Group Executive Director for BUA Group, Kabiru Rabiu has said that the demand for cement will henceforth be driven by massive building of infrastructure and commercial or residential housing development, stating that cement price will remain stable in the short-term and gradually drop in the medium term.
Speaking at an investor conference recently, Rabiu said although BUA Group started as a trading company, importing rice, cement and flour, but has turned to a major integrated manufacturer of these products locally thereby creating thousands of jobs for Nigerians.
“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.
By 2005, the firm established its first flour mill in Lagos, followed by another flour mill 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 tonnes.
“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. “So, this government has a plan of spending about $20 billion starting from next year on infrastructure. A lot of this money will go to construction of roads, bridges and other critical infrastructure currently lacking in the country. We are already well positioned to take advantage of the opportunities that arise within the sector,” he disclosed.
BUA Group’s target is to increase capacity to 10 million metric tonnes per annum by 2018 while remaining a leading player in the cement industry.
Expatiating, he said: “In 2008, again we acquired a controlling stake of a cement company, a company called Cement Company of Northern Nigeria Plc, as well as Edo Cement. And we were one of the 13 companies given licences to bring in bulk cement into the Nigerian market. The group has invested heavily in these acquired companies to upgrade infrastructure as well and introduce additional capacity.”
Besides, BUA Group’s sugar refinery has 720,000 metric tonnes capacity, while a new plant is being set up in Port Harcourt. In the infrastructure segment of the firm’s operation is cement production, where it is the third-largest cement producers in Nigeria with a current capacity of 5.5 million metric tonnes per annum.
“Our port operation was concessioned to us by the government and can take up to two million tonnes of cargo per annum. And we obviously established 30 kilometres of gas pipeline to power our cement plant in Edo State,” he said.
On cement price volatility and competition, Rabiu said cement price in Nigeria will remain stable in the short-term. He said certain competitors did a price reduction a few months but when demand rose speedily over the period, the price was subsequently adjusted upwards.
“If you look at the supply and demand pattern in Nigeria, you realise that we have very low capacity of cement compared to other emerging markets or emerging economies. So, we feel in the short to medium term, there is a possibility of prices going up. When a key competitor reduced its price, we saw a bit of slow-down in the demand pattern. When demand tends to be stronger obviously then the price trends to go up,” he explained.
Rabiu said the firm produces 3.5 million tonnes in Edo Cement which is running on natural gas. “We have Sokoto Cement that is 500,000. That one is on heavy fuel. We also have BUA Cement 1 which is a floating terminal. In terms of energy, Sokoto Cement, which is in the north-western part of Nigeria does not have natural gas infrastructure. At the moment, they are running on heavy fuel. But we are converting the plant to coal which is available for the plant,” he said.
Rabiu said the limestone and distance to the deposit is really important in the cement business. “If you take the largest cement plant in the country for example, from where the plant is located to where the deposit is, it is about nine kilometres away. They are nine kilometres apart and obviously difficult to manage. And that is what we try to avoid. Edo Cement is sitting right on top of where the limestone is, and same with Sokoto Cement. So, our Edo Cement plant is the only cement plant in Nigeria that is in marble that supports the limestone. In terms of quality, it is also better because of the high purity of our raw material. For us that is very important especially in the competitive environment,” he said.
The performance of BUA Group has also not gone without recognition. For instance, the BUA Cement was recently announced as the “Cement Brand of the Year 2015” at the 2015 Marketing World Awards in Lagos. The company beat other major manufacturers including Lafarge and Dangote Cement to clinch the award. BUA Cement, a wholly owned subsidiary of BUA Group.
According to Instinct Media, organisers of the awards, the company won based on its consistency in delivering superior product offerings as well as setting the pace for cement manufacturing in the country.