BUA Cement P1

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BUA Cement PLC (“BUA” or “the Company”) owns and operates two cement plants i.e., one in Sokoto State, northwestern Nigeria known as the Kalambaina plant, and another one in the Edo State, in southern Nigeria. In 2010, BUA acquired the Cement Company of Northern Nigeria (CCNN) and the Edo Cement Company as its entry point into the Nigerian cement industry.  CCNN and Edo Cement Company had been owned by Scancem International, with a minority stake from several state government in Nigeria. Separately, BUA also created a completely new company, Obu Cement Limited, to commence greenfield cement operations in Edo State in 2015. In 2020, BUA merged CCNN and Obu Cement to form BUA Cement Limited in its current form, which is a listed company on the Nigerian Stock exchange, and the 4th largest company by market capitalization in the country.  At the time of acquisition of CCNN (which had operations only in Sokoto state), the plant was barely functional and over the past 10 years BUA has upgraded these operations and built new cement operations on the site, while also decommissioning its older cement lines.The Sokoto Kalambaina plant (“SKP”) produces CEM II type cement (comprised of 75-80% clinker, 5% gypsum and 15%-20% limestone) and currently has two operational lines i.e., line 3 and line 4, with a capacity of 1.5 metric tons per annum (MTPA) and 3 MTPA cement production respectively.  Power is provided via a recently commissioned 50 MW power plant (associated with line 4 expansion) and a temporary (rented) 12 MW power plant, both fueled by liquified natural gas (LNG). The temporary power plant will be decommissioned once the Project, as referred to below, is completed.  SKP’s lines 1 was built in 1964 and decommissioned in 1986, while line 2 was built in 1985 and decommissioned in 2021 (although its grinding unit alone is occasionally still being used).SKP is located around 10 km from Sokoto City and is the only cement plant in north-western Nigeria. The plant supplies cement to northern Nigeria, with products also increasingly being exported to the neighboring country of Niger. IFC is proposing a $500 million loan (a $150m A-loan and $350m B/Parallel loan), to finance BUA’s expansion of the SKP (“the Project”) including working capital. The Project will include i) expanding cement production capacity by 6 MTPA by constructing two modern, large-scale integrated cement lines i.e., lines 4 and 5, each producing 6,000 tons of clinker per day and 7,500 tons of cement per day; ii) constructing 120 MW (existing 50 MW plus new 70 MW) of captive gas-based power plants; iii) installing a 10 MW solar power plant; iv) expanding the cement distribution fleet by approximately 500 new trucks; v) expansion of quarry operations including equipment and machinery to increase associated operations; vi) constructing additional storage silos; and, vii) building infrastructure in support of the use of liquified natural gas (LNG) allied to additional diesel storage tanks. The plant will operate 24 hours a day, 330 days per year. Project implementation has already commenced, with Line 4 already completed (funded by BUA with internal capital and external financing, though considered part of the Project financing plan), and anew 50 MW gas power plant is also now installed and operating.  Future electricity requirement will be provided via LNG power generation, although the generators being dual fuel will have the capacity to also operate on diesel if required. LNG is supplied to the Project by road tankers from Rumuji (Rivers State) some 1,200 km distant from the SKP and stored on-site. SKP’s line 3 was commissioned in 2018 and line 4 (which is considered part of the Project) in 2021; both of these are fully operational. Civil works associated with the line 5 expansion commenced in December 2021 and are anticipated to be completed in 2024.Sinoma CBMI is the Engineering, Procurement and Construction (EPC) contractor for line 4 and 5 and is also the Operations and Maintenance (O&M) contractor responsible for operating lines 3 and 4 and this will similarly apply to line 5 once operational. The O&M contractor for the power plants is KS Energy and delivery of LNG is undertaken by Greenvile LNG, a Nigerian LNG production and distribution company.Limestone for clinker production is currently obtained from a quarry that occupies some 67 hectares (ha) and is contiguous with the SKP’s southern boundary.  Limestone is transported to the plant by trucks and crushed on-site. This quarry will be expanded by a further 63 ha to a total surface area of 130 ha and exhausted within the next two years.  Thereafter, two new quarries located some 3 to 4 kilometers south-west of the plant on either side of the Sokoto-Binji Road, with an approximate combined surface area of 1,200 ha will then be utilized.  Limestone from the new quarries will be transported to the cement plant by use of trucks and a 7 km conveyor belt to be constructed.