How to start a Lucrative Cement Manufacturing Business in Nigeria

Cement is the basic raw material of concrete and is a very important building material.

The manufacturing process of cement is rather complicated. It consists of raw materials mining, raw meal preparation, clinker calcinations, cement grinding, and some auxiliary operations. Meanwhile, a large amount of dust and exhausted gas are generated in the cement production process, so the cement plant should also be equipped with complete sets of a dust control system and waste heat power generation equipment. Therefore, even the construction of a small cement plant can be counted as a large-scale engineering project, and we must go through thorough investigation and careful planning before starting a new cement factory.

Nigeria currently faces a supply-demand gap of over 20 million metric tonnes for cement. This deficit continues rising annually by 10-15%. Furthermore, over 90% of cement sold comes from just two major players, indicating a market dominated by monopolies without enough competition.

As a new entrant, these statistics highlight the significant margins and growth runways available within Nigeria’s cement sector. The federal government aims to improve infrastructure across transportation, housing, agriculture, and power. These ambitious development goals will require vast cement quantities, translating to widened opportunities.

1. Clarify Your Production Scale and Cement Type

The first thing to do when you are planning to start a cement factory is to determine which type of cement you are going to produce and how many tons you are going to produce per day

The most widely used cement for concrete works is ordinary portland cement (OPC), apart from that, there is also pozzolana portland cement (PPC), white portland cement, quick-setting cement, refractory cement, etc.

The production capacity of cement factories also varies greatly, ranging from 50 TPD to 10,000 TPD.

What kind of cement does the cement factory produce? What is the production scale? To answer these questions, investors must consider the local cement market size, cement prices, and their own investment capacity. The larger the production scale of a cement factory, the higher the construction cost and production cost. However, if the local cement demand is large and the market competition is weak, then high output means high income and profit.

2. Find the Most Appropriate Location for Your Cement Factory

The site of a cement factory is better near the limestone mine.

Cement plant locates near the limestone quarry.

The site selection of a cement factory is very important. A good site can make construction easier, save construction costs and subsequent production costs.

Since the coverage area of a cement plant is very large and the cement industry produces heavy pollution, cement plants are usually built in the urban periphery or rural areas. And in most countries, approval from the local government is required to start a cement factory. The cement plant should also be as close to the limestone mine as possible to save the transportation cost of raw materials.

The site of a cement factory cannot be selected easily. It needs a professional team of engineers to investigate the local geological environment and soil before finally determining the appropriate site, and you can always rely on AGICO to find the most appropriate site for your cement factory.

3. Design the Cement Factory

As a large-scale industrial facility with complex structures and numerous machinery, the design and layout of a cement plant must be entrusted to the professional engineering design institute.

The design institute is the cooperative unit with the longest service time and the widest content for the project. The whole process of project construction cannot be separated from the cooperation of the design institute. Selecting an experienced design institute is very beneficial to the quality, investment, and progress of the project. The experienced design director will assist the construction team to make the project plan and remind the start-up time of each work.

4. Purchase Needed Equipment

This ball mill has been loaded on a track for transportation.

A cement ball mill is ready for transportation.

There are many kinds of industrial equipment used in a cement plant, including thermal equipment, grinding equipment, dust removal system, transportation system, storage system, and so on. When placing an order, we may need to order different equipment from multiple manufacturers at the same time.

Some large-scale equipment in the cement plant, such as cement ball mill, vertical roller mill, cyclone preheater, rotary kiln, etc., has a complex structure and takes a long time to manufacture, so they must be ordered in advance according to the schedule of the construction period to ensure that they will arrive in time during the installation.

The supplier of each type of equipment should be selected in advance to make sure the design institute will have sufficient time to communicate with them to determine the parameters of the equipment.

5. Factory Construction & Equipment Installation

The construction of a cement plant

The cement factory is under construction.

