BUA’s cement expansion shows stable policies yield positive results
BUA Group is expanding its cement segment rapidly, thanks to a long period of policy stability in the industry.
It was a simple policy of the Olusegun Obasanjo administration that led to cement renaissance in Nigeria.
Before 2005/06, cement makers today, including Dangote Cement, were all traders. The only local manufacturer then was Lafarge, a French cement giant.
Obasanjo summoned a meeting, which ended up encouraging backward integration in the industry and restricting imports.
The Goodluck Jonathan’s administration did not tamper with this policy and rather provided the needed support necessary for cement growth.
In 2014, Olusegun Aganga, the then minister of industry, trade and investment, announced that the industry had attracted $8 billion investments.
The current government of Muhammadu Buhari has also continued with the policy direction, leading to more expansion and activities in the sector. This is an indication that the manufacturing sector needs a stable policy environment to grow, expand and create the desired jobs. Analysts believe that the high rate of unemployment in Nigeria is partly attributed to policy instability in many industrial sub-sectors. The manufacturing sector has 76 sub-sectors, out of which cement is one.
With a stable policy in place, BUA has not only shown that it can thrive in a relatively stable environment but will be willing to expand its frontiers.
Frank Udemba Jacobs, immediate past president of the Manufacturers Association of Nigeria (MAN), said many times that the sector needs policy stability to prosper.
Recently, vice president, Yemi Osinbajo, commissioned BUA’s 1.5 million metric tonnes Kalambaina cement plant in Sokoto State, which gulped $350 million to build.
The ultramodern cement plant has a 32 megawatts multi-fuel captive power plant and a coal mill, blessed with huge limestone deposits.
One significant thing about the plant is that it increases cement production in Nigeria and BUA’s capacity in particular.
Another critical aspect of this plant is proximity to Niger Republic, which enhances its export potential. The cement plant started three years ago when BUA engaged Sinoma at the height of foreign exchange crisis and began production in March this year.
Speaking at the commissioning of the plant, Osinbajo said the cement factory is a demonstration that Nigeria has vast potential, which investors should explore. According to him, the National Infrastructure Master Plan recommends that Nigeria needs to spend $3 trillion to bridge the infrastructure gap as well as five percent of GDP annually.
Abdul Samad Rabiu, chairman and CEO of BUA Group, said at the commissioning that the new plant would be generating more power than is currently generated by the entire Sokoto State.
According to Rabiu, the plant would run on coal, heavy oils or a mixture of both, and the use of coal is expected to save over 70 percent of energy costs compared with 15 million litres of fuel oil per month or 40 tonnes or even 20 trucks of fuel that could have been used per day.
He said at least 2,000 direct and 10,000 indirect jobs are required to get the plant running, adding that the $1 billion Obu Cement Complex in Okpella, Edo State, commissioned in August 2017, will be completed by end of this year.
BUA is not only playing in the cement industry, but also in rice, edible oils, sugar, and real estate, among others. It operates rice milling factories with a capacity of 200,000 tonnes per annum as well as 1,000 tonnes of edible oils per day. It is planning to begin production of 2.5 million metric tonnes of steel annually.
BUA Cement recently announced the completion of its newest Obu plant in Edo State, which has a capacity to churn out 3 million mtpa of cement annually.
This will bring the total capacity of BUA Obu cement operations to 6 million tonnes and move the entire group’s installed capacity to 8 million mtpa.
Speaking at a business forum recently, Rabiu said that the completion of BUA’s Obu Cement second line puts BUA Cement in prime position to become Nigeria’s second largest cement producer by volume in the shortest possible time. “Through a strategic combination of BUA Cement’s newer, more energy efficient plants and the proximity of our factory locations to key regional markets across Nigeria, BUA Cement has in no time become the industry leader in capacity utilisation as well as maintaining a strong presence and brand leadership position in regional markets where it operates, “Rabiu said.
“The nature of the formulation of BUA Cement’s products and the product strength has seen it dubbed, ‘King of Strength’ by block makers and others in the construction industry in Nigeria,” he added. In addition, BUA Cement has also entered into a partnership with the Standards Organisation of Nigeria (SON) and Industrial Training Fund (ITF) to train thousands of block makers across Nigeria on the proper mix and techniques for block-making to reduce the rates of building collapse in Nigeria. The completion of the new 3million mtpa BUA Obu II Cement Plant will see BUA’s installed capacity rise to 8million metric tons by the time it fully becomes operational in December 2018. The plant has the capacity to run on multifuels – gas and heavy oils— and will give BUA Cement a stronger foothold in the South-South and South East markets in Nigeria where it has become the preferred brand of cement. By virtue of its location in Okpella, Edo State, BUA Obu Cement plants are five hours away from all the major markets across Nigeria.”
BUA Group announced last year that it built a 50km pipeline to carry gas to fire its gas turbines at its Obu Cement Plant.