Why Cement Prices Might Stay Elevated: Analysis From Lafarge And BUA

Why Cement Prices Might Stay Elevated: Analysis From Lafarge And BUA....KINDLY READ THE FULL STORY HERE▶

The ongoing depreciation of the Naira and rising inflation have significantly increased cement production costs by 121%, raising concerns among Nigerians who hope for a drop in the price of this essential building material. Cement prices in Nigeria are already high, and the problem has been compounded by smuggling activities to neighboring countries where prices are even steeper……CONTINUE READING 

In countries like Chad and Cameroon, a 50kg bag of cement costs between $120 and $150. At an exchange rate of ₦1,600 per dollar, this translates to ₦240,000 to ₦270,200 per bag—far exceeding the local price of ₦8,000 in Nigeria. This price disparity has intensified smuggling, reducing the availability of affordable cement for Nigerian consumers.

Industry experts warn that without targeted intervention, lower cement prices in Nigeria might remain out of reach as production costs continue to rise. Kabiru Rabiu, Group Executive Director of BUA Cement, noted that illegal smuggling to Cameroon and Chad is driving up local cement prices. He said, “Cement sold across the border is fetching $150 to $270. This has led to significant smuggling activities, especially to regions like Maiduguri.”

A Vanguard analysis of the financial performance of the top three cement manufacturers—Dangote Cement Plc, Lafarge Africa, and BUA Cement Plc—revealed a decline in profitability due to increased production costs. Their combined revenue grew by 84.5% to ₦1.116 trillion in Q1’24 from ₦604.9 billion in Q1’23. However, production costs surged by 121% to ₦586.6 billion in Q1’24, overshadowing the revenue increase and causing Profit Before Tax (PBT) to drop by 4.1% to ₦196.4 billion from ₦204.8 billion.

The National Association of Block Moulders of Nigeria (NABMON) has called on the Federal Government to reduce import duties on cement manufacturing components to attract foreign investment. NABMON President, Mr. Adesegun Banjoko, stated that the current price of ₦8,000 to ₦9,000 per bag is still too high.

A top official at Lafarge Africa, speaking anonymously, highlighted that rising input costs and inflation have made the operating environment challenging for the cement industry. The official emphasized that erratic energy supply and increasing costs for imported machinery parts due to exchange rate fluctuations are significant concerns.

Kabiru Rabiu of BUA Cement explained that while mining costs are relatively low, energy costs, which account for 40-50% of production, are indexed to the dollar. This has led to substantial increases in costs for gas and other imported materials, which are crucial to cement production. Rabiu stressed that the depreciation of the Naira continues to drive up input costs, impacting the overall price of cement.

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