Tag: cement

The spate of building collapse in recent times has been blamed on several factors, including the allegation of substandard cement. Dr. Victor Oyenuga, a building engineer and past President, Nigeria Institution of Structural Engineers, in this interview with Bukola Afolabi sheds more light on the issue.

The quality of cement is believed to be responsible for building collapse. What is your reaction to this sir?

Generally, most cement that we have around are good. It is actually the mixture that gives it the quality; if the cement is bad in form of quality, then it is the manufacturer’s fault, but once cement is released and the transfer is good, then you can’t fault the manufacturer. It is not the use that leads to the collapse of structure in the country; it is the proportion of the cement that is an issue.

If cement quality is not basically the problem, then what are those factors responsible such?

One of the factors is the quality of a building’s foundation. When we are talking about foundation we are actually referring to the soil texture because once the soil texture is not good, the engineer cannot physically determine the strength of the soil that is required and once they don’t know the strength of the soil then the foundation that we are providing may actually be a faulty one. So soil condition is a major parameter. We also have faulty design, that is, the engineer did not design the way it ought to; if design is not given to a structural engineer, then there can be a faulty design as a result of that. But the major problem is the issue of construction either in terms of material or in terms of production of concrete itself. For example, instead of the common one-four we have which structurally we don’t normally refer to it we refer to the strength of the concrete, if the proportion does not rise and the engineer has designed to a particular strength of concrete and that strength of concrete is not achieved, then you don’t except the same strength as the man has already designed to come up as far as the production of that concrete is concerned. If for example the engineer decide to use 25 concrete and the mixing after test shows something much more less than that, because he has already designed for that, his re-enforcement is also in proportion to the 25. So, he finds out that the proportion of the re-enforcement required will probably be more if 20 were used. As a result, when the basin is loaded you end up having a collapse because the strength of the concrete is not as adequate. Where the cement comes in is the mixture. If the mixture that is supposed to be used is not properly achieved, then you have problems of collapse of the structure.

The buildings that are collapsing in Nigeria, Lagos precisely, are not new buildings. Is it there structure or what?

Most of them are new buildings but those that are not new, everything have a life span and the average is each building structure is designed for fifty years. So, if you have a building that is much more than that, definitely it may collapse. So, every building has a life span. If know building collapse, that may be due to it. In most cases there is a modification of that building. Most of the time there are modifications. For example like the building that collapse at Oshodi. We are trying to modify a whole building to another use. In most cases there is also modification of the use of such building. So, if a building is designed as a residential and because the area is now becoming popular like ikeja, Surulere etc, you decide that no, my own is still okay, just paint it according to a commercial thing, there can be a collapse because that building was not designed to carry such loads. But we found out that by and large, about 60-70% collapse under construction. And If a building should collapse when it is been constructed, it means that there is a major problem because it means that when it is carrying its own weight, and also the load that is put on it, then there is a major problem.

So, you are trying to tell us that it is not true that the quality of cement is a factor in building collapse?

Cement is not used as a material only in construction. Cement is used as a binder and the strength of that binder is the function of the quantity of the cement that is use in the product. Because we don’t have any organization we can say is a fake cement manufacturer. The cement manufacturers we know are all major and most of them are international organisation. There is no how you mention Dangote and Lafarge any of the major who are part of. We don’t have any quark cement manufacturing company here and I believe all of them are manufacturing to standard internationally. So, it is the mixture, what the cement is put into, it is the use of that cement that is a problem. Am not saying that the cement is okay, there may be some product that comes out of the system because there is always s 95% task, the remaining 5% task is the bag. What am saying is that, is not used per say, it is used with other materials to get a particular product. And in most cases for building, it is the proportion of the cement, instead of using two cements they use one and when you use one, you cannot expect the same strength because this thing is the one that is binding. Instead of having a big quantity firm binding material you have a little of them. Definitely, you don’t expect anything reasonable from there.

What role that can cement manufacturers play to stop the building collapse?

There is always a standard for everything, not necessarily for cement only. I have told you that for iron rod there are minimum strength the iron rod suppose to be. That is why I said when they are shipping out, they should indicate the diameter. I also expect that every cement manufacturer should be able to give a certificate that this my consignment because we have so much crises of cement, this is class 2 cement, this is the strength and so on like that. So, once they are able to meet with the standard, whoever is in charge, whoever is going to use that product, will work towards that particular standard and it as a failure, you can easily trace, I mean we are talking of engineering, we are talking of science, but there is virtually nothing that you cannot, by the time you start taking the test from one material to another, you will know where exactly the failure is. So what am saying in effect is that, the main manufacturer just as I’ve said should give the certificate showing the strength of the cement that is produced. When that is done, we know where the problem is.

In that case don’t you think that professional bodies are expected to play the role of advocacy?

