NIGERIA: BUA in talks with China's Sinoma over $1.9 billion steel, cement deal

Nigerian conglomerate BUA Group is in talks with China's Sinoma to build a steel plant in Nigeria and two cement plants in East Africa for $1.9 billion, its chairman said.

Expansion plans by Nigerian firms have slowed as Africa's biggest economy grapples with a slump in oil prices which has dried up vital oil revenues and forced firms to lay off staff.

Abdulsamad Rabiu said the unlisted company was talking to the Chinese firm for a construction package which includes financing, building on an existing relationship. Both firms already agreed in September on a $600 million cement expansion in the West African nation.

He gave no details on the funding but Nigeria has been in talks with China's state export and import bank for a loan to spur investments of Chinese firms in Africa's top oil exporter.

The two cement plants, which will have an annual capacity of 3 million tonnes each, will cost $700 million. The steel plant, with a capacity of 1.2 million tonnes, will cost $1.2 billion.

"We have identified two countries that we believe hold great opportunities for us in terms of building integrated plants," Rabiu told Reuters on Wednesday, declining to name the countries in East Africa.

"With the (fall) in the price of commodities ... we can do them much cheaper than what it would have cost some years ago," he said. The construction of the Nigeria-based steel plant would include a 200 megawatt power plant.

Rabiu said the expansion would help BUA to tap demand to lower reliance on import-dependent businesses such as sugar as a slump in oil prices made it difficult to generate dollars.

The West African nation has its own iron supply, while the sugar industry depends on imports.

BUA is considering shutting its sugar refinery in Lagos next month because it could not get the hard currency needed to import raw materials, Rabiu said.

The central bank has imposed restrictions to halt a slide of the naira but Rabiu said it would eventually have to let the official rate fall to between 250 to 270 against the dollar by year-end.

The currency has fallen 45 percent on the secondary market below its official rate of 197 naira NGN=D1. "The biggest challenge is the sourcing of foreign exchange," Rabiu said.

BUA's main rival, Dangote Cement (DANGCEM.LG), has also been expanding with Sinoma, signing in September a $4.34 billion deal with the Chinese firm to almost double its capacity across Africa.

NIGERIA: Dangote begins construction of new 9 million tons capacity cement plants in Okpella, Itori

In a deft move to consolidate its leadership position in the Nigerian cement sector, Dangote Cement Plc has announced the commencement of construction of new cement plants in two communities in the country.

The new plants are expected to add 9million metric tonnes per annum to the company’s current local cement output of 29.25 million metric tonnes, bringing it to a total of 38.25 million metric tonnes per annum.

The company stated that the communities in which it is setting up the new plants are Okpella in the northern part of Edo State, South-south of Nigeria with a three million per annum plant and another six million per annum capacity plants in Itori in Ogun State, South-west of the country.

The Group Managing Director and Chief Executive Officer (CEO), Dangote Cement Plc, Mr. Devakumar Edwin, who made the announcement in Lagos, explained that the Okpella plant will be made up of one line and will produce a total of 3 million metric tonnes per annum, and the Itori plant which will deliver approximately 6 million tonnes per annum from two procution lines. Both plants are expected to come on stream within the next three years.

Devakumar said the move by the company was to help expand the spread of the company’s manufacturing outfits, thereby reducing the transportation cost component of their operations.

He added that the new investments will further lower cost of production; bring about future reduction of the price of cement and also to generate employment opportunities for the youths of host communities.

Also speaking at the event, the Group Managing Director, Cement, Dangote Industries Limited, Mr. Onne Vander Weijde, said the demand for cement was still high considering the level of population growth in Nigeria, saying that Nigeria’s per capita consumption of the building material which is just above 100kg per capita is relatively low, indicating a massive growth potential.

“There has always been a surplus in demand because cement was not readily available, but ours is available and the prices are affordable. Consumer prices have fallen by 35 per cent in naira terms, but if you take it in dollar terms and relate it with today’s parallel market rates, you will realise the price of the product has gone down in Nigeria, and in some cases below the prevailing average global price.

“This itself is a huge driver for increasing the per capita consumption,” he said.

He said with the capacity of the plants in Nigeria, the company can supply the entire western and central Africa region, maintaining that currently, Dangote cement is exporting cement to Niger, Ghana, Togo with plans to move up to the Ivory Coast.

“Nigeria had always been an import-dependent country in terms of cement in the past and if we do not add up capacities, we will not be able to match up the consumption rate in the country. We want to ensure that we are always one step ahead to meet the local demand for the commodity,” he said.

According to him, the investments would create in excess of 5000 jobs at the beginning stage, noting that logistics and construction of the plants would also provide more employment opportunities indirectly to surpass that amount.

In his remarks, the Special Adviser to the President of Dangote Group, Mr. Joseph Makanju, said expectations were very high about cement price reduction when the nation began building local cement production capacity.

He noted that those price reduction expectations were now being met with cement now selling at about N1,300 per 50kg bag, among the most affordable in the world.

“Before now, cement was selling for over N2000. There is a lesson here to learn for the country and the media has a big role to play in this because when you go through transformation by moving a country from being dependent on import, there is need to encourage local investment to make those products being imported into the country,” he said.

