ASHAKACEM EXPANDING TO CREATE JOBS FOR N-EAST-KWAIRANGA
Nigerians were promised that upon deregulation of the sector that cement would be sold for N1, 000 but up till now the price is still high. What is responsible for this?
First of all, cement is the only product that its price came down in the last five years. Secondly, cement price is based on cost of production and we cannot be able to control the retailers’ prices because of several reasons such as logistics, transportation and the rest. So you have to take so many things into consideration. It’s not only the issue of price. There is the quality of the cement and all what we are doing, especially we, in Ashaka, is to make sure that at the end of the day, we produce cement that is not going to be only acceptable to the people but affordable. But there are some other costs that you cannot control. I can tell you that when I look at the cost profile of producing one bag of cement in Ashaka, more than 50 per cent is related to power. So, how can you bring down the price? The promise that the government has made is good. The government is trying to push us so that we can see how we can be able to bring down the price but in every business, price is a function of demand and supply. And what we are trying to do is to make sure that we increase our own capacity in all our locations because we felt that this will save the cost of producing more cement. We are trying to set up a coal power plant in Ashaka and this is the type of things people should take into consideration.
What are the likely implications of a ban on the 32.5 cement grade?
Banning it will not solve any problem. And the issue of ban of cement, especially the 32.5 grade, which is the one that we are producing in Ashaka will only create more problems to us. First of all, we’re trying to make sure that people have gotten what they want in doing their own business, or in doing their own buildings. Nobody has told you that this 32.5 is inferior or that it has produced some cracks or made his building to collapse. So why are you banning it? In the last 30 years that we have been operating, nobody has complained, but simply because there are other products in the market is not enough to ban the existing one. I think that the issue of having other cement brands in the market should be left for the users. Let the users determine which one they want, that is a fair market principle. Banning the 32.5 will have a multiplier effect on the economy, especially in the North-east. Everybody knows the situation in that part of the country and in Ashaka, we have over 630 staff. And the culture we have, especially in the Northern part of the country, is that by the time one worker is sacked, at least 10 dependents will also be affected. But now, you want to ban the 32.5 produced by Ashaka for no reason, as far I am concerned. If there are any concrete reasons that have to do with quality, of course, we are going to own up. Moreover, we are under a big group, Lafarge that is the number one globally as far as cement production is concerned. Our technical centre is one of the best in the world. And all what they do is to make sure that the researches are done accurately, looking at all the different products and how we can improve ours on daily basis. We in the North have been using this 32.5 and by the time you say you are going to ban this, believe me, it will throw up a lot of implications. Think of the employees, the communities around the area. Ashaka is even the only quoted company in Northern Nigeria, and that is why it is called the star of the North because of its production capacity over the years and the employment it has generated.
Does your company have any problem producing any other type of cement apart from the 32.5 class?
No. We have even introduced what we call, Superset which is also acceptable. What we do is to identify the needs in the market. We have a research and development department that does this. This Superset is specifically for block making. As I speak, we are getting investment of over 500 million Euros to Ashaka for expansion in the North-east. We are just waiting to get a date for Mr. President to come and do the ground breaking ceremony. Let me also clarify that this 32.5 is not only used in Nigeria, but also in the developed countries. In fact, in Nigeria, researches have shown that 50 percent of cement users use 32.5 classes. Even Julius Berger (construction firm) has confirmed that it uses the 32.5 cement grade and that is enough for us not to bring politics into it. But in Ashaka, we want to ensure that our new line will come with a newer model machines that can cater for other brands, but that notwithstanding, we are not going to discard this simply because we want to bring another one because it is already adding value and accepted in the market.
You spoke about this expansion plan, how many jobs is this investment going to create?
We are even trying to put a grinding plant in Jos so that we will not just rely on one location. We believe strongly in generating employment. I can tell you that issue of unemployment and poverty are related to what is happening in the North-east because people don’t have anything to do. So if at the end of the day, producing less than 1 million tonnes we are able to engage 630 staff directly, then we have distributors, transporters, suppliers, you can imagine what it would be when we increase it to four million tonnes. So the impact it will make in terms of employment generation, in terms of social community projects, in terms of the impact on the nation’s economy and even the security in the area, will be tremendous. People will get work to do and this is what we are bringing to the table.
