000 per bag. About three years ago, the price had climbed to an all time high of about N2,000 per bag.
The manufacturers are upbeat that the target of satisfying local demand and having excess for exportation will be achieved by 2012.
Corroborating this view, an official of Dangote Industries Plc, who refused to have his name in print because he was not authorised to give out the information yet, told our correspondent that the group planned to increase its production capacity from the current eight million metric tonnes to 20 million metric tonnes before the end of 2011.
He said that the group‘s Obajana Cement Plant was currently being expanded to add five million metric tonnes per annum to its initial five million metric tonnes production capacity.
The group is also speeding up the construction of its Greenfield cement plant at Ibese, Ogun State, which will yield another five million metric tonnes. Another of its subsidiary, Benue Cement Company Plc, is currently producing about five million metric tonnes per annum.
The group is the largest importer of the product, with import licences currently estimated at 80 per cent of the total national exports, according to figures provided by the company on Thursday.
BUA Cement Plc is said to be producing about three million metric tonnes of the product yearly, with plans to increase the figure to five million in the shortest possible time.
In an electronic mail sent to our correspondent, the Country Manager, Lafarge Nigeria/Benin, Mr. Jean-Christophe Barbant, said the capacity of local cement manufacturers had increased in the last few years.
He said, ”Next year will be more challenging because capacities are expanding. At Lafarge WAPCO for instance, we will inaugurate a new cement factory (Lakatabu) in the second quarter of next year. By 2011, the local manufacturers will be producing enough to meet local demand.”
currently producing five million metric tonnes per annum, Lafarge operates in Nigeria through its different subsidiaries, which include Lafarge WAPCO Cement Company Plc, Ashaka Cement Plc and Unicem. The group also imports about 0.5MMT through its subsidiary, Atlas Cement Company.
By 2011, Barbant said Lafarge would be contributing seven MMT to the national cement market, which would be half of the current national demand of 14 MMT per annum.
Dangote, the source said, had also forecast production figure of 46 MMT of cement per annum by 2015. This, he noted, would place it among the top eight in the world.
“Demand will be greatly supported by the need to refurbish infrastructure and supply the residential and commercial real estate sector. The consumption of cement per capita, which is put at 75kg, is set to increase,” the source said.
The world‘s highest consumers of cement per capita are Philippines, 300kg;
The figure is compared to an average of and‘ 1,180kg, Korea‘s 1100kg and Malaysia‘s 880kg, world‘s highest consumers of cement in that order.
A ban on the importation of cement had been in place since 2001 as part of the Federal Government‘s policy of promoting self-sufficiency in the production of the commodity and boosting local production.
Barbant said, ”We are fully in support of government‘s policy on backward integration, encouraging local manufacturing and restricting import of cement. This policy encourages the cement manufacturers to produce more and make cement available and affordable.
”It is in the long-term interest of the country to attract and maintain competitive industrial activities and to reduce expenses in foreign currencies from imports.”
He, however, gave a caveat that the availability of the product might not necessarily lead to price reduction, especially if other factors failed to support it.
The Lafarge boss added, ”The price of cement depends largely on its production costs. Availability of cheap sources of energy - fuel, natural gas and power - is a key factor to stabilise the price of cement overtime.”
Out of the 36 states in Nigeria, 21 are said to have limestone, which constitutes 80 per cent of the input to cement manufacturing.
The Chairman of the Dangote Group, Aliko Dangote, had said recently at the annual dinner of the Lagos Business School‘s Breakfast Club, ”Given the abundance of the basic raw materials for cement in Nigeria, the Federal Government needs to consistently follow a set of policies deliberately designed to maximise the advantage of this endowment.”
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