“I am using this medium to appeal to the media by saying they have a huge role to play. You can refer to the cement story to educate the public. The price of cement has now come down to about N1300 in an environment where all the input costs are going up. The achievement is actually bigger than the figures.”

Expressing the excitement of the community on the announcement of the commencement of the new plant in Okpella, a community leader from the community, Chief Calib Musa, said the Community had long awaited the move by Dangote saying the Okpella people are happy and would give all the necessary cooperation to Dangote Cement.

His words, “the investment is a very welcomed development. Dangote has the full support of our people because we know that the initiative will be beneficial to us and the company as well”.

Musa stressed that communities around the world wish and pray for opportunities like this to come to their way and Okpella leaders, people and youths are happy with Dangote for his decision to contribute to the development of our land.

He explained that the investment move was long due adding that all the noise about the community not supporting Dangote Cement was a ruse.

“We are happy with Dangote we want him to move very fast and we thank him immensely,” said the community leader.

NIGERIA: Infrastructure, housing to drive cement demand, says BUA chief

Demand for cement will be driven by building of infrastructure and housing development, Executive Director, BUA Group, Kabiru Rabiu has said.

He said the firm’s target is to increase its capacity to 10 million metric tonnes per year by 2018.

He said the company acquired a controlling stake at the Cement Company of Northern Nigeria Plc, as well as Edo Cement.This is in addition to being one of the 13 companies given licences to bring in bulk cement into the local market.

On how the plant is powered, he said the company established 30 kilometres of gas pipeline to power their cement plant in Edo State.

He predicted that cement price will remain stable in the short term and gradually drop in the medium term.

Speaking at an investor conference, Rabiu said though BUA started as a trading company, importing rice, cement and flour, it later turned to a major integrated manufacturer of these products locally thereby creating thousands of jobs for in the country.

“The company started as a trading entity importing rice, edible oil, cement as well as flour into the Nigerian market. Over the years, it began the production of what it previously imported like edible oil as well as rice and flour milling,” he said.

He said by 2005, the firm established its first flour mill in Lagos, followed by another in Kano with 5.5 million tonnes milling capacity per day.

Also, in 2008, BUA Group set up the second-largest sugar refinery in sub-Saharan Africa, which is situated in Lagos with installed capacity of 720,000 metric tones, he added.

“At the moment, companies within the group are separate entities within different divisions. We have the Infrastructure division and then we have the foods division. In the infrastructure segment, we have cement, real estate, steel and port operations,” Rabiu said.

He explained that massive infrastructure projects, commercial and residential housing development will drive cement demand in Nigeria. The BUA boss said he learnt from informed sources that President Muhammdu Buhari’s administration planned to spend about $20 billion starting from next year on infrastructure.

AFRICA: Lafarge Contends with High Operations Cost

Goddy Egene’s writes that the high cost of doing business in Nigeria is affecting the efforts of Lafarge Africa to improve its bottom line

“The overwhelming majority of our minority shareholders were strongly supportive, which reflects that they see the strong value opportunity in the creation of Lafarge Africa. Lafarge Africa is not only a value enhancing transaction for shareholders but it will provide significant value to all stakeholders through the creation of a Nigerian listed Sub-Saharan Africa building materials giant that will be better able to support the development needs of our continent.”

The foregoing were the words of former Chairman of Lafarge Africa Plc, Chief Olusegun Osunkeye, last year shortly after the company got the approval of shareholders to consolidate its operations in Africa. After consolidating its businesses, the company made Nigeria the hub of its operations in Africa. The nine months results of Lafarge indicate that the decision to make Nigeria its hub is paying off.

Corporate profile

Lafarge Africa Plc is a product of the consolidation of Lafarge S.A indirect assets in Nigeria and South Africa into the erstwhile Lafarge Cement WAPCO Nigeria Plc. The assets that were transferred to Lafarge Cement WAPCO Nigeria Plc included: Lafarge South Africa Holdings (Pty) Limited; United Cement Company of Nigeria Limited, through Egyptian Cement Holding B.V.; Ashaka Cement Plc; and Atlas Cement Company Limited.

Following the transactions, the name of the company was changed to Lafarge Africa Plc in order to reflect its new reach and positioning.

Lafarge Africa Plc was incorporated on February 26, 1959 to carry out the business of manufacturing and marketing of cement in Nigeria and has grown into one of leading Sub-Saharan Africa building materials company.

At present, the company has a presence in Africa’s two largest economies of Nigeria and South Africa. It has an installed cement capacity of 12 metric tonnes per annum(mtpa), aggregates capacity of more than five mtpa, Ready-Mix Concrete capacity of about 3.5 million mtpa and a market leading position in Pulverized Fly Ash.

Lafarge S.A. of France, controls 72.74 per cent of Lafarge Africa the remaining 27.26 l is held by Nigerian and foreign, institutional and individual investors. Lafarge S.A. of France is a world leader in building materials with a presence in 62 countries across the globe.

Nine Months Performance

Lafarge Africa recorded revenue of N168.14 billion, up by 5.4 per cent from N159 billion in the corresponding of 2014. Growth in cost of sales dampened gross profit. However, the growth in the company’s cost of sale (COS) and others affected the company’s bottom line. Lafarge Africa’s COS N113.75 billion was up by 9.34 per cent compared to the N104.04billion recorded in the preceding year. Costs emanating from plant maintenance and energy were the key drivers of COS.

