BUA Cement Increases Production Capacity to the Nigerian Market
BUA is the second largest producer in Nigeria after Dangote Cement. The company has set its sights on an expansion program that will increase its capacity to 22 million metric tons (MTA) by 2022.
This will be a 9MTA increase to its current cement capacity with new production units in Adamawa, Edo, and Sokoto states.
The company has enlisted the assistance of Sinoma CBMI to build these new plants at US$ 1.05bn. Once completed in 2022, these plants will push Nigeria’s cement capacity to 60MTA from its current 51.1MTA capacity.
This growth in cement production is viewed positively in many parts of the country where the price of cement rose suddenly because of a domestic supply shortage.
Some of the factors contributing to this shortage include higher domestic freight costs, supply disruptions, and increased export volumes.
In December of 2020, BUA Cement completed its NGN 115bn (US$ 296m) Series 1 corporate bond issue. This issue is part of its NGN 200bn bond issuance program and the largest ever corporate bond issuance in the Nigerian Debt Capital Markets.
BUA is not discouraged by other cement producing companies, such as Dangote Cement, which has a capacity of 29.3MTA in the country.
Dangote Cement Group is also expanding its activities, such as its Obajana cement plant. The company is adding a further 6MTA to its cement production, and there are plans for its greenfield plants at Itori and Okpella. These add an extra 12MTA to its overall production capacity. Another company dominating the sector is LafargeHolcim Ltd, which has a cement production capacity of 10.5MTA.
Nonetheless, despite the presence of these two companies, BUA still sees a great opportunity to grow in its domestic market of Nigeria. It estimates that the per capita cement consumption remains low across the continent at 109kg. This is as reported in the January 2021 issue of the International Cement Review (ICR).
The Chairman of BUA Cement, Samad Rabiu, said, "Nigeria and the surrounding region are homes to huge opportunities in construction, housing, infrastructure, and allied industries. Despite these opportunities, there is no doubt that there is still a huge deficit in supply while demand increases. This situation has led to an increase in retail prices of cement despite ex-factory prices remaining partially unchanged."
The Guardian reported that in the last quarter of 2020, Nigerian cement was sold at a cost ranging between NGN 2400 and NGN 2500 across many states. In January of this year, the prices went up significantly, with a 50kg of cement going for NGN 3600 in Lagos, NGN 4000 in Enugu and Imo states, NGN 4300 in Cross River state, NGN 3200 in Abuja, and NGN 3500 in Kano and Oyo states.
According to distributors, this rise has been attributed to several factors, including the federal government authorizing both BUA and Dangote to export their produce to the neighboring countries. This is because the export to these countries such as Niger, Chad, and Cameroon commands higher prices.
Photo: BUA cement bags on production line in factory (buacement.com)
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