$350m BUA Sokoto Cement Factory Resets Nigeria’s Manufacturing Capacity

By August 20, 2018 Investment News

The recent commissioning of the $350 million cement factory at Kalambaina in Wamakko local government area of Sokoto State is not only creating job opportunities for Nigerians but positioning the country to become a net exporter of cement which would in the long run widen her foreign exchange earning capacity.

Nigeria’s cement industry in recent times has multiplied production capacity to meet local demands and today cement producers are beginning to explore opportunities in the export markets to improve their trade margins and buffer shocks that may arise from the markets where their investments are domiciled.

Nigeria’s integrated cement manufacturing, which took new dimension a few years ago, has seen the country move from a nation with under three million tonnes of production capacity leaping to over 40 million tons.

With this turnaround, Nigeria is not only becoming self-sufficient in cement production but also a net exporter of the commodity, and to consolidate this success, indigenous manufacturers are exploring the export option in a move that is expected to improve diversity in product offerings and ultimate reduction in the price of the commodity.

According to the chairman of BUA Group, Abdulsamad Rabiu, the commissioning of the Sokoto cement plant with a capacity of 1.5 million metric tons would not only generate an estimated 2,000 direct and 20,000 indirect jobs but has positioned the company to project its products for export.

After about three decades of entering the Nigerian market as a commodity trader, the BUA brand has successfully inaugurated mega cement factories like the three million tons OBU cement plant at Okpella, Edo State.

The unveiling of the plant was a confirmation of the promise made by the company when it first started production of cement from its three million metric tons per annum cement plant at the location that it would follow up with an expansion.

According to the company, the plant is worth over $600 million. Vice President Yemi Osinbajo, who was a special guest of honour at the event, admitted that Nigeria’s economic emancipation and growth must be private sector-led and driven, for the country to get the desired result.

He also stated that there is no public sector resource that can match the resources, drive and commitment of the private sector. He emphasized that provision of enabling environment for industrial investment was the cornerstone of the Buhari administration’s economic policy.

While commending the project and its economic benefits for the state and the country, Osinbajo pointed out that its construction would boost the Nigerian economy.

The OBU plant inauguration is now followed by the commissioning in July, 2018 of the $350 million factory, throwing open new opportunities for the country in cement manufacturing utilizing local raw materials.

At the commissioning, the executive chairman of BUA Group, Abdul Samad Rabiu, said the $350 million 1.5 million metric tonnes Kalambaina cement plant was statement in action.

Abdulsamad said that though the cement plant started production towards the end of March this year and was to be commissioned in May, it was rescheduled as a result of his father’s death.

He expressed gratitude to Vice President Yemi Osinbajo, who was the chief guest of honour at the occasion for being part of the company’s success stories.

He recalled that in August 2017, Osinbajo commissioned the company’s 3 million metric tonnes Greenfield plant in Okpella, Edo State and also performed the groundbreaking for the second line which is set to be completed by the end of the year.

“I remember mentioning it then to Your Excellency that we were due to complete this Sokoto plant by the end of the first quarter of 2018. You gave your assurance that you will be here to commission it and here we are today, Your Excellency.

Your strong commitment to supporting industry is highly commendable,” he said.

While stressing that new plant was very unique from various viewpoints, Rabiu said its location, economic value and social impact, as well as the huge limestone deposits plus human capital potential among-st others were good factors.

Giving brief history of the plant he said, “Construction of this plant started three years ago when we engaged SINOMA at the height of the foreign exchange crisis.

“Despite what was termed by some to be harsh economic conditions in the months after signing the contract, we pushed on with resolve and a firm belief in the value of this project.

“I must say however that this project would not have been possible without the effort by the President Muhammadu Buhari- led administration to put deliberate policies in place to support key industries in the real sector from agriculture to manufacturing.

Through these policies, the Central Bank of Nigeria provided enough foreign exchange for heavy machinery to come in and this was helpful in completing the project on schedule.

“By also using coal to power our kiln, we expect to save over 70 per cent in terms of energy costs compared to if we had to use over 15 million liters of fuel oil per month or about 400 tonnes or 20 trucks of fuel oil per day.