Apart from COS, Lafarge operating expenses of N20.30billion increased by 23.41 per cent compared to N16.45billion recorded in 2014. As a result, the company’s core operating profit declined by 12.37 per cent to N34.10billion, won from N38.9 billion in 2014.

The company ended the period with a lower pre-tax and post-tax profits. Specifically, Lafarge posted pre-tax profit of N33.67billion, a decrease of 11.61 per cent, down from the N38.1 billion in 2014. Key drivers of the decline in PBT were resurging costs and decrease in finance and investment income.

However, assessing the results, analysts at Dunn Loren Merrifield (DLM), said they expect energy cost to decline in the years ahead given their anticipation of a higher coal utilisation as the company works to increase power supply to its plants in various parts of the country, having only recently constructed 220 megawatts power plant at Ewekoro, Ogun State.

They said the company is also planning to raise production capacity in the North East, Nigeria to 4mt from 0.9mt, including a 64mw coal power plant by 2018 for Ashaka Cement Plc.

DLM said the growth in operating expenses is reflective of the company’s effort to boost marketing and distribution networks.

Healthy Balance Sheet

Lafarge’s borrowings increased by 73.1 per cent to N23.94 billion from N13.83 billion in the prior year. According the analysts though, the current level of borrowings is the lowest in the industry when compared to its major competitor Dangote Cement with current debt of N278.56 billion.

They said: “We note that he current debt level was driven largely by short term debt as the company soured for funds to meet working capital needs particularly as net working capital remains negative. However, we applaud management’s effort to gradually reduce the company’s payables and long term debt. Consequently, debt-to-equity ratio increased to 0.13x from 0.08x and the debt-to-assets ratio also rose to 0.08x from 0.05x in the prior year. These in our opinion are relatively insignificant compared to industry peers.

The current debt level indicates that the company financed just eight per cent of its assets with debt. The low debt/assets and debt/equity ratios coupled with strong cash flow from operation, show that the firm has a low financial risk profile and is well positioned to repay its loans, interests and meet other financial obligations given its strong debt service cover ratio of 15.56.”

Lafarge/ Holcim Merger

Holcim Limited and Lafarge SA completed the much awaited merger in July, 2015 after a significant percentage of Lafarge shareholders offered their shares and the French financial regulator approved the deal. We note that in the deal, 87.46 per cent of Lafarge's share capital, representing 83.94 per cent of voting rights, were offered by shareholders fulfilling the conditions for the merger. Hence, former Holcim shareholders now control 59 per cent of the new company and former Lafarge investors controls 41 per cent.

DLM said overall, investment in LafargeHolcim provides opportunity for investors to capture global growth with high operating leverage.

“In our view, the company offers a strong likelihood to return cash to shareholders given the lowest need for expansion capital expenditure (capex). In Nigeria, the company is seeking to increase its plant capacity and overall business operations. For example, it planned to expand its South Eastern operation to 5mt from its 2.5mt with an investment of N120 billion. For the United Cement (Unicem) plant, plans are underway to increase production capacity to 12mt by 2018 from 8.5mt,” they said.

Recommendation

According to the DLM analysts, they update their view and re-establish their short term hold recommendation on the stock of Lafarge Africa Plc having evaluated the company’s performance in line with the prevailing business cycle and near term market outlook.

“Though, we see a positive outlook and prospects for future growth but the current economic weakness in the economy presents a divergent view on overall company performance. Lafarge’s nine months results exceeded our estimates albeit marginal as sales revenue for the period grew by five even as cement demand, which is very sensitive to business cycle and consumer sending’s remains lukewarm. Meanwhile, we believe the company can sustain its market share and production for the remaining half of the year despite the reduction in price initiated by competitors given the company’s production capacity. Lafarge’s inventory remains high recording an increase of 10 per cent as at 9M2015 to N26.71billion, representing inventory turnover days of 85.70 days, (9M’14, 85.12days).

While cement demand in Nigeria remains largely weak, a lower-than-expected sale may pile up inventory again. In addition, we believe that cement prices is yet to bottom out should the prevailing competition in the industry persist. Lafarge remains financially defensive and enjoys strong balance sheet with N12.45billion cash balance and 12.75 per cent net gearing at the end of September 2015.

AFRICA: Dangote Cement appoints two new Regional CEOs

Dangote Cement has appointed two new Regional Chief Executive Officers (RCEOs) to support it in its quest to serve the market and maintain its dominance in the African cement market

A statement from Dangote explained that while Arvind Pathak was appointed as the new regional Chief Executive Officer of Nigeria, Vivek Chawla will serve as the new Regional CEO for West and Central Africa.

Chawla has over 30 years of experience in the cement industry working across functions including management, operations, sales & marketing, projects and commercial.

Prior to his appointment, which became effective since August 17, 2015, he was the President of Hindalco Industries Limited, Hirakud, a flag ship company of The Aditya Birla Group.

Besides, Chawla also worked as Chief Executive Officer, East Region of ACC Limited, where he managed the P & L account of the region and pioneered large scale transformation programs in the areas of sales, logistics and manufacturing and successfully executed the largest EPC Project in the region.

