Dangote Cement invests $3 billion on plants, terminals across Africa

Following through with its ambitious expansion projects across the continent, Africa’s leading cement manufacturer, Dangote Cement Plc has invested $3 billion to build manufacturing plants and import/grinding terminals across Africa. The company’s operations span Cameroon, Congo, Ethiopia, Ghana, Senegal, Sierra Leone, South Africa, Tanzania, and Zambia.

In boosting its revenue and working capital, the company recently announced the issuance of N50 billion Series 1 and 2 Notes which is listed on the FMDQ OTC Securities Exchange. The Commercial Papers comprises N12.04 billion and N37.96 billion issuances under its N150 billion Commercial Papers (CP) programme. This is to access a new source of funding for the company’s future plans of building new grinding plants along the West African coast, and ensure they have clinker export facilities in Nigeria. They are looking at a possibility of two new lines in Nigeria, perhaps by the end of 2020, and it’s likely these will be in Edo State and Obajana, with a combined capacity of 6Mta.

Recently at the company’s annual general meeting (AGM), the chairman, Aliko Dangote noted that the company experienced some challenges in operating in sub-Saharan Africa, saying that the Management responded in robust fashion and benefited from the diversity they have created across their business and because of their local knowledge and attitudes towards doing business in neighboring countries in Africa.

While reviewing the company’s operations in the second quarter of 2018 the company posted an increase of 13.9 percent in total sales in Nigeria totalling 7.8 metric tonnes and reduction in Pan-African volumes by 3.9 percent owing to the shut down of operations in Tanzania. The strong first half of the year performance by the company in Nigeria was driven in part by an excellent recovery of the country’s economy. Profit before tax increased by N29.96 billion in the corresponding period of last year and total revenue generated went up by N69.77 billion in the same period.

This success is partly owed to the protectionism the company has received in the cement sector, thereby turning it into a major exporter of cement in the continent. In addition to good management decisions made by the company, they were able to propel the increased use of local coal in Nigeria and that helped to improve fuel security, maintain production uptime and it reduced the need for foreign currency. The coal is sourced from their parent company, Dangote Industries and from other Nigerian suppliers which have worked out just fine because it enabled them to phase out the use of expensive low pour fuel oil in their kilns and also to reduce the use of imported coal.

Theis expansion is targeted at providing much-needed infrastructure to cater for the rapidly growing continent which according to the World Bank report will increase to about 2.5 billion people by 2050.


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