BEIJING: Africa’s richest man has signed a contract with a Chinese company to further increase Nigeria’s cement production.
Dangote Cement Plc of Nigeria signed construction contracts worth $228 million with China’s Sinoma International Group to build cement plants in Senegal and Zambia.
According to the agreements, the two companies will build nine cement plants across Africa, including Ethiopia, Zambia, Senegal, Kenya, Niger, Cameroon and Mali, with annual production capacity of between 1.5 million metric tons and 3 million tons. The expected accomplishment time is about 30 months.
Shen Jun, chairman of Sinoma Nanjing, said the company’s cooperation with Dangote could be traced back to 2008 and more than 10 cement plants have been established since then. He said the company plans to bring the latest and the most suitable technologies to Africa and work on transferring skills to local workers.
Huang Ping, Sinoma’s Africa regional director, said the contracts are the continuation of a previous collaboration with the group and Sinoma’s low cost with good quality, as well as efficiency have attracted the local partners.
“With this the total deal volume between Sinoma and Dangote has exceeded $3 billion,” he said.
Aliko Dangote, president and CEO of Dangote, said: “We have concluded this deal with Sinoma in order to drive our pan-Africa expansion strategy at a time when the global economy seems to be emerging from recession.”
Aliko Dangote is the richest man in Africa, according to Forbes Magazine, with interests in cement, sugar and flour businesses.
“We are in a strong financial position and we are putting our money where our mouth is,” he said.
Dangote has projects and operations in Nigeria, Benin, Ghana, Senegal, Zambia and South Africa, with a capacity of 13 million tons. The group’s total commitment to new production capacity in Africa is $1.63 billion
Sinoma’s collaboration with an African partner is not a novel experience as it has followed a similar approach in most of its overseas joint ventures, according to Ren Zhigang, the branch manager of CBMI Construction Co Ltd in Abuja, a subsidiary of Sinoma International Engineering Co Ltd and an affiliate of Tianjin Cement Industry Design & Research Institute Co Ltd, considered one of China’s top three cement research institutes.
Ren said his company has a long history of collaboration with BUA Group, a Nigerian business giant. In addition, it has also teamed up with French industrial giant Lafarge SA on many projects in various regions. Lafarge has also become one of the major global strategic partners for the Chinese company.
Ren said the collaborations include the cement plant set up in 2010 in Nigeria’s Ogun state in 2010 with daily production capacity of 5,000 tons. “We were the engineering, procurement and construction contractors and built that factory according to Lafarge’s requirements.”
According to the African Development Bank, Nigeria is a regional leader in terms of infrastructure power and the network covers the national territory quite extensively.
However, with the boom in infrastructure projects across the country, heavy equipment and cement supplies have been under strain. CBMI regards this as an opportunity to establish its business in the region and help ease the pressure.
Annual cement demand in Nigeria was estimated to be about 10 million tons in 2004, according to data published by the economic consular office of China in Nigeria. However, the actual production capacity was just 3 million tons. By the end of last year, the country’s annual production exceeded 28 million tons and the capacity is still growing.
However, for Sinoma, localization and real skill transfer have been the top priority in Africa. Ren said if local employees can fully manage the company affairs after professional training, it would lead to huge cost savings and boost efficiency.
Sinoma has already reaped the benefits of such a strategy in Saudi Arabia, he said.
He said African markets now need more jobs, especially in a populous country like Nigeria. So CBMI has a good chance to bring more jobs and professionalism to local employees by collaborating with local and international partners.
According to Ren, the company is focusing on factory construction in installments and providing one-year after-sales service on all its completed projects, including spare parts for machinery and operational management guidance. The company is also trying to be involved in permanent operational management as they believe the manufacturer of the equipment is the best judge for maximizing productivity.
“But we are not stepping into mine operations or actual cement sales,” he said.
