BUA Cement Plc has signed a $240 million agreement with the Chinese engineering firm CBMI Construction. The contract is for the construction of a new 3 million-ton-per-annum (mtpa) production line at its existing plant in Sokoto.
The project, dubbed Sokoto Line 6, is a cornerstone of Chairman Abdul Samad Rabiu’s “Volume Strategy,” aimed at narrowing the gap with market leader Dangote Cement while catering to the surging infrastructure demand in Northern Nigeria and neighboring Sahelian markets.
The US$240 million project, which includes the new cement line, power plant, and other key facilities, will significantly increase BUA Cement’s production capacity, bringing its total annual capacity to 20 million tons when completed and strengthening regional supply.
The Project: Efficiency and Scale
The $240 million investment is designed not just for volume, but for operational efficiency:
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Capacity Surge: Upon completion, Sokoto Line 6 will bolster BUA Cement’s total installed capacity toward the 20 mtpa mark, significantly strengthening its footprint in the North-West geopolitical zone.
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Energy Strategy: Following the trend of its recent expansions, Line 6 is expected to be “multi-fuel” capable, utilizing a mix of natural gas and locally sourced coal to mitigate the impact of fluctuating energy prices.
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Timeline: Engineering and procurement are slated to begin immediately, with a projected commissioning date in late 2027, positioning BUA to capture the next wave of Federal Government infrastructure spending.
Market Dynamics: The Cement War Escalates
The deal comes as the Nigerian cement industry remains a high-stakes duopoly-dominated market:
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Price Competition: With increased capacity, BUA continues to signal its intention to drive down the retail price of cement—a point of frequent public discourse and government pressure.
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Export Ambitions: The Sokoto plant’s proximity to the border makes Line 6 a strategic asset for land-linked exports to Niger and Burkina Faso, leveraging the AfCFTA to diversify revenue away from the Naira.
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Logistics Advantage: By expanding in Sokoto, BUA minimizes transport costs to the northern markets, a critical advantage over competitors whose primary plants are concentrated in the South and North-Central regions.
Financial Implications
The ₦240 million ($240m) price tag represents a significant capital expenditure (CAPEX) commitment for the 2026 fiscal year:
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Funding Mix: Analysts expect the project to be funded through a combination of internal cash flows and debt instruments, following BUA’s successful 2024–2025 bond issuances.
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Dividend Outlook: While the high CAPEX may suggest a cautious dividend policy in the short term, the long-term cash-flow generation from the new line is expected to support BUA’s reputation as a high-yield industrial stock.
This agreement builds on BUA Cement’s 15-year collaboration with CBMI, during which CBMI successfully delivered cement production lines totaling 14 million tons across BUA’s factories in Obu (Edo) and Sokoto.
In parallel, the BUA 700-ton-per-day mini LNG plant in Kogi, scheduled for completion later this year, will supply clean, reliable energy to power the new Sokoto line as well as existing lines, improving efficiency, reducing emissions, and supporting sustainable industrial growth.
This investment comes at a transformative time for Nigeria. The bold reforms introduced by His Excellency, Mr. President, have made it easier to establish and operate factories while stimulating demand for infrastructure and construction projects.
These reforms create a favorable environment for industrial growth, and BUA Cement is proud to contribute to the nation’s development by expanding capacity, creating jobs, and supporting critical infrastructure.
With completion of the Sokoto line targeted in 20 months, BUA Cement is excited about the opportunities ahead and confident that this project will strengthen its position as a leader in the Nigerian cement industry and across the region.
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