Displaying items by tag: Lafarge Africa

Dangote Cement felt compelled to issue a statement clarifying its prices at the end of August 2023. In the release it stated what its ex-factory price was in Nigeria and added that transport costs and the location of a delivery could add additional expense. It made the declaration in response to alleged “misinformation” on social media channels that the company had been selling its cement more cheaply in the neighbouring country of Benin. A subsequent investigation by the This Day newspaper reported that Dangote Cement does not officially export cement to Benin and that the average price in the country was actually slightly higher than the end prices Dangote Cement provided. Competitor BUA Cement wasted no time though in saying at its annual general meeting that it would ‘crash the price of cement.’

All of this may sound familiar because a similar argument broke out in early 2021. At that time prices were rising following the outbreak of Covid-19, although other factors were at play. Then as now, Dangote Cement, the largest domestic producer, defended itself by publishing its prices and BUA Cement made another showy claim saying that it had no plans to raise the ex-factory price of its cement at the present time or in the future, “…barring any material, unforeseen circumstances.” The government also became involved with the Senate of Nigeria discussing the matter in relation to potential legislation at the time. Part of the problem here has been that Dangote Cement is the biggest producer and it has gradually started exporting cement from Nigeria in recent years and, regardless of any effects to the domestic market, it leaves it exposed to the kind of unsubstantiated scuttlebutt it has faced recently. Back in 2021 it briefly stopped exporting cement for a while before resuming it again in May 2021.

Graph 1: Half-year sales revenue from selected large cement producers in Nigeria. Source: Company reports.

Graph 1 shows how some of the large cement producers in Nigeria did in the first half of 2023. Dangote Cement is the market leader by a considerable margin and the figures here do not even include its sales elsewhere in Sub-Saharan Africa. Despite its market dominance its sales revenue has fallen so far in 2023 and the company blamed election uncertainty, a “cash crunch”, negative currency exchange issues and the weather. That said though it did manage to increase its earnings through initiatives such as using alternative fuels, making efficiencies at its plants and utilised compressed natural gas in its truck fleet.

BUA Cement and Lafarge Africa provided less descriptive context in their release. Both BUA Cement’s revenue and profit after tax rose year-on-year but Lafarge Africa’s profit after tax fell. This may have been due to a rise in fixed production costs such as staffing, by-products costs and electricity, although depreciation was also an issue.

For all of BUA Cement’s talk of “crashing the cement price” it is preparing to commission two new 3Mt/yr production lines at its Obu and Sokoto plants respectively in the first quarter of 2024. Given everything else that is going on in the Nigerian economy, such as inflation, and the large size of the country it seems unlikely to lower the price although it might slow down the rate by which the price continues to rise. In its 2022 annual report BUA Cement’s managing director Yusuf Haliru Binji said that the new production lines would enable it to potentially increase its exports. This is the logical next step for a local sector outgrowing its domestic bounds and this is exactly what Dangote Cement has done. Yet, as the recent price debacle has shown, the price of cement matters to Nigerians. If the price keeps going up all of the local producers may end up facing negative attention whether warranted or not.

Nigeria: Lafarge Africa has installed a new bag filter at its 3.9Mt/yr Ewekoro cement plant in Ogun State. The filter cost US$8.51m. Lafarge Africa says that the equipment has successfully reduced the plant’s dust emissions to below 50mg/Nm³. The company said that it has made ‘significant adjustments’ to its production activities, besides introducing air quality measurement systems across a 10km radius of the plant.

Lafarge Africa’s head of health, safety and environment Rachael Ezembakwe said “Care for the environment and for our host communities is built into all aspects of our operations within the country. Our social impact is focused on the areas of the most need: education, empowerment, health and safety, and shelter/infrastructure.”

Nigeria: Lafarge Africa's sales were US$257m during the first half of 2023, up by 5.9% year-on-year from US$242m during the first half of 2022. Costs rose and the company's profit after tax fell by 5.2%.

Lafarge Africa said "Our strategic and cost management initiatives have contributed to improved results, despite the challenges. We remain steadfast in our commitment to driving innovation and accelerating green growth in line with our sustainability ambitions and targets." The company added "The Nigerian infrastructure and construction sector is expected to continue to grow despite inflationary pressure on purchasing power. As a result, we maintain our positive outlook, with market recovery expected for the second half of the year. We will continue to maximise volume opportunities across our markets and actively manage our costs. The company remains committed to its sustainability ambitions and strategy of Accelerating Green Growth.”

Nigeria: Lafarge Africa has applied to the Standards Organisation of Nigeria (SON) to use the product name Roadcem for its CEM-II Portland limestone cement (PLC) when sold in bulk. The Nigeria Tribune newspaper has reported that Lafarge Africa supplies PLC in bulk for use as a soil stabiliser in roadbuilding. It sells supplies the product bagged to retailers as Classic PLC.

SON certified Lafarge Africa's PLC under its Mandatory Conformity Assessment Programme.

Nigeria: Lafarge Africa has appointed Chinedu Richard as its acting Chief Financial Officer.

Richard has worked for Lafarge Africa for over 10 years in a variety of financial roles. Most recently he held the position of Head of Finance Planning & Analysis. Prior to working for Lafarge Africa he was a Financial Analyst for Dangote Cement. He has also worked for Oando.

Richard is a graduate of pharmacy from the University of Lagos and holds a masters degree in business administration (MBA) from Lagos Business School. He is also a member of the Chartered Institute of Management Accountants (CIMA).

Nigeria: Lafarge Africa's Roadcem product has been approved by the Federal Ministry of Works and Housing. The product is a cement additive that is used for soil stabilisation in road construction projects. It was developed to improve the characteristics of soils before they are used for the base, sub-base or sub-grade construction in roads.

