Chinese Cement Companies Battle Dangote, BUA as They Expand Into Nigeria, Africa
- Chinese cement companies are aggressively expanding into Africa, challenging existing firms
- Two cement Chinese firms, China Cement and Huaxin have bought shares in existing companies in Africa to take up a slice of the industry shares
- Experts believe that the entrance of the companies will spark a price war in the industry like the downstream petroleum sector
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
With shrinking market shares at home, Chinese cement giants such as China Cement and Huaxin are making inroads into Africa to sustain growth.
With declining domestic demands, these cement firms are aggressively expanding by acquiring stakes in existing cement companies and establishing new plants across the continent.
Source: UGC
Two Chinese cement firms enter Africa
The growth strategy is meant to harness Africa’s growing infrastructure needs and boost global market presence.
Due to this, Chinese cement makers are intensifying competition with big players such as Dangote and BUA to reshape the landscape in Africa’s cement sector and drive economic opportunities, reports say.
Experts have said that Nigeria’s cement industry is tightly regulated and dominated mostly by three players, hence these foreign firms furrow into the sector by buying shares in existing firms.
Huaxin acquires Lafarge Africa
Legit.ng previously reported that Holcim AG will sell its 83.8% share in Lafarge Africa to Huaxin Cement Co., a Chinese cement company, in a $1 billion deal.
A statement by the group on Sunday, December 1, 2024, disclosed that the deal will be finalised in 2025 subject to regulatory approval.
The deal will see Lagarge’s market capitalisation on the Nigerian Exchange Limited (NGX) double if the new owners do not delist from the NGX.
Lafarge is currently valued at N934 billion, about $556 million on the NGX.
Holcim’s move follows a trend of several divestment steps by the company.
According to reports, in 2021, Holcim divested from its Zambian operations by selling Lafarge Zambia to the same Hauxin Cement Co.
The firm owned a 75% stake in Lafarge Zambia. However, the shares were sold in a deal that valued the Zambian arm at $100 million.
The company’s sale to Huaxin will mark the entry of Chinese Nigeria’s growing cement industry, mostly dominated by Dangote Cement, Africa’s largest cement maker.
Founded in 1907, Huaxin is one of the top 10 cement manufacturers in China. The firm is listed on the Shanghai Stock Exchange and boasts a market cap of $2.18 billion.
Larfage’s market capitalisation
In the nine months ending September 30, 2024, Huaxin made a revenue of $3.4 billion. However, the firm posted a net profit of $157 million.
In the same period, Lafarge Africa posted revenue of N479.5 billion, while the firm posted a net income of N60.1 billion.
Lafarge boasts a higher profitability stakes, makeing it an attractive acquisition for Huaxin as it seeks to enhance overall profit margins.
Holcim’s divestment from Nigeria continues a trend of foreign exits from Nigeria, especially European and American companies.
Katsina billionaire opens cement plant
Legit.ng earlier reported that Dahiru Mangal, Nigerian billionaire and a top player in the aviation industry, has completed a $1.5 billion cement plant in Moba, Kogi state, and rolled out the first product from the plant.
The Mangal Cement Company Limited began business to compete the big players such as Dangote, BUA, and other manufacturers.
The facility intends to churn out about 200 cement trucks daily, which analysts say will create direct and indirect jobs and drive competition in the industry.
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Source: Legit.ng