NIGERIA: China’s Sinoma signs US$600m Nigerian cement expansion deal

Nigerian conglomerate BUA Group has signed US$600 million worth of contracts with China’s Sinoma International Engineering to double capacity at its flagship cement plant as it seeks to expand market share in Africa’s biggest economy.

BUA group, with interests in cement, pasta, steel and real estate, said it expected to double capacity at its Obu cement plant which currently produces 3.5 million tonnes.

It expects to complete the expansion by 2017, BUA’s executive chairman Abdulsamad Rabiu said at the signing ceremony held at Sinoma’s offices in China.

"BUA has less than 10 per cent of market share now. after expansion we should go to about 20 percent," he said.

Dangote Cement, majority owned by Africa’s richest man Aliko Dangote, controls around 70 percent of market share in terms of output, with 29.25 million tonnes capacity in Nigeria.

The local unit of French cement maker Lafarge Africa , with 8 million tonnes, ranks second, industry analysts say.

Construction projects across Africa were worth around US$325 billion last year, a 2014 Deloitte report showed, up nearly 50 per cent from the previous year as power, transport, oil and gas and real estate sectors expanded.

BUA was also eyeing a continent wide expansion, Rabiu said.

Last week, Sinoma signed US$4.34 billion worth of contracts with Dangote Cement to almost double its production capacity across Africa, including Nigeria.

NIGERIA: Dangote Cement declares N121.8bn half-year profit

Dangote Cement Plc achieved a profit after tax of N121.808 in the six-month period ended June 30,2015, the company’s condensed consolidated statement of profit or loss and other comprehensive income for the period showed.

The figure was 21.65 per cent higher than the N95.440bn PAT the cement giant announced for the same period of 2014.

The statements, which were filed with the Nigerian Stock Exchange on Thursday, showed that Dangote Cement also achieved a 20.23 per cent growth in profit before tax. Its PBT grew from N107.070bn to N128.726bn in the period under review.

This followed a 15.94 per cent rise in revenue, with the company realising N242.215bn revenue as against N208.909bn in the first half of 2014.

The growth in profit was achieved despite increases in administrative expenses, selling and distribution expenses and finance costs.

The results showed that administrative expenses rose to N13.618bn in the six months to June 30, 2015 from N7.295bn in the corresponding period a year ago, while selling and distribution expenses jumped to N23.385bn from N18.030bn.

Finance costs soared from N8.146bn to N24.381bn, while cost of sales rose to N84.501bn from N73.537bn.

Dangote Cement had grown its revenue to N114.7bn from N103bn in the first quarter of 2015 on the back of its expansion programme, which saw it commence operations in some African countries.

Its net profit for the quarter had also risen by 44.1 per cent to N68.6bn from N47.62bn in the first quarter of 2014.

The company had at its Annual General Meeting in April received the approval of its shareholders to pay N102bn as dividend for the 2014 financial year.

The Board of Directors had proposed the dividend, which translated into N6 per share after the company grew its revenue from N386bn in 2013 to N392bn in 2014.

The Chairman, Dangote Cement, Alhaji Aliko Dangote, had explained that, “As a result of the sizeable investment that we have made over the past few years, Dangote Cement ended the year (2014) with new lines in Nigeria, factories becoming operational in Senegal and South Africa.”

Earlier in the year, the company had said that its new plants in Senegal and Cameroun had commenced operations with plants in Ethiopia and Zambia following.

NIGERIA: BUA gears up for August launch of 3MMT Obu Cement Plant

Expectations are high as commodities conglomerate BUA Group counts down to full commercial production of over 3million metric tonnes of cement at its newly-built $600mn Obu Cement Plant in Okpella, Edo State with clinker production already in full swing. At the current rate, it is expected that cement dispatch to the various markets will commence in the first week of August.

BUA Group Chairman/CEO, Abdulsamad Rabiu, said the company’s three-year journey in constructing the world-class plant would give a much needed boost to Nigeria’s cement industry as well as enhance the development of related sectors including housing and construction.

“The Obu Cement plant, which is about 5km away from Edo Cement company, is 100 per cent owned by the BUA Group. The Edo Cement plant, which has a capacity of 500,000tonnes/annum is also being rehabilitated and would be receiving clinker from the Obu Cement plant before being fully rehabilitated. The two plants would be rolling out about 3.5mtonnes/annum of cement. Asides from the initial costs of over $500 million in Obu Cement, we have also invested over $100 million in gas turbines to power a 50-megawatt plant for 24-hour electricity generation as well as the construction of a 30km gas supply pipeline,” he said.

The Obu Cement plant was supplied by the world renowned European cement equipment suppliers, FL Smidth of Denmark and the civil construction was handled by the mega construction firm, Julius Berger. This combination from two world leading companies in cement equipment and construction services has given birth to one of the finest cement plants in the world.

Rabiu further added that the plant’s location in Edo State, makes it a strategic point for markets in the North and South-South of the country; “essentially we are 200 metres to the highway linking Okene, Kogi State and Benin, Edo State which will guarantee adequate distribution of products.”

He also revealed that an estimated 250 to 300 trailers of cement would be delivered to markets across the regions daily, once the Obu plant kicks off full commercial activity.