It is the role of the SON to ensure that what Mr. A manufacturing company sell, and take sample from their product. They go out and take sample from the market, they go to Alaba; they go to Surulere; they go to one village in Ogun State where Lafarge is producing its cement; where Dangote is producing cement, and take sample and test. On report, we tested your cement, they are not measuring up to standard is not the problem. Ours is to give an idea that the type of cement that we require is this. We don’t have the right to control anybody, we have to go through police to arrest. We are members of the regional association, it’s a society. You may decide to join, you may decide not to join, it is not compulsory you should join.

Dangote Cement Plc has rewarded distributors with bonuses of N800million for the year ended 2012.

The distributors, picked from the 36 states, and Abuja received between N2million to N60million at a ceremony in Lagos.

Speaking during an event with the theme: Cementing partnership, the company’s Chairman, Aliko Dangote said the organisation would continue to reward its distributors for growth.

He further said the event was organised to appreciate the distributors for their contributions to the company.

Business managers can tell you that revenue is the main reason a business lives. Revenue is one sure indicator that tells if a business is going up or down because it is the mirror from where all receivables could be seen. In a nut-shell, the strength of any business lies in its ability to generate good revenue. In other words, only very lively or healthy business can drive good revenue. Conversely, the revenue position of any business is enough to determine if the business is on the verge of going down or making waves. However, impressive revenue statement explains in clear terms, the fact that a business is on the right track.

The beauty of a strong revenue position of any company lies in the fact that it commands positive results in all the other indices such as profit, asset, dividend earnings, employment, and even perception from the various publics. It is therefore inordinate for companies whose processes are pointing towards the fulfillment of impressive revenue results to continue to propagate the converse, with the intention of achieving personal or selfish points to the detriment of the economy. It is good that the various financial regulatory bodies like the Central Bank, Securities and Exchange Commission and the Nigerian Stock Exchange have made the publication of financial reports of quoted companies compulsory, otherwise many companies with far-reaching ulterior motives, which larger target is to defraud the economy, would have been making spurious claims capable of sending wrong signals to the economy and its followers.

With the emergence of auditing firms that can boast of global practice standards, many manufacturers can no longer be allowed to influence their auditors so as to publish very poor results with the intention of deceiving the operators and stakeholders in the economy. The presence of the last two checks in our financial reporting system has made it possible for certain claims that are largely false to stand the test of the times.

A very careful study of the revenue position of some major cement companies in Nigeria makes one to continue to ask if the consumers and owners of smaller businesses are in any way protected in the economy. A situation where a company or an organization wakes up any time to paint pictures of a non existing economic doom, either for a sector or an institution, must be seriously looked into .

Early in the year, A leading cement firm projected that 2013 will be very bleak in the annals of its production activities as a major or dominant producers of the all-important product which his company enjoys over 70 per cent market share. This claim was instantly supported by an association of cement manufacturers, insisting that many cement plants would be closed down as over 80 per cent of its current workforce will be in danger. They tried to justify their claims by concocting an imaginary year 2013 quarter one financial report. Two of the major operators tried to use the issue of glut to arm-twist the federal government so that some guarantees and licenses already issued to some Nigerian dealers would be revoked . Ibeto cement was the primary target of the glut claim, in a bid by those raising the issue of glut to have their way and make even more profit even as the Nigerian publics were being roasted in overzealous prices which only a competitive market can effectively dismantle.

As companies begin to release the 2012 full financial statements and the first quarter of 2013, the fallacies of the association and those of the powerful market leaders started to emerge, showing very wide gaps between their claims and their earlier positions that were made to wind-hook government and the operators in the economy.

As against all the projections made by one of the firms against the back-drop of a very poor 2013 outing, the gap between its 2011 financial result and that of 2012 has continued to widen, depicting a very impressive business activities within the period against the orchestration of a likely industrial collapse. In 2012, its revenue grew by 24 per cent, recording a whopping N298.5 billion against the N241 billion in the previous year. Profit for the year recorded a 25 per cent rise to about N152 billion while earnings per share also made a 25 per cent rise. The company’s total assets moved up by 28 per cent. At the same time, it has proposed a dividend payout of as much as N3 per share against a paltry N1.25k last year. Even though it has a very high inventory stock stockpile which can be attributed to the expanding production scope, the company has enjoyed a continuous price movement over the last one year. With total profit running to as much as 25 per cent, it is obvious that if the company sells its produced 50 per cent less than the usual shelve price it will still make huge profit and declare dividends.

Some companies embarked on a media frenzy to sell their purported glut story in national newspapers. Business Editors were hurriedly bundled into flight to some locations to see purported cement-filled-silos with no buyers because of the “glut”. And to drive home their point, it was said to have closed down a cement firm, thereby putting jobs of 890 workers in jeopardy. Lafarge was also rumoured to be in the process of shutting down Ewekoro plant.

Alas, it was all a gimmick to deceive Nigerians, an attempt to use government machinery to drive out competition. Now all that is proving to be the sad tactics of businessmen hell-bent on muscling out any form of competition.

