The United Cement Company of Nigeria Limited (UniCem), Nigeria’s third largest cement manufacturer, is located in Calabar, the Cross River State capital. The company recently announced plans to double its production capacity from 2.5 metric tons to five million metric tons yearly. NICHOLAS KALU met the Managing Director of the company, Mr. Olivier Lenoir, who spoke on this and other issues affecting the cement industry.
You recently announced plans to double your production capacity. Why did you decide to do this?
Cement demand in the country has continued to grow. Nationally and regionally (south-south and south-east regions) the demand is currently growing at about 12% per annum. To meet the growing demand, we are investing N84 billion naira in an additional 2.5m metric tons (state-of the-art) cement line project to double our existing capacity to 5 million metric tons per annum by 2016 as well as consolidate our position as Nigeria’s third largest manufacturer in the industry. This project has a lot of economic and social benefits; creation of direct and indirect employment, growth of local economy and people development. UniCem has a strong commitment to develop local capacity. Through various initiatives such as the ‘UniCem Community Development Initiative’ (UCDI) and ‘Graduate Trainee Scheme’, we have been enlisting and training young people from the community as mechanical technicians and the training of young Graduate Engineers to fill the local manpower gap. Sinoma Group of China is constructing the 2.5m metric tons new cement line. The company is reputed for cement plant construction across the globe with track record of project delivery from previous projects handled around the world. The project includes the building of a new 45 megawatts Captive Power Plant (CPP) by Wärtsilä Nigeria Limited. Work on the project has already started. UniCem is getting technical expertise and support for this project from its shareholders who are global cement majors. The N5 billion 20km Cement Evacuation Road which we are building will be a support infrastructure to cater for the expected traffic increase and reduce the movement of articulated vehicles with the Calabar metropolis when the project is completed.
Cement price per bag is between N1900 and N2000. What is responsible for the hike in price?
Prices have generally been stable for more than a year and among the lowest in the country in Southsouth and Southeast. However, some External factors: Road levies, high cost of energy, poor road infrastructure with attendant impact on cost of transportation and general inflation in the country has resulted in the slide increase currently experienced. Demand and Supply balance have also a direct impact and distributors play a key role in retail prices.
What is your view of the cement market in terms of growth and development?
There is good demand, steady growth of 15 per cent in 2013, primarily driven by the need of housing and infrastructure. Total cement consumption has reached about 21m tons as at 2013 as against 9m metric tons in 2005. The backward integration policy of the government along with the strong support of Ministry of Trade, Industry and Investment has been a catalyst for the growth of the cement sector. It should be emulated in other manufacturing sectors as a role model. However, Nigeria’s per capita consumption per annum at 110 kg, is lower than many other developing countries. It has potential to grow higher to transform Nigeria into a developed nation. UniCem, as Nigeria’s third largest cement manufacturer and the leader in South-South and South East regions, is well placed to meet the growing regional demand, with its current capacity of 2.5 million tons and doubling to 5.0 million tons by 2016. UniCem is proud of its role in development of manufacturing in the region and recognition as Quality cement provider. The cement industry in Nigeria has a positive future.
Dangote has announced the production of 52.5 cement grade; are you also thinking in that direction?
UniCem has a state-of-the art, modern manufacturing plant with capability to produce quality cement of all types. All our products meet the SON requirements and are fully MANCAP certified by them. We produce cements of 32.5 and 42.5 strength grade to meet the customer needs for their various applications ranging from housing, commercial buildings to infrastructure projects like bridges and roads. UniCem is fully supporting free competition and product differentiation for the customer to choose based on his requirement. If there is a requirement to supply 52.5 grade cement in our region, we will do so.
What is your view on the recent media reports on collapsed buildings and concerns of substandard cement in the market?
First of all, conformity of all cement products to the Nigerian Cement Standard is mandatory by law (similar to NAFDAC certification for medicines) and fully enforced by the ‘Standards Organsation of Nigeria’. There is no substandard cement manufactured in Nigeria. All Cement Manufacturers (including UniCem) fully comply and are certified by SON. At UniCem, we take pride in our Internal Quality standards, which are very stringent. Since introduction of UniCem in the market, there has been no quality complaints linked to it. In fact, in his recent visit to UniCem, the DG of SON commended it on its quality products and standards. On the unfortunate occurrences of building collapses, the causes have been well stated and documented by leading experts: Poor or no design – most buildings in the informal sector are done by unqualified persons, who cut costs and do not involve qualified professionals, e.g. absence of soil testing and designing, leads to foundation failures in coastal regions.
Poor construction practices– not following the correct construction methods and lack of proper supervision, e.g. concrete is properly mixed, inadequate formwork and scaffolding leads to building collapse during construction itself. A sad case is of the building collapse in Nsukka recently this month, where few persons lost their lives. A three-storey building collapsed during construction when the roof was being put up. As we are expecting the final investigation report from the experts (COREN/other), all pointers are towards the usual causes of collapses – lack of design and supervision & non-involvement of qualified professionals.
As UniCem, we go beyond manufacturing and supplying high quality products. We are committed to play our part in ensuring sustainable construction through a two- pronged approach. Training and skills development-partnering with the SON, we run certificate programs for block makers and building artisans, imparting practical demonstration and training to them. This year we will cover 5,000 artisans within our selling region of south-south and south-east Nigeria. We also distribute free educational literature to them. Improvement of regulatory framework and practice in the construction sector.-we engage with government institutions (Ministry of Works/Housing, SON) and professional bodies. (e.g COREN, NSE, NIA and NISE) regularly through seminars and meetings to improve the building specifications and their enforcement.
What are the challenges faced by UniCem as cement industry operator?
Cement manufacturing is highly energy dependent- consistent and adequate supply of gas is a must. We experience frequent interruptions, leading to loss of production and increased cost. Poor infrastructure- The absence of rail and poor condition of Roads in our operating region is a big handicap – this result in slow and costly movement of incoming raw materials and dispatch of finished goods (cement) to the customers.
Taxes in Nigeria are not harmonised. This exposes operators to multiple taxes over one product by government at different levels.
Nigeria cement sector is relatively young, and lacks in skills and experience workforce. UniCem has a strong plan in place for training and development of its employees and also people from nearby communities to meet the challenge.
As a key priority, we are also focusing on safety, putting in place best practices and standards at the plant. On road safety we are working with all stakeholders, especially the Federal Road Safety, our dedicated transporters and other in the promotion of road safety.
Last September, the Cross River government introduced Road Maintenance levy which was highly decried b the industry operators in the state. Has the Government rescinded on that policy?
Government has not changed its tax policy in this regard. We are confident; in the future this will change due to the impact of the policy on investment generally.
What will be your advice to the government to support growth of the cement industry in Nigeria?
They should take steps to address energy supply in the in the country. Nigeria will grow faster if energy concerns are addressed. Address infrastructure issues on priority-Roads, rail and promote water transportation so that transportation of bulk goods like cement can be made easy and harmonisation of taxes to reduce the current experience of multiple taxes in the country.