Benefits to host communities

The Obu Cement Plant currently manufactures cement straight from limestone, receiving 9000 tonnes of limestone and clay each day for its large-scale operations, which will provide over 1500 direct jobs, a situation which means the company has also had to factor in employees’ pressing needs. “We have constructed a housing estate for most of our workers and are still building, to ensure they have access to decent accommodation.”

The wider Okpella community and its environs is also expected to benefit from a new medical facility and an administrative block for the community’s youth centre, while the roads being built to and from the quarries will also serve residents.

To enable stable power supply, a 30-kilometre gas pipeline has been built, with compensation paid to all three host communities. As far back as April 2014 BUA Group signed a gas sales and purchase agreement with the Nigerian Gas Company, which will guarantee the supply of about 0.9Mm3/day to the Obu plant. However, liquid fuels will also be used as a backup, to ensure production around the clock.

Cement grades

The soon-to-be-launched Obu plant is equipped with cutting-edge facilities, with the capacity to produce all three grades of cement, as allowed by the Nigerian Industrial Standards, as backed by the Standards Organisation of Nigeria (SON). These are the 32.5, 42.5 and 52.5 grades. When asked what steps BUA Group is taking to ensure compliance, Rabiu said the organisation had observed due diligence in this regard.

He added that the Group welcomed these requirements, as the customers would not be short changed, and Nigeria’s cement industry would be operating at world-class standards.

“In total, the investment has so far gulped over $600 million but no cost is to be spared, if we are to build lasting solutions to enhance Nigeria's self sufficiency in cement production,” he added.

In addition to the Obu Cement plant, BUA Group’s other investment in the cement industry include the Cement Company of Northern Nigeria Plcand Edo Cement Company ltd. The official commissioning ceremony for the new Obu Cement Plant is planned for Q3, 2015.

Established in 1988, BUA Group has over the years grown steadily to become one of Nigeria’s largest foods and infrastructure conglomerates with investments in sugar, cement, agribusiness, flour & pasta, rice, edible oils, real estate and port operations.

NIGERIA: Lafarge's 220mw Power Plant Begins Operations October

Lafarge Africa Plc has said its newly constructed 220 megawatts power plant at Ewekoro, Ogun State will commence operation in October.

The News Agency of Nigeria (NAN) quoted the CEO, Lafarge Nigeria, Mr. Guillaume Roux, to have said the project worth $400 million (N78.8 billion) was executed in partnership with the International Finance Corporation (IFC) and Wartsila.

He said IFC would provide financial and advisory services for the project through InfraVentures, its Global Infrastructure Project Development Fund, while Wartsila would build and manage the power plant.

Roux expressed the hope that the project would enhance 1.4 million households’ access to electricity and help mitigate energy problems of many firms in the country.

He said power project remained one of the company’s contributions toward providing an enabling environment for new investments and the nation’s economic growth.

NAN reported that the Nigerian Electricity Regulatory Commission (NERC) had licenced embedded power companies to boost electricity supply in the country.

Embedded power companies are not primarily power generating companies, but they generate extra power from their operations and sell the surplus to the national grid or the distribution companies. Africa and the Middle East contribute 18 per cent to the company’s turnover in 2014. Nigeria represents about three-and-half per cent of the company’s turnover from Africa in 2014.

NIGERIA: CBN denies rice, cement importers access to fore

Godwin Emefiele, the Governor of the Central Bank of Nigeria, (CBN) says importers of rice, cement and other products will no longer access Foreign Exchange from CBN, banks and bureau de change for such importation.

Speakimg to newsmen on Wednesday, Emiefiele said the measure would prevent further depletion of the country’s foreign reserve.

He said the country was spending huge amount to import things that could be produced locally.

Emefiele said the apex bank would not continue to support the importation of such items through the use of the hard earned foreign exchange.

Some of the products include margarine, palm kernel, palm oil products, meat and processed meat products, vegetables, private airplanes and jets, Indian incense, tinned fish, galvanised steel sheet, roofing sheet and furniture.

“Importers who may want to continue importing these goods would have to sort their foreign exchange from their own private sources.

“The CBN will continue to be vigilant around this policy, keep reviewing the list of items as it becomes comfortable that these items can be produced locally if we apply ourselves sufficiently.

“This policy change is in line with the belief that Nigeria cannot attain its true potential by simply importing everything into the country.

“We have to decide what we really want for our country and I believe that the time is now for that deep and honest conversation,’’ he said.

He said in spite of relative positive Gross Domestic Product growth over the past seven years, there was no corresponding reduction in unemployment and poverty.

He said bank’s analyses of the situation had compelled it to stop forex access to some of these goods to encourage local production and consumption for economic development.

He also said that the Federal Government was spending about N1.3 trillion on the average annually to import rice, fish, sugar and wheat.

“Why should we continue importing rice into Nigeria when vast amount of paddy rice produced by local farmers across rice belts are being wasted and ignored?

“What will it take for these importers to stop importation and go into processing this locally produced rice.

“Why are they not utilising large expanse of arable land for cultivation instead of importing rice into the country?’’ he said.

Emefiele said that Nigeria had been creating jobs for other countries, while importing rice into the country.

He said it was unfortunate that sardines, toothpicks, among others, were imported into the country.

Emefele said the apex bank had no power to ban the importation of the items but noted that it would work hard to ensure support for local production.

He said local production would reduce poverty, unemployment and pressure on the reserve.

