By Alex C
Africa’s division of French giant, Lafarge, has revealed that its 50 percent-owned subsidiary, Nigerian Cement Holdings (NCH), has entered into an agreement with Flour Mills of Nigeria to purchase a 30 percent stake in United Cement Company of Nigeria (UNICEM).
NCH currently owns 70 percent of UNICEM. With the deal, set to be completed in two stages, it will have total ownership of the cement company.
“Pursuant to the agreement, a first 15 percent tranche would be acquired in the first quarter of 2015, while the second 15 percent tranche is scheduled to be acquired by February 2016 at the latest,” Lafarge said in a statement.
UNICEM is Nigeria’s third-largest cement manufacturer and has the only cement plant in the South-South and South-East Region of Nigeria. Strategically located in Cross Rivers State of Nigeria’s Niger Delta region, the plant has a cement capacity of 2.5mm tonnes with an another 2.5mm tonnes expected to be added in 2016.
French owned Lafarge Africa has been aggressively expanding its business across sub-Saharan Africa, especially Nigeria, creating in the process what many industry watchers have described as an epic cement battle with Africa’s Largest Cement Company, Dangote Cement, owned by Africa’s richest man Aliko Dangote.
In September, Lafarge consolidated its Nigerian and South African assets into Lafarge Africa and has since then pushed several expansion plans. The cement giant has also extended its business tentacles to Power- seen as Nigeria’s new gold. Immediately after the company’s consolidation, Lafarge Africa announced a partnership with the International Finance Corporation (IFC) and Finnish’s Wartsila manufacturing company to build a 220 megawatts gas-fired power plant in Nigeria at an estimated cost of $400 million.
The deal will enable Lafarge to more than triple the 90 megawatt power output in its Ewekoro power plant in Ogun State, South-Western Nigeria. Dangote Cement has not been idle in the battle for supremacy; a few days ago the cement manufacturer arbitrarily slashed the price of cement by 40 percent, a tactics it has often deployed to put rivals under pressure.
The company is also pushing into new frontiers across Africa. With its market capitalization surging beyond $22 billion, Dangote Cement is Nigeria’s most capitalized listed company and the first to hit $20 billion capitalization mark.