BusinessDay 16 Apr 2018
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Monday <strong>16</strong> <strong>Apr</strong>il <strong>2018</strong><br />
C002D5556 BUSINESS DAY 43<br />
REAL SECTOR WATCH<br />
Steel firms expand capacity, tap<br />
export opportunity to earn FX<br />
Stories by ODINAKA ANUDU<br />
Nigerian steel<br />
firms are expanding<br />
capacity<br />
and tapping<br />
into export opportunity<br />
in the neighbouring<br />
markets to earn foreign<br />
exchange.<br />
Aarti Steel Nigeria Limited,<br />
which recently completed<br />
a 120,000- tonnes capacity<br />
cold-rolled mill in Ota, Ogun<br />
State, exports steel to Togo<br />
and Mali and plans to expand<br />
to Central Africa, Ivory Coast<br />
and Benin to boost capacity,<br />
earn more foreign exchange<br />
and tap the growth potential<br />
in the continent’s market.<br />
Aniket Singal, Aarti’s vice<br />
chairman, told <strong>BusinessDay</strong><br />
that the company was looking<br />
at expanding its export<br />
footprints, but said there<br />
was a need for a policy that<br />
would keep substandard roofing<br />
sheets at bay. African<br />
Industries, in October 20<strong>16</strong>,<br />
exported finished steel products<br />
to Morocco, Ghana and<br />
other parts of Africa for the<br />
first time.<br />
The company said its export<br />
of finished steel products<br />
would save the country over<br />
$650 million yearly. Alok<br />
Gupta, group managing director,<br />
African Industries<br />
Group, said that the quality<br />
of steel products of African Industries<br />
was at par with steel<br />
from Ukraine, if not better,<br />
adding that the company had<br />
become internationally competitive<br />
in exporting products<br />
Nigerian Breweries expanding local input sourcing operations, says MD<br />
The Nigerian<br />
Breweries (NB)<br />
says it is committed<br />
to raising<br />
its current<br />
50 percent local raw materials<br />
sourcing to 60 percent<br />
before 2020.<br />
Speaking at the annual<br />
general meeting held last<br />
Wednesday in Lagos, Jordi<br />
Borrut Bel, managing<br />
director of NB, said the<br />
brewer would continue<br />
to improve on its value<br />
extraction from local raw<br />
materials, including cassava<br />
and sorghum.<br />
Bel stated that the company<br />
was determined to<br />
improve the sorghum value<br />
chain in the country.<br />
The brewer’s profit after<br />
tax (PAT) on the financial<br />
year ended December 31,<br />
2017, surged to N33 billion,<br />
from N28.4 billion reported<br />
in the correspond-<br />
A cross section of participants trained by Nigerian-American Chamber of Commerce (NACC) on “Customer Relationship<br />
Management” in Lagos recently<br />
ers.<br />
He said the firm had<br />
cut water consumption for<br />
production by 28 percent<br />
in the last 10 years, sourcing<br />
100 percent of its packfrom<br />
Nigeria.<br />
He called for Export Expansion<br />
Grant to enable the<br />
company to sustain its exports.<br />
He added that freight<br />
cost from Ukraine to Ghana<br />
was $40 per metric tonne<br />
(MT) while that of Nigeria to<br />
Ghana is $65/MT, which was<br />
expensive.<br />
Uche Iwuamadi, executive<br />
director of the group, said the<br />
company’s operational capacity<br />
was below 70 percent,<br />
stating that there would likely<br />
be excess steel in the country<br />
when African Industries<br />
reached 100 percent capacity.<br />
African Industries has 12<br />
subsidiaries, including six big<br />
ing period of 2017, representing<br />
a <strong>16</strong> percent rise.<br />
Revenue for the period was<br />
N344 billion, as against<br />
N313 billion recorded in<br />
the previous year, representing<br />
approximately 10<br />
percent increase.<br />
Bel said the board of<br />
directors of NB recommended<br />
dividend of N33<br />
billion to shareholders,<br />
which was highest in the<br />
company’s history.<br />
The recommendation<br />
amounts to a total dividend<br />
of N4.13 per share<br />
for the 2017 operating year.<br />
Bell explained that the<br />
brewer gave out 100 per<br />
cent dividend as part of its<br />
dividend policy, consistent<br />
in its robust balance sheet.<br />
He explained that the<br />
company’s stable growth<br />
amid economic headwinds<br />
was a result of the company’s<br />
ability to cut cost.<br />
steel plants such as African<br />
Steel Mills, Ikorodu Steel Mills,<br />
African Foundries, and Abuja<br />
Steel Mills.<br />
“We produce one million<br />
tonnes of steel per year and<br />
our target is to export between<br />
200,000MT and 400,000 MT<br />
this year. You can see we are<br />
earning foreign exchange<br />
when others are demanding<br />
it from the government,” Uche<br />
Iwuamadi, group executive<br />
director, African Industries,<br />
told <strong>BusinessDay</strong>.<br />
Standard Metallurgical<br />
Company Limited (SMC) is<br />