“I believe that the current situation we found ourselves affords us a unique opportunity to embrace self-sufficiency in Nigeria.

“We should also reduce our appetite for everything and anything foreign, conserve reserve and create jobs at home for our people.

“With full complement of the bank management, we would continue to look for areas which the bank can play a catalytic financial role to achieve the goal in the near future,’’ he said.

On lifting of ban on importation of textiles and furniture by the Nigeria Customs, he said CBN would not provide foreign exchange for people that would want to import such products.

NIGERIA: CCNN LAUNCHES N48B EXPANSION PROJECT

Cement Company of Northern Nigeria (CCNN) has launched an expansion project estimated at about N48 billion to modernise and increase capacity of its 55-year-old cement plant.

The expansion project would increase the company’s installed capacity by 200 percent to 1.5million metric tonnes, CCNN Managing Director/Chief Executive, Mr. Alf Karlsen, disclosed yesterday.

He stated this at Wamakko local Government Secretariat, Sokoto during the distribution of 2,600 bags of cement worth N6million to its host communities.

“The expansion is part of the ongoing modernisation and cost optimisation programme aimed at reducing average cost and enhancing productive capacity with a view to ensuring that CCNN remained competitive in the cement industry,” he stated.

Mr. Karlsen, who was represented by Head, Corporate Affairs of the company, Sada Suleiman, said the increase in installed capacity would enable the company to maintain its current market share and expand into new markets.

He disclosed that they had completed the process of acquiring new mining areas and expansion of quarry area, with Sabon Gida, Danatu and Gidan Mubaga communities relocated to a new settlement.

To ensure an improved life for the communities, he added that CCNN provided electrification, Primary and Islamiyya Schools, fully furnished clinic as well as mechanised borehole and reticulation to the entire settlement.

Chairman Wamakko local government area of Sokoto State, Alhaji Ahmed Abdullahi Kalambaina, commended CCNN for the cement distribution and other projects executed for its host communities.

He noted that the gesture would help in boosting the cordial relationship between the company and its host communities.

NIGERIA: Sokoto Cement to build $600m plant

The Cement Company of Northern Nigeria (CCNN), Sokoto, is to build an additional power plant to make it self-sufficient in power supply to enhance its production capacity. The plant will cost about $600 million.

The company generates 12 megawatts (MW) of electricity but has gone into partnership with a Chinese company, CBMI to build a new plant to increase its generation to 16MW, the Head, Public Communications, Bureau of Public Enterprises (BPE), Alex E. Okoh, has said.

Okoh said the Principal Manager, Corporate Affairs, CCNN, Alhaji Sada Suleiman, stated this while explaining the company’s activities and plans when the post- privatisation monitoring team of the Bureau of Public Enterprises led by Mr. Ibrahim Babagana visited the plant.

He said earlier, CCNN’s plant does not generate sufficient power to take the full load when running the plant on full capacity utilisation. He said CBMI of China has started the construction of a new production line which has a production capacity of one million tons of clinker per year, and that the line should be commissioned by the end of next year to increase the company’s capacity by about 200 per cent.

The BPE team was also told that the company is being operated by the core investor with total staff strength of 383 of which only two are expatriates.

The Cement Company of Northern Nigeria’s prime market area covers six states of the Northwest zone, including Sokoto, Kebbi, Zamfara, Katsina, Kano, and Kaduna. The company is leading supplier within its geographical market area.

The firm was founded by the late Premier of the Northern Region, Alhaji Sir Ahmadu Bello. It was incorporated in 1962 and commenced production in 1967 with an initial installed capacity of 100,000 tons per annum at the Kalambaina plant.

The need to meet the increasing demand for cement necessitated an expansion of the plant with the commissioning of a second line with an installed capacity of 500,000 tons per year in 1985, by the then Head of State, Major-General Muhammadu Buhari. Thereafter, in 1986, the first line was shut due to its uneconomic mode of operation, thus leaving the plant with a rated output of 500,000 tons per annum.

Under the privatisation and commercialisation programme of the Babangida Administration in 1992, the Federal Government disinvested about 20 per cent of its holding in the company and sold it to the Nigerians. But under the civilian administration of Chief Olusegun Obasanjo, the Company was earmarked as one of the companies to be fully privatised. In 2000 therefore, public bidding for the company was concluded and Scancem International ANS of Norway, a member of Heidelberg Cement Group was appointed as core investor and technical partner of the Company. Following a strategic re-orientation, Heidelberg Cement Group divested its CCNN shares in 2008. A Nigerian company Damnaz Cement Company Limited later became CCNN’s new core investor and assumed full responsibility as with its technical/administrative experts.

In 2010, Messrs BUA International Limited acquired Damnaz Cement Company Limited and became indirectly the majority shareholder in CCNN and its technical partner. The ownership structure has core investors owning 50.7 per cent of the company; State Governments over the years reduced their shareholding from 36.8 per cent to 7.6 per cent; while other private shareholders retain 41.7 per cent.

The BPE team expressed satisfaction with the success story of the privatisation and the company is doing to remain competitive.

NIGERIA: Ashaka Cement profit falls on Insurgency, lengthy rainy season

Ashaka Cement Plc’s first quarter profit fell despite reduced production costs as the Northern Nigeria cement giant grapples with lengthy rainy rains and insurgency in the north of country that disrupts operations.

