Dangote Cement and BUA face a new challenger in Nigeria from Chinese newcomer Huaxin Cement, which is buying an 83.8% stake in Lafarge Africa from Holcim.

Holcim said in a statement on 1 December that the sale will value the whole business at $1bn and is expected to close in 2025. Lafarge Africa is Nigeria’s third-largest cement producer.

Huaxin, one of China’s largest cement manufacturers and listed on the Shanghai Stock Exchange, has been expanding in Africa since 2020, with the acquisition of Kenya’s ARM Cement unit in Tanzania. In 2021, it completed the acquisition of 75% and 100% stakes in Lafarge Zambia and Lafarge Cement Malawi respectively. The company snapped up the South African and Mozambique assets of Brazil-based InterCement Participacoes SA in 2023.

“While Holcim was operationally efficient, they were not particularly interested in remaining in this market and were not gaining market share,” says James Ola-Adisa, an industrial analyst at Lagos-based Chapel Hill Denham. Holcim agreed to divest its businesses in Uganda and Tanzania last year. Huaxin is “trying to make inroads into Africa as opposed to what Holcim’s doing: trying to get out of the market,” and is likely to be “pro-expansion”, he says.

Dangote Cement, Nigeria’s largest cement producer, boasts a domestic production capacity of 35.3m metric tonnes per annum (mtpa), with an additional 16.7m mtpa across nine other African countries. Second-placed rival BUA Cement earlier this year commissioned the fifth line at its Sokoto plant and the third line at its facility in Obu, Edo State, as part of its expansion drive. BUA aims to increase its installed capacity to 20m mtpa from 17m mtpa currently.

Lafarge Africa CEO Lolu Alade-Akinyemi said the “transition provides an opportunity” for the company to “continue growing and evolving, supported by the investment and global expertise of Huaxin Cement”. “Our market position and long-term market potential are promising,” he said in a statement.

Competition to heat up

“The cement market in Nigeria is oligopolistic with three major players,” says Bunmi Bailey, head of research at SBM Intelligence in Lagos. The acquisition by Huaxin Cement could improve the performance of Lafarge Africa, which has an installed capacity of 10.5 million mtpa, she adds. “China is the top cement producer in the world, with Huaxin being among the top 10 manufacturers in China,” she says. “So, the Chinese acquisition deal could stir up more competition in the cement space with firms enticing customers with lower pricing and higher quality deals.”

Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprises, says the entry of the Chinese company will change the competitive environment in the Nigerian cement industry.

“The Chinese can also be very aggressive when they get into any market; they also typically get state backing from their country for most of their investments,” he says in a phone interview. “They are likely to come with even more resources to strengthen their competitive position.”

Competition is good for consumers because it will help to moderate prices, he says. “In any environment where you have intense competition, the consumers are always the ultimate beneficiaries.”