Huaxin Scoops up Lafarge Nigeria for $1B in African Expansion Spree
On 4 December 2024, Huaxin Cement (SSE: 600801) announced that as part of its African expansion strategy, it plans to acquire Lafarge Africa assets — owned by Holcim Group in Nigeria — for USD 1 billion. With this deal and an upgraded production capacity of 18 million tonnes per year, Huaxin will become the 2nd cement producer in sub-Saharan Africa behind Dangote Cement which has a capacity of 52 million tonnes annually.
According to the communique, Holcim has agreed to sell 83% share of Lafarge Africa to Huaxin. In Nigeria, Lafarge operated four cement plants in Sagamu, Ewekoro, Mfamosing and Ashaka with a combined production capacity of 10.5 million tonnes annually. In addition, Huaxin already has cement plants in Tanzania, Zambia, Malawi, to name a few.
The divestment across Africa is part of Holcim’s strategy to streamline its portfolio and focus on core markets. In the future, Holcim aims to focus on the North American market where there is an acute housing shortage and regulatory pressures for sustainable construction materials.
“The company’s overseas expansion aims to effectively counterbalance the decline in the domestic market. Nigeria, and Africa in general, offers attractive growth perspectives for the cement industry.”
Huawin Cement Chairman XU Yongmo
The sale of its assets on the African continent follows its divestment of the Indian Ocean cluster which was completed in October 2021. Since 2019, Holcim has amassed USD 3.1 billion from the sale of these non-core assets and intends to put the capital to use in the pursuit of fatter-margin growth opportunities in markets with high environmental standards ready to pay a premium for sustainable construction materials.
Observers note that the overseas expansion of Huaxin has gone into overdrive due to the bleak economic outlook in China and the prevailing housing crisis. Therefore, companies who were reluctant to go abroad are now faced with the prospect of ‘going out or dying in’. It is worth noting that Holcim is the largest shareholder in Huaxin with a 42% stake and thus the choice for this partnership is quite natural given the long-standing and fruitful relation.