Sapele Integrated’s exports hit 2900tpa

The exports of Sapele Integrated Industries by the end of 2013 hit 2900 metric tons per annum(tpa), even as total revenue that accrued within the period was N2 billion. The total number of staff working in the factories and those in plantations exceeded 700, Real Sector Watch has exclusively gathered.

This represents an increase of 179tpa from 2721tpa recorded in 2012, and N200 million from N1.8 billion reported within the same period. 2011’s export volumes were 2479tpa, amounting to N1.3 billion, while 2010’s were 2000tpa, accruing N500 million to the company.

“Part of the reason is price and part of the reason is volume. There has been significant price increase within the period, but all these are gradually changing,’’ says Ede Dafinone, CEO, Sapele Integrated Industries, in an exclusive interview with Real Sector Watch.

Sapele Integrated Industries was formed in 1998 to produce crumb rubber (processed rubber), which is a major input in tyre manufacturing. Located in Sapele, Delta State of Nigeria, the firm gets raw rubber lumps from plantations of small-holder farmers and processes them into crumb rubber for exports.

Findings showed the firm exported (and still exports) nearly 100 percent of its product to Bridgestone Tyre Company, one of the largest tyre companies in the world, whose offices are located in Spain, Italy, Poland, Japan, and other parts of the world.

“Bridgestone sends representatives here once every two or three years. They inspect the factories and ensure we are keeping up with the technical requirements,’’ Dafinone says.

Further findings showed in 2013, the firm spent about N80 million on energy. Currently, the firm’s meter, which it said had been paid for, is yet to be provided and the company is in negotiation with new power supplier in the area – Edo Distribution Company – to get it a proper meter.

Nigeria’s rubber production has been on the downward trend in recent times, falling from 113,479tpa before the advent of crude oil to 46,000tpa in 2004, according to Emmanuel Bassey, president, National Rubber Association of Nigeria (NRAN).

According to stakeholders, the industry witnessed exit of major players between 2000 and 2001, when international rubber prices crashed to as low as $50. From about 40 players within the period, number fell further to 12 by 2004, and to about eight players currently.

Reasons for consistent lower production in the industry ranged from low yield in plantations, dwindling international market for cars, fluctuating international rubber prices to volatility of oil prices and energy challenges. Stakeholders say the industry has sunk into a new low, as production in April fell by 50 percent while the international price nosedived to $170 per ton from $350.

“With the dwindling supply of rubber from rubber trees putting further pressure on the industry, raw materials which are the lumps from rubber trees are in short supply because most of the trees were planted in the 1960s and they have a life of 30 years,’’ Dafinone says.

“So, by 1990s all these trees were exhausted. But new planting is going on by former Michelin Group, the Okomu Group, and there are large-scale palm oil plantations owned by the Dunlop Group and sold to an investor. We have about 2000 hectares under plantation, with Okomu’s doing between 20,000 and 25,000,’’ he asserts.

On whether Sapele Integrated Industries would eventually go into manufacturing of finished products (tyres), Dafinone says while the firm is looking at that, it is aware it needed to go backwards before forwards.

“If you go into finished products and you do not have raw materials from plantations, you will collapse. So, the first step is to make sure you have more planted rubber. When you have that, you can go forwards in your integration into what is called the carbon black, which is the next stage before you get to tyres,’’ Dafinone explains, adding that carbon black is a delicate process because its raw materials often come from refineries, while serious efforts are required to ensure that workers do not inhale carbon.

On Michelin and Dunlop, tyre manufacturers that recently closed shop, Dafinone says low international prices, imports of cheaper ‘Tokunbo’ or second-hand tyres as well as smuggling pushed them out of the Nigerian market, stressing that tyre importers themselves are now going through a difficult phase.