“That would have been a very expensive venture and logistical nightmare but I can confidently say our approach is easier, cheaper and more efficient,” he stated. Talking on the new plant’s social impact and the expected employment generation, Rabiu said no fewer than 2,000 direct and 10,000 indirect jobs were required to get this plant fully running.

“We cannot therefore underestimate the attendant social impact of this investment,” he added.

Recalling that the plant was the only one in the entire north- west region of Nigeria, BUA’s chairman affirmed that it holds significant promise for the local markets and has huge export potential.

“The Niger Republic is a mere 100 kilometers from here and the Republic of Benin, just 200kms away.

“We are therefore in a prime position to actually deliver the entire demand here within the north-west which is our catchment area, and also export; even though at BUA, we have made it a policy to cater first to our home market before we export.

“In the event that we choose to export, the foreign exchange savings and potential foreign exchange this could generate for the country is huge,” he explained.

Rabiu, who divulged that BUA cement investment for now remained the single largest private led in the entire south-south region assured that the second OBU line cement complex in Okpella, Edo State which is gulping $1billion would be completed by the end of this year.

“That BUA cement investment in Edo State remains the single largest private-led investment in the entire south-south region of Nigeria outside the oil and gas industry.

By the time that plant is completed by the end of the year – together with what we have here, BUA Cement’s total production volumes will be in excess of 8 million metric tonnes and that would give us over 35 per cent of the entire volumes produced in Nigeria,” he noted.

While assuring of his readiness to sustain and improve on the mutual symbiotic relationship that exist between BUA and all their business host communities, Rabiu said they remained committed to their vision to unlock opportunities wherever they operate hence the resolve towards exploring new frontiers for the development of the nation.

On his part, Sokoto State governor, Aminu Waziri Tambuwal, assured that the state would continue to implement policies that guarantees investors friendly atmosphere.

Tambuwal further called on other intending investors to take advantage of the numerous mineral resources and abundant human capital in the state by channeling their investment to Sokoto.

Speaking before commissioning the plant, vice president, Yemi Osinbajo , said completing the $350 million BUA cement factory and power plant by the management was highly commendable for diverse reasons.

“I recall that on Tuesday August 29, 2017, I was in Edo State to commission the BUA cement plant in Okpella and as then the chairman of BUA disclosed that the Sokoto factory will be ready by 2018. And it is gratifying indeed that it is done and ready just as planned even ahead of schedule,” he said.

Osinbajo, stressed that the commissioning was not only an important milestone for the BUA Group but also for the cement industry and the Nigerian economy at large, noting that industries of this nature would facilitate Nigeria’s consolidation on the self-sufficiency drive in cement production, and increase the company’s status as net exporter of the product.

“The significance of this cannot be overemphasized as we explore and implement strategies to diversify the country’s earnings away from oil and gas exploitation.

“The investments of BUA totaling almost about $2 billion in Okpella plant and $350 million in Sokoto cement plant are clear demonstration to the world that Nigeria has vast capacities and potentials for profitable projects.

“After so many years of inadequate attention to national infrastructural development, the next few years will be defining for infrastructural development in Nigeria.

“The National Integrated Infrastructure Master Plan (NIIMP) estimates that an investment of $3 trillion is needed to bridge the infrastructure gap, and increase our infrastructural access from the current level of about 35 per cent of gross domestic product to at least, 70 per cent by 2050.

“To be where we ought to be in infrastructural development, investment in construction materials in particular is crucial.

Cement is of course, literally the building block for much of the infrastructures that we need in Nigeria today; from housing to road, to bridges to dam etc.

“Currently, Nigeria produces over 40 million metric tons of cement, which means we produce more cement than any other country in Africa. Indeed, several countries in Africa put together, we still produce more cement,” the vice president added.

While submitting that Nigeria’s huge market size and the high urbanization rate of 3.5 per cent as well as the low per capital cement consumption of about 125 kilograms and an estimated housing deficit of about 17 million were key drivers that would guarantee successes in the venture, Osinbajo also appealed for a holistic downward review of the price of cement.

Source: Leadership