The 2012 financial performance notwithstanding, the first quarter result of the company for the 2013 period has already pointed towards a higher return, prompting a further conclusion that the hues and cries by those companies was designed to fool the government , as it would have offered them the opportunity of milking Nigerians dry with uncompromising price for cement. This trend is also the same in other cement companies.

Lafarge/Wapco Nigeria also made an average of 30 per cent increase in all indices against the belief that sales were very bad and would remain so in the coming months. Its 2013 First Quarter result also indicate that there is no end to profit maximization in the industry. Lafarge moved its revenue to N88 billion from N63 billion while profit also moved up to about 40 per cent to N33 billion against N19 billion in 2011. A 51 per cent profit record, from N10 billion in 2011 to 21 billion in 2012 also dims the claims that importers have the capacity of sending many manufacturers home. Both companies still enjoy very good earnings per share even as they cry.

There are strong indications that cement market is still enjoying a very wide gap and that is why the price has not come down all this while, because there seems to have been some integrated demand for the product both in the construction projects and housing needs. The cry for a non-existing glut was believed to have been a protest against an effort to make the product affordable. If the claim has been true, the trading figures will say it. It is spurious for any business to make profit in the face of poor sales and patronage. What the records have shown at large is that the industry is even large and could need more off-market dealers to increase their imports into the country even as the revenue will rise if the few manufacturers increase their capacity.

Nigerians must have seen the picture of glut and do not need to imagine its consequences with some jaundiced projections. We have seen textile mills collapse, beer bottling companies die, beverage companies close shop and even car companies folded; etc these are examples of products that were sandwiched by glut, overwhelming glut. They died because their revenues were swallowed in the frenzy of massive importation. Their revenue records and profit can tell the difference. These may have put an end to the glut story, and it is real; the records are here and there is no hiding place. Government must take note of these companies tactics in business and be wary of them. There was never any glut in the cement market. All those who helped to sell the glut theory merely aided and abetted a misrepresentation of facts. These companies audited result and first quarter 2013 results have effectively put to rest the purported glut claims.

The Federal Government will review the Backward Integration Policy in the cement sector with a view to consolidating on the tremendous success so far recorded, the Minister of Trade and Investment, Olusegun Aganga, has said.

Aganga, who spoke during a meeting with stakeholders in the cement industry in Abuja, yesterday said a new cement policy would be unveiled soon.

In attendance at the meeting were, Managing Director/CEO, Lafarge Cement WAPCO   Nigeria Plc, Joseph Hudson; Chairman, BUA Group, Alhaji Abdulsamad Rabiu; Group Managing Director, Flour Mills Plc, Chief Emmanuel Ukpabi ;  Chairman  Ibeto Group, Chief Cletus Ibeto and Group Representative, Dangote Industries Limited, Isa Tata Yusuf.

The Minister said: “Following the tremendous success recorded through the introduction and rigorous implementation of the Backward Integration Policy in the cement industry, we are planning to review the entire policy to consolidate on the gains so far recorded. We have achieved everything we set for ourselves 10 years ago when the Backward Integration Policy was introduced. We want to thank all stakeholders and investors in the sector for the success story recorded so far.

“However, we want to take the next step as part of our strategy on the way forward. We are forming a group of people that will look at the cement policy in detail and come up with the policy response that we need to have in place to take that next step that will make us a major exporter and user of cement.

“In 2002, the major priority of the country’s Backward Integration Policy was about cement production from limestone. I am delighted to say that after 10 years of implementation of BIP, the good news is that we started with 2 million tons capacity, but today, we have about 28 million tons capacity of cement,  investment of about $6billion; which provides direct and indirect employment for about 2 million people. And because of what we have done together, we have been able to save about N210billion in foreign exchange per year.

“For the first time ever, this ministry did not issue any import licence in 2012. This is a remarkable achievement  and a major economic success for our country. However, we want to carry out a deeper review of the cement sector to ensure that it is more competitive not just locally but internationally because we are at a point where we should be thinking about exporting some of our products.

“This means that we need to look at the overall structure including the current pricing, availability, affordability, in addition to developing an export strategy for the sector.”

Aganga said that the ministry would work with all the stakeholders in the sector to ensure its sustainable growth and development.

He said, “At the end of the day, this is one of the sectors that Nigeria should, and will be rightly known for as one of the greatest contributors to the Gross Domestic Product of the country. This is the key message that I want to pass across in terms of where we are today and what our plans are in terms of where we want to be going forward. I want to carry everyone along in terms of what we are looking at and incorporate your inputs into what we are planning to do so that at the end of the day, it will be a win-win situation for all the manufacturers, consumers and the Nigerian economy at large.

“Hopefully, before the end of this week, the committee will be set up. There is no industrial policy that has been as successful as the BIP in the cement industry. So, we have a duty to make sure that we  protect the sector and continue to see it grow.”