Cement, ceramics manufacturers source 91% raw materials locally

Favourable government policies and determination of the private sector to diversify the country’s economy have resulted in more manufacturers taking interest in exploitation of local raw materials.

Currently, manufacturers in the non-metallic sub-sector such as cement and ceramics source 91.48 percent of their raw materials locally. This is a significant improvement from 79.55 percent reported in the first half of 2013 (H1 2013) and 63.16 percent recorded in the corresponding period of 2012 (H2 2012).

Similarly, there has been an outstanding improvement in the local content of inputs of players in the food, beverage and tobacco, having increased their local raw materials sourcing to 79.34 percent by the second half of 2013 (H2 2013), from 68.99 percent obtained in the first quarter H1 2013 and 70.74 percent recorded in H2 2012.

The trend is equally similar among players in the textile, apparel and footwear, having jerked up their local content of inputs to 60.79 percent in H2 2013, from 52.86 percent recorded in H1 2013 and 47.22 percent in H2 2012, July to December 2013 Economic Review released to Real Sector Watch by the Manufacturers Association of Nigeria (MAN) has shown.

“From the information gathered from members, most manufacturers are finding ways of adapting to the use of local raw materials where such are available. The essence of it is to save foreign exchange for the country and simultaneously save costs,’’ says MAN.

“The costs saved from such are being used to answer other needs in the factories. Such needs include changing of machines and equipment, purchases of other production assets and working capital,’’ adds MAN.

Backward or vertical integration, which allowed companies to buy their suppliers, was introduced by the Federal Government to drive up the sector. This has made the industry reach 28 million metric tons mark.

Key players in the cement industry are Dangote Cement (DangCem), Lafarge WAPCO, the United Cement Company of Nigeria (UniCem), Ashaka Cement (AshakaCem) and the Cement Company of Northern Nigeria. Raw materials used in cement making include limestone, marl, calcite, shale and gypsum, among others, Real Sector Watch’s findings have revealed.

Limestone may be found in Abia, Akwa Ibom, Anambra, Bayelsa, Benue, Borno, Cross River, Enugu, Imo, Nasarawa, Ogun and Sokoto states, among others.

About 1 billion tons of gypsum deposits are spread over a number of states in the country, according to the Nigerian Investment Promotion Council (NIPC). Gypsum is currently found in Yobe, Adamawa, Bayelsa, Anambra, and many other states. However, it is still being imported by cement and chalk makers as it is not in the Nigeria Customs Service’s (NCS) Import Prohibition List, findings have shown.

“The raw materials required in the production of the cement making process; limestone and marl, are mined at the adjacent quarries, which are located along a limestone belt, known for its abundance and quality,’’ says UniCem, stressing its local content policy, in an e-mail to Real Sector Watch.

Ceramics is made from solid mineral raw materials such as feldspar, tin, kaolin, iron, silica and quartz, among others, all of which are available in many parts of the country. Players in the industry include West African Ceramics Limited located in Kogi State; Goodwill Ceramics FZE, Agbara; Wonderful Pottery, Lagos, among others.

Findings have also shown that players in the food, beverage and tobacco sector are increasingly sourcing local raw materials indirectly from farmers or through direct involvement in farming. Nestlé plc sources cereals such as maize and soybeans from local farmers and is also engaged in direct planting of the cereals in many parts of the country, according to sources.

Deepak Singhal, managing director of De United Foods (Dufil) Industries Limited, the firm that manufactures Indomie Noodles, said at a public event last year that his firm sourced 90 percent of raw materials locally through farmers. Exports of the firm by end of 2013 hit a record $500 million.

Though there are 10 surviving textile makers in the country, evidence abounds that they source cotton, which is a major production input, from the Northern part of the country. Footwear industries are also known to be tapping into animal skin common in many parts of the country, findings have shown.