Small Scale Cement Manufacturing in Nigeria; The Feasibility Report.

Cement is a fundamental component in construction, serving as a binder that hardens and reacts with carbon dioxide in the air to secure other materials together. Among the various types of cement, Portland cement remains the most widely used globally and in Nigeria. Produced by burning a homogenized mixture of clay and limestone, this process creates an intermediate product called clinker.

The clinker is then blended with gypsum in specific proportions and ground into a fine powder to form Portland cement. This versatile product is indispensable in constructing housing, bridges, buildings, and cement concrete roads.

Beyond large-scale infrastructure, cement is also critical for making mortar and concrete. For mortar, cement is mixed with sand and crushed stones in specific proportions. For concrete, cement is blended with fine and coarse aggregates, serving as the backbone for various construction applications.

Infrastructure is the cornerstone of socio-economic development for any nation. A well-established infrastructure network is vital for a country’s self-reliance and economic growth. The construction industry is central to economic development, generating employment and spurring growth. In developing nations like Nigeria, cement consumption is often viewed as a barometer of progress and an essential indicator of economic activity.

Cement production in Nigeria dates back to the early 20th century. The country’s first cement factory, the Nigerian Cement Company (NIGERCEM), was established in 1954 in Nkalagu, Eastern Nigeria. This milestone marked the beginning of local cement manufacturing, laying the foundation for subsequent developments in the industry.

During the 1960s and 1970s, the Nigerian government recognized the need for self-sufficiency in cement production to meet the growing demands of the construction sector. This realization led to the establishment of several state-owned cement plants. However, challenges such as inadequate maintenance, outdated technology, and inconsistent power supply hindered these plants’ efficiency and productivity.

Today, Nigeria is among Africa’s leading cement producers, thanks to substantial investments in modern facilities and capacity expansions by major players. Key contributors to the Nigerian cement industry include:

Dangote Cement: As Africa’s largest cement producer, Dangote Cement has a production capacity of 52 million tons per annum, with Nigeria accounting for 35 million tons. Its state-of-the-art facilities and efficient production processes have revolutionized the industry, making it a dominant player.

Lafarge Africa: A subsidiary of LafargeHolcim, this company operates multiple plants in Nigeria, producing high-quality cement for diverse construction needs. Lafarge Africa focuses on sustainability, reducing its environmental footprint, and promoting eco-friendly construction practices.

BUA Cement: Known for its rapid growth, BUA Cement has heavily invested in modern production facilities and infrastructure, solidifying its position as a significant market player.

The primary raw materials for cement production include limestone, ball clay, iron ore, and gypsum. Nigeria is richly endowed with these resources, particularly limestone, which is abundant in states such as Kogi, Ogun, Benue, Sokoto, and Edo. These materials are sourced from local miners, supporting the domestic economy.

The cement production process involves several stages:

Raw Material Extraction: Limestone and other materials are mined and transported to production facilities.
Crushing and Mixing: The materials are crushed and blended to achieve the desired chemical composition.
Clinker Production: The mixture is heated in rotary kilns at high temperatures to form clinker.
Grinding: Clinker is ground with gypsum to produce fine cement powder.
Packaging and Distribution: Cement is packaged for local or export markets.

The global cement market reached an estimated value of $385.8 billion in 2023. According to projections, the market will grow at a compound annual growth rate (CAGR) of five point four percent (5.4%), reaching $629.9 billion by 2032. Factors driving this growth include rapid urbanization, infrastructure investments, and increased construction activities, particularly in emerging economies.

Major cement-producing countries include China, India, and the United States. Leading importers of cement include the United States, the Philippines, and Bangladesh, driven by construction booms in these regions.

Nigeria’s cement market continues to thrive, fueled by urbanization, housing demand, and government infrastructure projects. According to ConsTrack360, the Nigerian cement industry is expected to grow by three point two percent (3.2%) annually, reaching $3.43 billion in 2023. The sector’s long-term outlook remains strong, with a projected compound annual growth rate (CAGR) of three point three percent (3.3%) from 2023 to 2027. Cement output is expected to increase from $3.32 billion in 2022 to $3.89 billion by 2027.

The production capacity of the proposed plant is two hundred (200) tons per day cement plant and the plant would operate three (3) shifts of eight (8) hours each, for three hundred (300) days per annum at eighty percent (80%) of the installed capacity in the first, second, third, fourth and fifth year of operations respectively.

Demand for cement is concentrated in southern and southwestern Nigeria, home to major urban centers like Lagos, Ibadan, and Port Harcourt. Northern Nigeria also contributes significantly, driven by ongoing infrastructure projects.

The Nigerian cement industry faces several challenges:

Energy Costs: Cement production is energy-intensive, and high energy costs impact profitability.
Logistics: Poor road infrastructure affects raw material transportation and distribution efficiency.
Regulatory Barriers: Lengthy approval processes hinder new plant establishment.
Environmental Impact: The industry is under pressure to adopt sustainable practices.

Emerging trends include the development of green cement, digital innovations for efficiency, and regional export expansion, particularly to neighboring West African countries.

Cement production in Nigeria is pivotal to the country’s economic and infrastructural development. The industry’s significant growth reflects Nigeria’s commitment to self-reliance and industrialization. Addressing challenges such as energy costs and logistics while embracing sustainability will further strengthen Nigeria’s position in the global cement market.

With a growing domestic market and export potential, the cement industry stands as a beacon of progress, supporting Nigeria’s vision for a prosperous and resilient future.

Table of Contents

EXECUTIVE SUMMARY 1.0 Business Overview 1.1 Description of the Business 1.2 Vision and Mission Statement 1.3 Value Proposition 1.4 Critical Success Factor of the Business 1.5Current Status of Business 1.6 Description of the Business Industry 1.7 Contribution to Local and National Economy 2. Marketing Plan 2.1 Description of the Product 2.2 Product Packaging and Delivery 2.3 The Opportunity 2.4 Pricing Strategy 2.5 Target Market 2.6 Distribution and Delivery Strategy 2.7 Promotional Strategy 2.8 Competition 3. Production Plan 3.1 Description of the Location 3.2 Raw Materials 3.3 Production Equipment 3.4 Production Process 3.5 Production Cost 3.6 Stock Control Process 3.7 Pre-Operating Activities and Expenses 3.7.1 Operating Activities and Expenses 3.8 Project Implementation Schedule 4.0 Organizational and Management Plan 4.1 Ownership of the Business 4.2 Profile of the Promoters 4.3 Key Management Staff 4.3.2 Management Support Units 4.4 Details of Salary Schedule 5. Financial Plan 5.1 Financial Assumption 5.2 Start - Up Capital Estimation 5.3 Source of Capital 5.4 Security of Loan 5.5 Loan Repayment Plan 5.6 Profit and Loss Analysis 5.7 Cash Flow Statement 5.8 Viability Analysis 6.0 Business Risk and Mitigation Factors 6.1 Business Risks 6.2 SWOT Analysis

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