Displaying items by tag: Nigeria

Nigeria: The board of directors of Ashaka Cement plc, with the support of parent company Lafarge, has agreed to fast track the expansion of its US$617m cement plant in Ashaka, Gombe State. The move became imperative in order to guarantee the future of Ashaka Cement, to enhance job creation and to deliver economic and social welfare to the immediate communities. Chairman of the board of Ashaka Cement, Alhaji Umaru Kwairanga, confirmed the developments.

"Having secured sufficient limestone and coal reserves to support the existing plant as well as the new plant, the contracts have been signed with the main equipment and engineering suppliers," said Kwairanga. He added that credit facility lines of US$308m had been secured and signed in addition to internally generated cash flows to support the expansion project.

"Ashaka Cement has operated in harmony with all of its neighbouring communities to the mutual benefit of both parties," said Kwairanga. "In the last three years alone the company has spent US$2.47m on community-related projects and there is the opportunity for the company to do more as the partnership thrives."

Nigeria: The controversy among cement manufacturers and the Standards Organisation of Nigeria (SON) over the application of various cement grades for building and construction may have waned as block makers in the northern part of Nigeria have started to comply with the SON directive on the classification of cement grades and their uses.

Northern Nigerian block-makers have announced that they have complied with the SON directive as most of them now use 42.5R grade cement to produce concrete blocks. Hamza Gambo, chairman of Kaduna State Blocks and Concrete Makers Association, said that all of his members have complied with the SON directive, adding that the directive was in the national interest. He stated that most block-makers in the north now use Dangote 3X cement, which is the only 42.5R grade cement that meets the SON specification.

"We've been using the new improved cement for the past two months," said Gambo, who owns concrete block plants across Nigeria. He added that the Kaduna State Blocks and Concrete Makers Association would deal with members who refuse to comply with the SON cement grade standards according to the association's constitution.

Nigeria: In a bid to tackle 're-bagging,' which is one of the biggest threats in the cement industry in Nigeria, Dangote Cement has launched an all-out attack on perpetrators.

In the cement industry 're-bagging' refers to the emptying of the original cement bag and refilling with a different adulterated product or commodity. Another common method is to buy cement from shops, grind it, mix it with sand and then put the adulterated commodity into a bag belonging to a reputable cement manufacturer.

Often cement makers end up bearing the brunt of customer dissatisfaction, as they believe the product is from the original source. In the case of damage associated with the product, consumers often attribute it to the firm whose bag has been used for the product.

"There are different forms of what these people are doing," said Devakumar V G Edwin, Dangote's managing director and CEO. "We have an extensive team that is spearheaded by a former police commissioner exclusively on this." According to Edwin, his team is working hard to halt bag thefts by cement plant workers, which facilitate the re-bagging business.

"We have even heard people say that they sell Dangote Cement for US$5.52 – 6.13/bag," said Edwin. "What happens is that our customers often call us and inform us of the situation. Sometimes, they tell us that we are cheating them because of the price someone tells them elsewhere. Once we get the information, we launch into action."

Nigeria: A Federal High Court has rejected an application by Lafarge Cement WAPCO to restrain the Standard Organisation of Nigeria (SON) from enforcing the newly introduced cement grade restrictions. Justice Ahmed Mohammed ruled that making such an order would prejudice its order compelling the defendants to appear in court to show cause why they should not be restrained from enforcing the new cement grade.

The defendants in the suit are the SON and the minster of Trade and Investment, Segun Aganga. The counsel for the defendants had opposed Lafarge's application for an order asking parties to maintain the status quo. They argued that the court could not make such an order when its jurisdiction to entertain the suit was being challenged.

The creation of Lafarge Africa, the clearance of the Cemex West acquisition by Holcim in Germany and the sale of Lafarge's assets in Ecuador all hint at the scale of business that LafargeHolcim will command when it comes into existence. Despite the media saturation of coverage on the merger the implications in developing markets are still worthwhile exploring, especially in Latin American and Africa.

In sub-Saharan Africa, Lafarge is merging its cement companies in Nigeria and South Africa to create Lafarge Africa. Analysts Exotix have described the move as, 'the birth of a leading player on a continental scale'. Indeed, if Lafarge wanted to grow Lafarge Africa to encompass its many other African cement producing subsidiaries it could hold at least 17 integrated cement plants (including plants in north Africa) with a cement production capacity of at least 40Mt/yr in 10 countries and infrastructure in others. That puts it head-to-head with Dangote's plans to meet 40Mt/yr by the end of 2014 through its many expansion projects. Following these two market leaders would come South African-based cement producer PPC with its expansion plans around the continent.

Meanwhile across the Atlantic in Latin America the Lafarge-Holcim merger threatens Cemex. Unlike in Africa where Lafarge has a ubiquitous but disparate presence, Lafarge and Holcim's cement assets are more evenly scattered around the Caribbean, Central and South America. In terms of cement production capacity Cemex and Lafarge-Holcim will both have around 30Mt/yr, with Cemex just in front. The next biggest cement producers in Latin America will be Votorantim (present mainly in Brazil) with just over 20Mt/yr and Cementos Argos (Columbia) with about the same. This includes some new acquisitions in the United States for the growing Columbian producer. In Ecuador Lafarge and Holcim held over 50% of the market share, hence the sale by Lafarge of its assets to Union Andina de Cementos for US$553m.

Depending on how well the merger integrates the two companies, corals the various subsidiaries and implements strategic thinking the merger could just create business as usual with little disruption to the existing order. Yet in both continents the merger has the opportunity to shake up and reinvigorate the cement markets as existing players suddenly discover serious new competition and react accordingly.

