Lafarge Africa Announces Major Cement Production Expansion in Nigeria
Lafarge Africa has unveiled significant expansion plans for its cement manufacturing facilities in Nigeria, with the Ashaka and Sagamu plants set to increase their combined production capacity to 5.5 million metric tonnes per year. This strategic move has generated considerable market enthusiasm, reflected in the company's share price climbing to N165 following the announcement in early February 2026.
Market Response and Financial Performance
The expansion announcement triggered immediate positive reactions in Nigeria's equities market. Lafarge Africa's shares experienced a notable 5.1% increase, breaking out of a stagnant trading pattern that had persisted since late January. Trading volume surged dramatically, reaching 10.5 million shares - nearly ten times the previous levels and representing the highest trading activity recorded in at least ten days.
This development follows Huaxin Cement of China's acquisition of an 83.8% controlling stake in Lafarge Africa from Holcim in August of the previous year, marking one of the first major production investments under the new ownership structure.
Financially, Lafarge Africa has demonstrated robust performance, with profit after tax soaring by 246% to N208 billion during the nine months leading to September. Revenue also showed substantial growth, increasing to N780.5 billion from N479.5 billion in the corresponding period of the previous year. The company's return on equity strengthened significantly, climbing to 33% from 12.9%, indicating improved financial efficiency and profitability.
Production Capacity Details
The expansion projects will specifically enhance production capabilities at two strategic locations:
- Ashaka Plant: Expected to increase output to 2 million metric tonnes annually
- Sagamu Plant: Projected to reach 3.5 million metric tonnes per year
These upgrades will elevate Lafarge Africa's total installed capacity beyond its current 10.5 million tonnes per year, which is distributed across four manufacturing facilities throughout Nigeria. The expansion represents a strategic investment in domestic production capabilities that could influence the broader construction materials sector.
Potential Impact on Cement Supply and Pricing
Nigeria's cement market has historically been characterized by supply constraints, largely due to high entry barriers and the dominance of three major producers: Dangote Cement, BUA Cement, and Lafarge Africa. The capacity expansion could modestly alleviate supply pressures, particularly in regions served by the Ashaka and Sagamu facilities.
Improved availability may reduce the frequency of cement shortages that often disrupt construction activities, especially during peak building seasons. While the expansion alone is unlikely to fundamentally transform national supply dynamics, it could contribute to stabilizing distribution networks and reducing operational pressure on existing plants that have been operating near maximum capacity.
Regarding pricing implications, cement costs in Nigeria have remained elevated for years, supported by import restrictions and regulatory policies that protect local producers from international competition. Additional capacity from Lafarge could introduce mild price competition, particularly if output growth outpaces regional demand in certain areas.
However, industry analysts emphasize that meaningful price reductions for consumers would likely require broader structural changes, including:
- Increased market competition through new entrants
- Policy adjustments that lower barriers to market entry
- Regulatory reforms addressing import restrictions
Broader Industry Context
Meanwhile, other developments in Nigeria's cement industry continue to shape the competitive landscape. Katsina State billionaire Dahiru Mangal has initiated cement production through a new factory in Moba, Kogi State, representing a significant investment of approximately $1.5 billion - substantially higher than the original $600 million estimate due to naira depreciation over the project's development period.
This new facility is expected to dispatch approximately 200 trucks of cement daily and generate numerous employment opportunities, both directly at the manufacturing site and indirectly through related business activities in the surrounding region.
For now, investors appear optimistic that increased production capacity will support Lafarge Africa's continued growth trajectory, while consumers and construction industry stakeholders monitor developments closely to determine whether expanded manufacturing capabilities will eventually translate into more affordable cement prices across Nigeria's building materials market.