First of all, cement is the only product that its price came down in the last five years. Secondly, cement price is based on cost of production and we cannot be able to control the retailers’ prices because of several reasons such as logistics, transportation and the rest. So you have to take so many things into consideration. It’s not only the issue of price. There is the quality of the cement and all what we are doing, especially we, in Ashaka, is to make sure that at the end of the day, we produce cement that is not going to be only acceptable to the people but affordable. But there are some other costs that you cannot control. I can tell you that when I look at the cost profile of producing one bag of cement in Ashaka, more than 50 per cent is related to power. So, how can you bring down the price? The promise that the government has made is good. The government is trying to push us so that we can see how we can be able to bring down the price but in every business, price is a function of demand and supply. And what we are trying to do is to make sure that we increase our own capacity in all our locations because we felt that this will save the cost of producing more cement. We are trying to set up a coal power plant in Ashaka and this is the type of things people should take into consideration.
What are the likely implications of a ban on the 32.5 cement grade?
Banning it will not solve any problem. And the issue of ban of cement, especially the 32.5 grade, which is the one that we are producing in Ashaka will only create more problems to us. First of all, we’re trying to make sure that people have gotten what they want in doing their own business, or in doing their own buildings. Nobody has told you that this 32.5 is inferior or that it has produced some cracks or made his building to collapse. So why are you banning it? In the last 30 years that we have been operating, nobody has complained, but simply because there are other products in the market is not enough to ban the existing one. I think that the issue of having other cement brands in the market should be left for the users. Let the users determine which one they want, that is a fair market principle. Banning the 32.5 will have a multiplier effect on the economy, especially in the North-east. Everybody knows the situation in that part of the country and in Ashaka, we have over 630 staff. And the culture we have, especially in the Northern part of the country, is that by the time one worker is sacked, at least 10 dependents will also be affected. But now, you want to ban the 32.5 produced by Ashaka for no reason, as far I am concerned. If there are any concrete reasons that have to do with quality, of course, we are going to own up. Moreover, we are under a big group, Lafarge that is the number one globally as far as cement production is concerned. Our technical centre is one of the best in the world. And all what they do is to make sure that the researches are done accurately, looking at all the different products and how we can improve ours on daily basis. We in the North have been using this 32.5 and by the time you say you are going to ban this, believe me, it will throw up a lot of implications. Think of the employees, the communities around the area. Ashaka is even the only quoted company in Northern Nigeria, and that is why it is called the star of the North because of its production capacity over the years and the employment it has generated.
Does your company have any problem producing any other type of cement apart from the 32.5 class?
No. We have even introduced what we call, Superset which is also acceptable. What we do is to identify the needs in the market. We have a research and development department that does this. This Superset is specifically for block making. As I speak, we are getting investment of over 500 million Euros to Ashaka for expansion in the North-east. We are just waiting to get a date for Mr. President to come and do the ground breaking ceremony. Let me also clarify that this 32.5 is not only used in Nigeria, but also in the developed countries. In fact, in Nigeria, researches have shown that 50 percent of cement users use 32.5 classes. Even Julius Berger (construction firm) has confirmed that it uses the 32.5 cement grade and that is enough for us not to bring politics into it. But in Ashaka, we want to ensure that our new line will come with a newer model machines that can cater for other brands, but that notwithstanding, we are not going to discard this simply because we want to bring another one because it is already adding value and accepted in the market.
You spoke about this expansion plan, how many jobs is this investment going to create?
We are even trying to put a grinding plant in Jos so that we will not just rely on one location. We believe strongly in generating employment. I can tell you that issue of unemployment and poverty are related to what is happening in the North-east because people don’t have anything to do. So if at the end of the day, producing less than 1 million tonnes we are able to engage 630 staff directly, then we have distributors, transporters, suppliers, you can imagine what it would be when we increase it to four million tonnes. So the impact it will make in terms of employment generation, in terms of social community projects, in terms of the impact on the nation’s economy and even the security in the area, will be tremendous. People will get work to do and this is what we are bringing to the table.
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