Chinese-owned HBM Breaks Silence on High Cement Prices in Nigeria, Begins Distributor Recruitment
- HBM Nigeria has revealed several reasons cement prices are still high in Nigeria
- Despite low per-capita consumption and 20%–30% capacity utilisation, Nigeria’s cement market offers substantial room for growth
- HBM’s distributor recruitment drive could intensify competition and crash prices, while investors demand greater transparency across Nigeria’s real estate sector
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Chinese-owned HBM Nigeria has explained why cement remains expensive in Nigeria, pointing to foreign exchange exposure, high energy costs and manufacturers’ dependence on privately generated power.
The company’s explanation comes as HBM moves to expand its footprint in Nigeria’s cement market through a fresh distributor recruitment drive, potentially increasing competition in a sector dominated by major producers.
Source: Getty Images
HBM Nigeria’s Chief Executive Officer, Lolu Alade-Akinyemi, said the country also has significant room for cement demand to grow because consumption per person remains comparatively low.
Alade-Akinyemi spoke in Lagos during a question-and-answer session at the Experiencing Panterra event, where he was represented by HBM’s General Manager of Readymix Concrete, Emmanuel Ilaboya.
HBM explains pressure on cement prices
According to Alade-Akinyemi, one of the biggest pressures on cement production costs is manufacturers’ exposure to foreign exchange.
He said a significant proportion of inputs used by the cement and concrete industries are imported or priced in foreign currency, leaving producers vulnerable to movements in the naira.
“And especially for the cement and concrete industries, where the majority of what we use to produce is imported. In fact, the gas and the oil, despite the fact that they are made locally, will be paid in dollars,” he said.
However, the HBM chief said the relative stability of the exchange rate over the past year had improved manufacturers’ ability to forecast expenses and plan production.
He added that HBM was focused on operational efficiency to prevent increases in imported input costs from being fully transferred to consumers.
Power costs add to manufacturers’ burden
Alade-Akinyemi identified electricity as another major reason cement production remains expensive in Nigeria.
Unlike manufacturers in some competing markets that can depend substantially on public electricity, Nigerian cement producers often have to invest heavily in their own power infrastructure.
“There is no cement manufacturer in Nigeria that can rely on that. You have to build your own power plant, you know, to produce the power that you can use, that costs money,” he said.
The combination of energy expenses and foreign exchange exposure, he explained, makes it difficult for manufacturers to substantially reduce production costs.
Nigeria's low cement consumption signals opportunity
Despite the challenges, HBM believes Nigeria's cement industry has considerable growth potential.
Alade-Akinyemi said cement consumption in Nigeria is below 150 kilogrammes per person, compared with about 500kg in Egypt and 700kg in South Africa.
“What that tells you is that there is a huge opportunity,” he said.
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He also estimated capacity utilisation among manufacturers at between 20% and 30%, suggesting significant unused production capacity across the industry.
The comments come as HBM seeks new distributors, a move that could strengthen its distribution network as it competes for a bigger share of Nigeria’s building materials market.
Investors eye Nigeria’s construction opportunities
Source: Getty Images
At the same event, Panterra CEO Tayo Odunsi called for greater transparency in Nigeria’s real estate sector, saying investors require reliable information to make decisions.
Panterra Chief Investment Officer Ayo Ibaru said currency stability, access to financing, security and partnerships with investors from the Global South are increasingly shaping West Africa’s property market.
Chinese-owned HBM battles Dangote, BUA
Legit.ng earlier reported that Chinese-owned HBM is stepping up its battle with Dangote Cement and BUA Cement for a bigger slice of Nigeria’s lucrative cement market, launching an aggressive distributor recruitment drive as production capacity expands and retail prices remain as high as ₦15,000 per 50kg bag.
The company is asking prospective distributors to provide at least ₦250 million in working capital, a 500-square-metre warehouse and access to five 20-tonne or 40-tonne trucks.
Source: Legit.ng
