Dangote to raise cement capacity by 9mmtpa

Dangote Cement plc has disclosed the start of the construction of new cement plants in two communities in Nigeria, in a move to consolidate on its leadership in the sector.

The new plants are expected to add 9 million metric tons per annum (mmtpa) to the company’s current local cement output of 29.25mmtpa, bringing it to a total of 38.25mmtpa.

According to the company, the communities it is setting up the new plants are Okpella, Edo State, with a 3mmtpa plant, and another 6mmtpa capacity plants in Itori, Ogun State.

Devakumar Edwin, group managing director/CEO, Dangote Cement, who disclosed this in Lagos at the weekend, said: “The Okpella plant will be made up of one line and will produce a total of 3 mmtpa, and the Itori plant, which will deliver approximately 6mmtpa from two production lines. Both plants are expected to come on stream within the next three years.”

The move by the company is to help expand the spread of the company’s manufacturing outfits, thereby reducing the transportation cost component of their operations.

The new investments will further lower cost of production, bring about future reduction of the price of cement, and also generate employment opportunities for the youths of host communities, Devakumar said.

Onne Vander Weijde, group managing director, Cement, Dangote Industries Limited, said the demand for cement was still high considering the level of population growth in Nigeria, saying Nigeria’s per capita consumption of the product, which is just above 100kg per capita, was relatively low, indicating a massive growth potential.

“There has always been a surplus in demand because cement was not readily available, but ours is available and the prices are affordable. Consumer prices have fallen by 35 percent in naira terms, but if you take it in dollar terms and relate it with today’s parallel market rates, you will realise the price of the product has gone down in Nigeria, and in some cases below the prevailing average global price.

“This in itself is a huge driver for increasing the per capita consumption,” he said.

According to Weijde, the investments will create in excess of 5000 jobs at the beginning stage, as logistics and construction of the plants will also provide more employment opportunities indirectly to surpass that amount.

In his remarks, Joseph Makanju, special adviser to the President of Dangote Group, said expectations were very high about cement price reduction when the nation began building local cement production capacity.

Makanju noted that those price reduction expectations were now being met with cement now selling at about N1,300 per 50kg bag, among the most affordable in the world.

“Before now, cement was selling for over N2000. There is a lesson here to learn for the country and the media has a big role to play in this because when you go through transformation by moving a country from being dependent on import, there is need to encourage local investment to make those products being imported into the country,” he said.