How infrastructure gap fuels expansion in cement industry

How infrastructure gap fuels expansion in cement industry

Nigeria has a population of 198 million growing at 2.6 percent. But the infrastructure stock does not grow to match this rising population. According to the National Infrastructure Master Plan, Nigeria needs to spend $3 trillion and five percent of GDP annually to bridge the infrastructure gap. From roads to bridges, down to power and railways, the country’s infrastructure has recorded significant depletion in the last 20 years, owing to poor maintenance culture, lack of sufficient funds and corruption.

Nevertheless, the gap presents a huge opportunity for the cement industry players, who are aggressively expanding capacity and operations to tap into the hiatus.

Prominent among the players is the Dangote Group, whose local capacity is estimated at 29.4 million metric tonnes per annum (mtpa).

In 2016, Dangote Cement commenced the construction of a $1 billion investment in cement plants in Okpella, Edo State, with potential for 6,000 new jobs.

The 6 million mtpa capacity cement plant in Okpella came on the heels of a similar arrangement for another 6 million mtpa cement plant in Itori, in Ogun State, where the company is currently running a 12million mtpa cement plants at Ibese, in Yewa division of the state.

By the time the investment is completed, Dangote’s production capacity will hit 41 million mtpa in Nigeria alone.

Dangote Cement already has a strong presence in many African countries.

While reviewing the company’s operations in the second quarter of 2018 on July 22, Joe Makoju, group chief executive officer of Dangote Cement, said Dangote has invested $3b in building manufacturing plants and import/grinding terminals across Africa.

Makoju stated that the investments were located in Cameroon (1.5 million mtpa clinker grinding), Congo (1.5 million mtpa), Ghana (1.5 million mtpa import), Ethiopia (2.5 million mtpa), Senegal (1.5 million mtpa), Sierra Leone (0.7 million mtpa import), South Africa (2.8 million mtpa), Tanzania (3.0 million mtpa), and Zambia (1.5 million mtpa).

“In all, the company, which employed 27, 952 workers in Nigeria as at 2017, had its revenue increased by 16.9 percent and earning per share increased by 3 percent to N6.60 kobo per share for the second quarter, which ended June 30, 2018.”

Dangote Cement Plc recorded a rise in its profit before tax to N155.6bn for the half-year of 2017, compared with N124.9bn posted in the corresponding period of 2016.Gross revenue was N412.7bn as against N292.2bn reported in June 2016.But Dangote Cement is not the only firm expanding operations.Last week, BUA Group commissioned 1.5 […]

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