Osita Ezedozie, the Director of Highways (Materials, Geotechnics & Quality Control), of the Federal Ministry of Works and Housing, said “Following the improved performance observed from the tests, pilot study and evaluation of Roadcem over ordinary Portland cement in soil stabilisation, approval has been granted for the introduction and use of Roadcem for stabilisation of soil in highway pavement sub-base course construction. At 5% Roadcem content, the stabilised sharp sand complies with all the specification requirements for a sub-base course and also achieves higher stability at a lower cost than stabilisation with ordinary Portland cement.”

Nigeria: Lafarge Africa has launched the Eco Label brand, as part of its wider UniCem brand, to promote its sustainable products. Products within the new branding have a lower 30% carbon footprint compared to the local industry standard. The formal unveiling of the new branding took place at the Mfamosing cement plant in Calabar.

Khaled El Dokani, the chief executive officer of Lafarge Africa, said “Lafarge Africa is proud to be the first local cement manufacturer of eco-friendly cement to the Nigerian market. With the rollout of this Eco brand, we are accelerating the transition to more sustainable building materials for greener construction.”

Mining and materials company Afrimat said it was buying Lafarge South Africa this week. The assets it is acquiring include aggregate quarries, ready mix concrete (RMX) batching plants, one integrated cement plant, two cement grinding plants, cement terminals and fly-ash sources. The means of purchase is somewhat unusual, as Afrimat is paying around US$6m but it also appears to be taking responsibility for around US$50m of outstanding debt that Lafarge South Africa owes its parent company, Holcim. In a statement Afrimat’s chief executive officer (CEO) Andries van Heerden talked up the benefits for his company in terms of the boost to its aggregates and concrete businesses.

This is quite the change from 2012 when India-based Aditya Birla Group was reportedly looking into buying Lafarge South Africa. At this time the value for the business for a similar mix of assets, including 55 RMX plants and 20 quarries, was said to be to US$900m. Prior to this, Lafarge South Africa spent around US$170m in the late 2000s on increasing the production capacity at its integrated Lichtenburg plant and building its Randfontein grinding plant. Then in 2014, when the merger between Lafarge and Holcim was announced, Lafarge consolidated its Nigeria-based and South Africa-based operations as Lafarge Africa. It later decided to move the South African business to another Holcim subsidiary, Caricement, in 2019 to keep the business in Nigeria more profitable by reducing its debts. This transaction was valued at US$317m. At the time chair Mobolaji Balogun said that Lafarge South Africa’s operations had faced a challenging market in South Africa, with shrinking demand in an aggressively competitive sector. Afrimat is now buying Lafarge South Africa and its subsidiaries from Caricement.

Holcim isn’t alone in making an effort to sell up in South Africa. In April 2023 the Valor Econômico newspaper reported that Brazil-based InterCement was receiving offers for its remaining African-based assets in Mozambique and South Africa with a potential deal valued at around US$300m. InterCement runs Natal Portland Cement in South Africa, which operates one integrated plant and two grinding units. This follows the sale of its Egypt-based assets in January 2023 to an unnamed buyer.

PPC, the country’s largest cement producer, is staying put. However, it issued a mixed trading update this week ahead of the formal release of its annual results to 31 March 2023. Trading conditions in the interior of South Africa and Botswana were described as being ‘difficult,’ with cement sales volumes down by nearly 6% year-on-year and earnings before interest, taxation, depreciation and amortisation (EBITDA) down by 26%. Yet the group says it was able to grow its revenue. PPC’s CEO Roland van Wijnen added, “We therefore remain hopeful that the South African government will roll out its infrastructure development plans and protect the local cement market through the introduction of import tariffs to create a level playing field for domestic producers.” Dangote Cement subsidiary Sephaku Cement was more circumspect in its recent trading update but it too warned that, “deteriorating economic conditions and persistent challenges in the cement industry impacted Sephaku Cement’s financial performance to break-even levels.”

Much of the above makes for gloomy reading. As the local trade association Cement and Concrete South Africa (CCSA) has laid out to local media, the market faces the problem of having 20Mt/yr of production capacity, 12Mt/yr of demand and over 1Mt/yr of imports compounding the problem. Lobbying by local producers against imports has been a feature of the market since the early 2010s and this work continues through the efforts of the CCSA and others. However, the plea by PPC for government infrastructure spending suggests that the market faces more systemic problems. As a consequence some cement producers are trying to leave the market, while others are attempting to tough it out.

Nigeria: Lafarge Africa has appointed Lolu Alade-Akinyemi as its group managing director and chief executive officer with effect from 1 July 2023. He succeeds Khaled El-Dokani, who has been in post since 2020. Following his resignation El-Dokani will continue to work as a non-executive director of the company.

Alade-Akinyemi previously worked as the chief financial officer and the supply chain director of Lafarge Africa. Before joining the cement producer in 2014, he was the finance director for PZ Cussons Nigeria. Prior to this he worked for Coca-Cola Company for 16 years with positions in finance, business development, supply chain and sales in the UK, Belgium, Ghana and Nigeria. Alade-Akinyemi started his career as a trainee at ExxonMobil. He is a certified accountant and holds a bachelor’s degree in economics from the University of Essex and a master’s degree in business administration (MBA) from the Edinburgh Business School in the UK.

Nigeria: Lafarge Africa has opened a bag manufacturing unit at its Ewekoro cement plant in Ogun State. It has a bag production capacity of 105m/yr. The company says it is the first of its kind in the country. It is intended to increase the availability of bags through large-scale production locally. The project is a joint-venture run with MDV Industries.

Khaled El Dokani, the country chief executive officer for Lafarge Africa, said “We are using the best technology that produces the most efficient and durable bag in Nigeria. It is a very great day for us at Lafarge Africa.”