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Nigeria’s BUA Talks With China About $1.9B Cement, Steel Deal

Nigeria’s BUA Talks With China About $1.9B Cement, Steel Deal

 

Nigerian conglomerate BUA Group is in talks with China’s Sinoma to build a steel plant in Nigeria and two cement plants in East Africa for $1.9 billion, its chairman said, according to a Reuters report.

While some Nigerian firms have put expansion plans on hold, others are seeing opportunities as Africa’s biggest economy struggles with an oil price slump. Some firms have laid off staff.

BUA Group is a Nigerian conglomerate founded by Nigerian businessman AbdulSamad Isyaku Rabiu, 56. It has interests in manufacturing, infrastructure and agriculture and revenue in excess of $2.5 billion.

Forbes estimated Rabiu’s worth at $1.2 billion in 2013, and ranked him 23rd on the the list of Africa’s 50 Richest. He is also chairman of Nigerian Bank of Industry.

BUA’s main rival, Dangote Cement, has also been expanding with Sinoma, signing a $4.34 billion deal in September with the Chinese firm to almost double its capacity across Africa.

Sinoma, or China National Materials Group Corporation, is a Chinese government-owned enterprise and the world’s largest cement equipment and engineering service provider. It’s also China’s leading manufacturer of non-metal materials.

BUA is talking to Sinoma about a construction package that includes financing, building on an existing relationship, Rabiu said, according to Reuters. Both companies already agreed in September on a $600 million cement expansion in Nigeria.

Nigeria has been in talks with China’s state export and import bank for a loan to stimulate investments of Chinese firms in the country.

The two cement plants, which will have an annual capacity of 3 million tonnes each, will cost $700 million. The steel plant, with a capacity of 1.2 million tonnes, will cost $1.2 billion, and will include a 200 megawatt power plant, Reuters reported.

“We have identified two countries that we believe hold great opportunities for us in terms of building integrated plants,” Rabiu told Reuters, without naming the countries in East Africa.

“With the (fall) in the price of commodities … we can do them much cheaper than what it would have cost some years ago,” he said.

In August, Nigerian billionaire Aliko Dangote said he plans to invest in a cement plant, coal mining and power generation in Zimbabwe — a country that is desperate for foreign investment, EconomicTimes reported. Dangote said he would spend close to $400 million on the Zimbabwe cement plant.

Also in August, Dangote announced he had signed a $4.3-billion deal with a Chinese government-owned engineering company to build eight new cement plants in
Cameroon, Ethiopia, Kenya, Mali, Niger, Nigeria, Senegal and Zambia, according to Reuters.

Nigeria has its own iron supply, but the sugar industry depends on imports.

BUA is considering shutting its sugar refinery in Lagos in March because it could not get the hard currency needed to import raw materials, Rabiu said. The expansion will help BUA to be less reliant on import-dependent businesses such as sugar. The slump in oil prices has made it difficult to generate dollars.

“The biggest challenge is the sourcing of foreign exchange,” Rabiu said.