For the first three months through March 2015, Ashaka’s net income reduced by 53.45 percent to N889.01 million from N1.91 billion the previous year. Sales slid by 29.84 percent to N4.56 billion as the company seek organic growth through merger and acquisition.

Ashaka have had its operations disrupted by Boko Haram as the company is located in Gombe State, the hot spot of the insurgents.

Boko Haram has waged a six-year campaign to impose Islamic law, or Shariah, in Africa’s largest economy and biggest oil producer.

While Ashaka’s profits flounder due to political risk, it was able to reduce costs to the barest minimum.

Cost of sales reduced by 11.74 percent to N2.93 billion in 2015 as against 3.32 billion the previous year as the company increased the use of local coal in place of the expensive LPFO to power plant at factories.

This is a major cost cutting measure by cement makers in Africa largest economy.

Gross profit was down by 48.87 percent to N1.63 percent due to the sharp fall in sales. Gross profit margin reduced to 35.74 percent in 2015 compared with 48.74 percent the previous year.

Net margin, a measure of profitability and efficiency slid to 19.50 percent in the review period as against 29.50 percent last year.

Analysts say the lengthy rains witnessed in the second and third quarters of 2014 which culminated in slow construction activities resulted in weak demand for cement products.

Ashaka will be in growth spurt as it plans to invest in a significant expansion of its cement production capacity to about 4 million metric tons from the current approximately 1 million metric tons, according to the company’s website. The company will use its internally generated funds to finance the expansion plan.

The expansion in capacity will comprise debottlenecking of the existing line for additional 0.5 million metric tons and installation of a new line of 2.5 million metric tons of cement per annum, according to Suleiman Yahyah, Chairman of the board of Directors of the company, during the its Annual General Meeting held in the capital city Abuja.

“As part of the expansion project, a captive coal-fired power plant of 64 megawatts capacity will be built in order to allow a reliable and sufficient source of power for the existing plant and the new cement line”, said Yahyah.

The minority shareholders of Ashaka are part of pan- Africa entity as its parent company Lafarge Africa increased its stake in the northern cement company.

Lafarge Africa has increased its stake in Ashaka Cement through a Mandatory Tender Offer (MTO) to all minority shareholders of Ashaka Cement.

Ashaka’s EPS reduced by 53.52 percent to 33k in 2015 compared with 71k last year. Total assets increased by a mere 1.01 percent to N72.31 billion.

Analysts see the company rebound to growth if government can intensify its fight as against the insurgents.

Ashaka’s share price closed at 21.50 2:30 pm on the floor of the NSE while market capitalization was N48.14 billion.

NIGERIA: Unicem to Suffer N9bn Losses

The management of United Cement Company of Nigeria (UniCem) has disclosed that the firm will suffer losses totalling N9 billion in 2015 due to the economic downturn currently affecting Nigeria, culminating in the devaluation of the Naira.

Managing Director (MD) of UniCem, Olivier Lenoir, stated this at the weekend while fielding questions from journalists on the progress so far made on the ongoing N84 billion second production line project of the company known as Line II.

“The devaluation of the Naira impacts negatively on our business because most our transactions like procurement of spares and materials, payment of some of contractors (Macmahon and CBMI), energy cost and servicing of foreign creditors are basically dollar denominated. Cumulatively, we will have a revenue loss of N9bn in 2015 due the devaluation of the Naira", he said.

He said the construction of Line II project at Mfamosing, Akamkpa. Local Government Area, Cross River State wasvon course and would provide employment for hundreds of workers.

Lenoir said: “As you may have seen from the presentation earlier, this project will at peak employ a total manpower of 1915. At this moment the manpower working in the project is 1290. The operations will determine what the manpower need will be when we handover the project”.

On the level of work done so far since the ground breaking ceremony of the Line II project, Lenoir said: "The actual progress on extension of the Captive Power Plant (CPP) is 85 percent, and for the civil construction of the 2nd line it is 38 percent.”

He said the expansion of the power plant and construction of the Line II are progressing as scheduled.

The MD said the major challenges in this project are: Non-technical, which include high level of malaria infection; heavy rain falls; customs clearance.

Lenoir said despite these hitches, UniCem is optimistic that the project would be completed on schedule.

He said the projection for the completion of work on the Line II, which include the Clinker NOCP (normal operation condition period) is September ,2016, which the completion of the Cement NOCP(Normal operation condition period) is projected December ,2016.

Furthermore he said, the completion of the “extension of the captive power plant- end of performance test” is set for September, 2015 and “provisional acceptance of power plant- October, 2015.”

Explaining the essence of the second production line, Lenoir said: “Ordinarily, yes it should translate to more supply which should bring down the retail selling price following the basic economic principle of Demand and Supply. However, other cost-push variables are not constant nor reducing e.g. energy cost, distribution cost including taxes and other environmental factors like road infrastructure. What is key in driving down retail selling price is reduction in cost of production and distribution which the government can do by creating of enabling environment like provision of basic infrastructure. We hope the incoming government will look into this by addressing the current road infrastructure concerns.”

He said though the standardisation policy for cement production was yet to be implemented; UniCem produces and sell cement products that conform to applicable standards in Nigeria.