Africa has a population of 1.1bn and it had a Gross Domestic Product (GDP) of US$2320/capita in 2013. South America had a population of 359m in 2010 and a GDP of US$8929/capita. This compares to US$27,250/capita in Europe and US$54,152/capita in the US. The economic development potential for each continent is humongous. Post-merger, LafargeHolcim will be first or second in line for some of this potential in Latin America and Africa.

Nigeria: The management of Lafarge Nigeria has urged stakeholders in the cement sector to cooperate on the need for proper product labelling by manufacturers.

The company's general manager (Industrial Performance), Lanre Opakunle, said that the step was necessary to address the issue of incorrect cement application in the Nigeria. Opakunle said that there is a need to review how cement products are labelled in order to educate end users on the basic steps necessary for the correct application and results.

"We discovered that labelling is not adequate and we made some proposals," said Opakunle. "However, those proposals have not been taken on board. We will keep making efforts to see that they are." Opakunle added that correct labelling would help to ensure that people have the right information at their disposal.

"Lafarge is the only cement manufacturer in the market that puts the uses and specifications of cement on their bags," said Opakunle. "In our technical submission to SON we said that we want to do more than that; we want to put it in a way that the layman can understand." He noted that issues of cement application should not dwell on the cement grades; rather it should be about knowing the right mix.

"The most widely used individual application of cement in the world is 32.5 grade," said Opakunle. "It is important that the user understands how to use whatever grade of cement that is available on the shelf because of certain risks which may maybe associated with these grades, whether it is 32.5 or 42.5 grade. The information should be properly labelled on the bags."

Nigeria: Lafarge Cement WAPCO, Ashaka Cement and Unicem have established suits against the Standards Organisation of Nigeria (SON) over its recent decision to employ a new Mandatory Industrial Standard Order for the field of cement manufacturing, distribution and effective usage in Nigeria.

The cement producers are also seeking an order of the court restraining SON, their privies, agents and whosoever is involved in purporting to act through the respondent from implementing the Mandatory Industrial Standard NIS 444-1 2014.

Nigeria/South Africa: French cement maker Lafarge intends to combine its businesses in Nigeria and South Africa. The new company Lafarge Africa, which will be 73% owned by Lafarge Group, will remain listed on the Nigerian Stock Exchange. The new company will have a cement production capacity of about 12Mt/yr in South Africa and Nigeria as well as operations in aggregates, ready-mix and fly ash. The new company will be worth more than US$3bn.

"I am proud to be part of the creation of this leading African building materials platform. It will provide access to growth in two of the largest economies on the continent. It will mean that our shareholders are invested in a larger and more geographically diverse business and it will contribute significantly to the economic growth of both our nations, " said Chairman of Lafarge WAPCO, Chief Olusegun Osunkeye.

Under the proposed terms, Lafarge Group will transfer its direct and indirect shareholdings in Lafarge South Africa Holdings (Pty) Limited (100% - representing 72.4% of underlying companies in South Africa), United Cement Company of Nigeria Limited (35%), Ashakacem plc (58.61%) and Atlas Cement Company Limited (100%) to Lafarge WAPCO. The transaction is subject to Lafarge WAPCO shareholder approvals and obtaining required regulatory and other customary authorisations. The group anticipates completion during the second half of 2014.

Nigeria: Lafarge Cement WAPCO, Ashaka Cement and Unicem have started court action against the Standards Organisation of Nigeria (SON) regarding its plan to limit the application of 32.5 grade cement. The action follows a publication by SON restricting the application of 32.5R grade cement to plastering use only.

"We have instituted a suit against the SON over its recent pronouncement and plan to implement a new mandatory industrial standard order for cement manufacturing, distribution and usage in the country," said the three cement producers at a briefing in Lagos. The producers added that 32.5 grade cement is a widely used multi-purpose product and has 'never' been associated with building collapses.

Following the Standards Industry of Nigeria's (SON) decision earlier this week to ban 32.5 grade cement for all applications except for plastering, the country's cement industry is likely to be faced with some difficult decisions. The new rules state that 42.5 grade cement must be used for casting of columns, beams, slabs and for moulding blocks, while 52.5 grade cement is now mandatory for building bridges. As a developing country, Nigeria is home to a large number of construction and infrastructure projects. To ensure safety this means that the construction industry must be well-regulated.

Arguments against the use of low quality cement in Nigeria have been long drawn out as low quality cement has been blamed for a spate of building collapses, resulting in the deaths of 297 people in 1974 – 2010.

In support of the country's cement producers, SON's director general Joseph Ikem Odumodu was eager to point out that low quality cement is not to blame for Nigeria's building collapses. He said that cement grades 32.5, 42.5 and 52.5 are designed for different applications, which are not being adhered to by builders. While 42.5 grade cement is the minimum suitable grade for multi-story building construction like residential homes, 32.5 grade cement is frequently used instead as it is cheaper and more readily available.

Dangote Cement is currently the only company producing 52.5 grade cement in the country, which it sells at the same price as its 42.5 grade cement. The new SON decision is therefore expected to be good news for Dangote, potentially increasing sales volumes and improving the company's reputation.

With regards to the rest of Nigeria's cement producers, unless they are able to convert their production process for 42.5 and 52.5 grade cement extremely rapidly, Nigeria's cement imports and prices for domestic 42.5 and 52.5 grade cements are likely to increase, in contrast to recent trends. The new regulations, which SON has said will be strictly enforced, provide an excellent opportunity for market share expansion to those cement producers that respond rapidly. It might also be considered the ideal moment for companies to begin exploring brand identities and marketing campaigns. Lookout for our new report on cement branding in a future issue of Global Cement Magazine.