Once the overall structure design of the cement factory is completed, then it is ready to start building. The civil engineering and equipment installation of a cement factory are undertaken by two different professional teams.

After the civil engineering team starts working, it is necessary to check its construction organization and plan according to the design progress. There must be a detailed work breakdown for all the key sub-items. The equipment installation team is usually called one to two months after the start of construction. They need to cooperate with the civil engineering team to complete the foundation construction of large equipment and complete the installation of various machinery and systems.

6. Staff Recruitment & Training

The training of workers should start 2 months before the factory project is fully completed. Because workers are better to be in positions in the later stage of equipment installation and single machine commissioning, to get familiar with their positions and the machines they will be operating, so as to lay a good foundation for future operation and maintenance.

Selecting the Cement Plant Location

Cement plants represent substantial fixed cost investments, so choose an appropriate location from the outset. Conduct feasibility studies around raw material availability, logistics, labor, power access, water, housing, and connectivity.

Prioritize locations offering abundant limestone deposits, low logistical costs, reliable infrastructure, and favorable governmental policies. Analyze the proximity of major cement consumers like state capitals and high-density housing areas.

Determining Required Capital Investment on a large Scale

The cement business is highly capital intensive. Starting a plant entails securing:

Land

Plants and heavy machinery

Technology licenses

Logistics infrastructure like ports

Operating capital

Contingency funds

Realistically, you need at least $100 million to start a cement company in Nigeria. This capital works as follows:

Equity: Gather 30% capital from investors and promoters

Debt: Raise 60-65% through banks/NBFCs

Working Capital: Remaining 10-15%

Storage and Warehousing

A small-scale cement manufacturing unit will also need investments for storage and warehousing. Explore different types of warehouses and pick the suitable one that helps maintain the quality of raw materials and finished cement.

A rough estimate is $300,000 USD but it can vary depending on several factors, including:

Location of the plant.

Choice of technology and equipment.

Land acquisition and development costs.

Fluctuations in raw material prices.

Regulatory requirements and compliance costs.

Conduct thorough market research and obtain detailed quotes from suppliers and contractors to get a more accurate cost estimate for your specific project.

Let’s explore the key storage components and considerations for mini cement plant manufacturers who may want to invest in storage and warehousing.

Key Storage Components for a Mini Cement Plant

Feeding Hopper with Load Shell: Temporarily holds and meters raw materials before grinding.

Master Hopper: A larger storage unit that feeds raw materials to the feeding hopper, ensuring a continuous flow.

Fly Ash Storage Silo: A tall, cylindrical structure for storing fly ash in bulk.

Cement Silo: A large, vertical, cylindrical structure specifically designed for storing finished cement.

Key Considerations

Capacity: The size and number of storage units depend on your plant's production capacity and inventory needs.

Material Compatibility: Choose storage materials that are resistant to the corrosive nature of cement and fly ash.

Safety: Implement dust suppression and proper ventilation to ensure a safe working environment in storage areas.

Accessibility: Design storage facilities for easy loading and unloading of materials, minimizing labor and equipment requirements.

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Setting up a successful cement business in Nigeria needs extensive planning, sizeable capital, strategic partnerships and efficient execution. Find your competitive advantage through cost leadership, targeted differentiation or geographical dominance. Despite the complexities involved, significant long-term profits make cement manufacturing worth the effort for patient entrepreneurs.

Get our Practical Training Guide on How to start a Cement Manufacturing Business in Nigeria. If you are planning to enter the cement industry but don’t know where to begin with, We will provide you with the step-by-step guide on how to start a cement factory. The  cement industry presents massive opportunities, given the country’s rapid urbanization and infrastructure development. This step-by-step guide will walk you through the process of establishing a successful cement manufacturing business company from scratch in Nigeria. Thorough studies will help devise precise business plans on product types, pricing, locations, target markets, and financial modeling. Our experienced team guides you through every process step, from initial design and engineering to construction, commissioning, and handing the key to start the production process

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