planning to launch a billet mill<br />
to produce standard wire rods<br />
in Nigeria for the local and<br />
ECOWAS market.<br />
Mohammed Saade, managing<br />
director, SMC, said was<br />
producing 300,000 tonnes of<br />
wire rods per year.<br />
“With phase two, we would<br />
produce 260,000 tons of billets<br />
in Nigeria. Nigeria today<br />
is a big market and we are<br />
committed to meeting local<br />
demands and the surplus can<br />
go to the ECOWAS market,”<br />
Saade said.<br />
Nigeria, Africa’s biggest<br />
economy, spends about $3.3<br />
billion on steel imports every<br />
year. Eighteen of the 30 steel<br />
manufacturers in Nigeria produce<br />
about 2.2 million tons a<br />
year with scraps and billets<br />
Bel explained that the<br />
foreign exchange situation<br />
improved last year, but<br />
pointed out that double<br />
digit inflation impacted<br />
businesses and consum-<br />
imported mainly from China.<br />
An average of steel products<br />
such as standard plates,<br />
hot-rolled coil, cold-rolled<br />
coil and rebar is $464.7 using<br />
Chinese prices, which means<br />
Nigeria imports roughly 7.1<br />
million metric tonnes of steel<br />
annually. Many of the exports<br />
are still scraps, billets, and<br />
nails .<br />
The publicly-owned Ajaokuta<br />
Steel Complex is in<br />
disrepair after government<br />
sinking over $5 billion into the<br />
plant. The government has<br />
been slow in handing over<br />
the behemoth to a private investor<br />
despite interests from<br />
foreigners.<br />
aging materials locally.<br />
Bell noted that development<br />
of employees was<br />
important for sustainable<br />
company performance,<br />
adding that early signs<br />
of improvement in the<br />
macro-economic condition<br />
were yet to reflect on<br />
consumer confidence.<br />
He said the firm remained<br />
committed to the<br />
market in the long term as<br />
the fundamentals of the<br />
beer market were strong<br />
and attractive in the both<br />
medium and long term.<br />
He pointed out that<br />
firm was well positioned<br />
to trade through difficult<br />
times by leveraging its<br />
innovative brands across<br />
different market segments.<br />
NB sources its sorghum<br />
through a company known<br />
as Psaltry International<br />
Limited, located at Alayide<br />
village, Ado Awaiye near<br />
Iseyin, Oyo State,<br />
Initiate policies to<br />
revive moribund<br />
textile mills,<br />
NTGTEA tells FG<br />
The Nigeria Textile,<br />
Garment and Tailoring<br />
Employers<br />
Association (NT-<br />
GTEA) has urged the Federal<br />
Government to initiate<br />
steps to revive moribund<br />
textile mills in Nigeria.<br />
By 1985, Nigeria had over<br />
180 textile mills employing<br />
more than one million<br />
Nigerians. Some of the<br />
mills were United Nigerian<br />
Textile Limited (UNTL),<br />
Aswani Textile, Afprint,<br />
Asaba Textile Mills, and Edo<br />
Textile Mills, among others,<br />
but there are fewer than<br />
three full-fledged healthy<br />
textile mills in Africa’s biggest<br />
economy and most<br />
populous country today.<br />
Speaking in a telephone<br />
interview, Hamma Kwajaffa,<br />
director-general of NTG-<br />
TEA, said unbridled importation<br />
of cheaper but substandard<br />
textile products<br />
killed local firms, stating<br />
that 95 percent of the textile<br />
market in the country today<br />
is dominated by China.<br />
Kwajaffa said the very<br />
few surviving textile firms<br />
are struggling and cannot<br />
compete with China and India,<br />
whose production costs<br />
in their home countries are<br />
much lower than Nigeria’s.<br />
“Energy costs four cents<br />
per kilowatt in other African<br />
countries but 20 cents per<br />
kilowatt in Nigeria. So how<br />
can a struggling textile firm<br />
compete? We need government<br />
intervention to be<br />
able to compete,” he asked.<br />
The textile industry in<br />
Nigeria is currently made<br />
up of fabrics makers, cotton<br />
producers, rug and carpet<br />
manufacturers as well as<br />
fashion and designers.<br />
“We can produce military<br />
uniforms. We have bed<br />
sheets, blankets, towels<br />
and handkerchiefs. We can<br />
make good products, but<br />
there is a need for incentives<br />
for the industry,” he<br />
said.<br />
In the first quarter of<br />
20<strong>16</strong>, Aisha Abubakar,<br />
minister of state for industry,<br />
trade and investment,<br />
toured three textile firms,<br />
which include Lucky Fibres<br />
Nigeria Plc, Spintex Mills<br />
and Nichemtex Plc in Lagos<br />
and Ogun states, promising<br />
to draw government attention<br />
to the challenges in the<br />
industry.<br />
However, smuggling,<br />
high production cost, poor<br />
patronage and lack of quality<br />
control on imports, which<br />
are age-old problems in<br />
the industry, continue with<br />
little or minimal government<br />
response.