“All our products are in compliance with regulatory standards. We went to offer production and services that satisfy customers’ needs,” he said.

According to him, "the review in scope of the project, challenging alignment of the road due to vast swamp and limestone rocks deposit on the right of way and Inclement weather due to excessive rainfall experienced in Cross River State have been the major limitations to early completion of this project."

He stated that there are two bridges on the entire stretch of the road; one of 30metres length, across Etamkpini River at km 13.5 and another of 105metre length, across great Qua River at the border of Ebereka and Etamkpini at Km. 9.6 .

Lenoir said: " in all we have over 80 numbers of box and pipe culverts across the 20 kilometre Evacuation road. These are conceived to give the road the desired stability in view of the terrain".

NIGERIA: UNICEM’s N93 billion project to be ready soon

UNITED Cement Company of Nigeria (UNICEM) N93 billion second cement plant evacuation road projects in Cross River State to be ready soon.

Conducting some newsmen on a facility tour of the projects in Mfamosing and Odukpani, at the weekend, the Managing Director of UNICEM, Olivier Lenoir said, already work on the two projects have reached over 50 and 70 per cent completion.

He said: “As you may have seen from the Presentation earlier, this project will at peak employ a total manpower of 1915. At this moment the manpower working in the project is 1290. The operations will determine what the manpower need will be when we handover the project while the road project has created 380 indirect jobs to local artisans.”

He explained that “in Line with the Federal Government incentives for Cement Industries, the shareholders and Board of UniCem had taken the initiative to support the Federal Government by investing in the economy by constructing an additional 2.5mt Plant, thereby increasing our capacity to 5.0 metric tonne per annum, create wealth, contribute to economic Development and Nigeria’s self-sufficiency in cement production”.

On whether the second plant will reduce cost of cement, Lenoir said: “Ordinarily, yes it should translate to more supply which should bring down the retail selling price following the basic economic principle of demand and Supply. However, other cost-push variables are not constant nor reducing for example energy cost, distribution cost including taxes and other environmental factors like road infrastructure.

“What is key in driving down retail selling price is reduction in cost of production and distribution which the government can do by creating of enabling environment like provision of basic infrastructure. We hope the incoming government will look into this by addressing the current road infrastructure concerns”.

On the 20 kilometers concrete and asphalt road, comprising 88 culverts and 2 bridges, Lenoir said has gone a long way diversely to enhance the economic fortunes of the locals and will showcase the use of cement in road construction.

The company’s Corporate Affairs Director, Ayi Ita, stated that the project has opened access to communities which hitherto never had road before the evacuation road project.

He disclosed that that the company had through the State government compensated all the communities affected by the road project and the locals are in charge of the sea sand used for construction of the road.

The company’s Project Manager, Mark Aibangbee, reiterated its commitment to ensure the road construction meets international standard.

NIGERIA: Cement firm partners microfinance bank on 5,000 new homes quantity

A NEW deal has been sealed between a cement firm, Messrs United Cement Company of Nigeria (UNICEM) and microfinance bank for the building of 5,000 new housing units in the country.

The agreement between UNICEM through its shareholder Lafarge in collaboration with French Development Agency (AFG) provides a long-term credit line of N1 billion to LAPO Microfinance Bank for the initiative.

This innovative solution will be extended to other states in the South South and South East region in the nearest future. Currently, the UNICEM’s Managing Director, Mr. Olivier Lenoir, said the project tagged ‘Easy Home’, was aimed at addressing Nigeria’s huge housing deficit of 17million and over 5,000 Nigerians are expected to benefit from the project Lenoir who said this last week in Calabar during the signing of a Memorandum of Understanding (MoU), that the project ‘is in line with our vision of ‘building a better future and commitment to contributing to addressing the situation that UNICEM has launched the ‘Easy home’ affordable housing scheme partnering LAPO Microfinance Bank’.

He disclosed that the proposed housing project “has the support of one of our shareholders, Lafarge France. As you may be aware, Nigeria has a huge housing deficit estimated at 17million.

“It is our believe that this project will afford low and middle income earners access to low interest rates loans to have their own homes.

We are offering the entire people of Cross River State and its environs an opportunity to build their dream home. This initiative is company’s contribution in solving the over 17 million housing deficit”.

Lenoir pointed out that UNICEM, being a leading manufacturer of cement, will provide its technical expertise to ‘Easy home’ residents through guidance on building plans, construction, access to quality cement and other building materials.

On his part, the Managing Director of LAPO Microfinance Bank Limited, Godwin Ehigiamuse, said that the project will go a long way to support individual home builders, especially the low and middle income earners.

According to Ehigiamuse, who was represented by the Bank’s Executive Director, Corporate Planning, Mrs. Josephine Nwachukwu, said in order to access the facility, prospective beneficiary must be able to make a minimum contribution of 10per cent of total construction cost.

Other criteria include; being either a self-employed person, salary earner or engaged in any income generating activity able to sustain the repayment, in possession of a landed property in Calabar as well as the provision of two guarantors.

He explained that the project has economic social as well as environmental impact on our clients. We are aware that houses for low-income earners are not just shelter but are equally locations for their economic activities.

The ceremony which was witnessed by a representative of Lafarge France, Mr. Aurelien Boyer, among others, will have great impact on all social indicators as experienced in other states were we started.