Dangote signs $4.3b cement deal with Chinese firm

Dangote Cement Plc yesterday signed a $4.34 billion contract with a Chinese construction company, Sinoma International Engineering Company Limited towards expansion of the cement company’s production capacity.
In what Dangote Cement described as “major move towards expanded production capacity”, Dangote Cement signed several contracts with the Chinese firm to build a total of 25 million metric tonnes per annum spread across the cement company’s operations in Nigeria, Nepal, Ethiopia, Kenya, Zambia, Senegal, Niger, Mali, Cameroon, Cote D’Ivoire and Ghana.
Under the contracts, Sinoma will construct 1.50 million metric tonnes per annum cement production facility each in Zambia, Senegal, Niger, Mali, Cameroon, Cote D’Ivoire and Ghana. The Chinese firm will also construct two 3.0 million metric tonnes per annum facilities in Itori, Nigeria and two 1.50 million metric tonnes per annum facilities in Kenya. The firm will also construct 3.0 million metric tonnes per annum facility in Nepal while Ethiopia will get a 2.5 million metric tonnes per annum facility.
Dangote Cement’s share price dropped by N3.90 to close at N165.15 yesterday at the Nigerian Stock Exchange (NSE).
Dangote Cement had recently said it expected to include returns from its African expansion projects in the group audited report and accounts as from the 2015 business year.
According to the cement group, the expansion projects are expected to increasingly generate additional returns as existing plants gather momentum and new projects come on stream. Dangote Cement’s new plants in Senegal, Cameroun, Ethiopia and Zambia have commenced operations. Dangote Cement has undertaken massive expansion project in 16 African countries, outside Nigeria.
The company had paid a dividend payout of N6 per share for the 2014 financial year. The group’s new Senegalese plant, located in Pout district, about 75 kilometers from Dakar, the country’s capital, is expected to create more than 1,000 jobs, with a total production capacity of 1.5 million tons annually. With the new plant, the company hopes to improve the country’s cement production capacity with an additional 1.5million tons, while serving an export market demand of two million tons along the Mali axis.
Country Head of Dangote Industries, Senegal, Luk Haelterman disclosed that the group has invested about $300 million in the cement plant, adding that actual production and sales started on January 10, 2015.
According to him, Senegal is a market with over-capacity of cement, because it had two cement factories before now. But today, Dangote has become the biggest and best because it has and produce the 42.5 grade only, which is better than it met on ground, which is the 32.5 grade.

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Group Executive Director, Dangote Cement, Mr. Devakumar Edwin added that the group had commissioned nine million tons of new capacity at it Obajana and Ibese plants, which placed the two plants among the biggest cement plants in the world.
“Outside Nigeria, we opened up new factories in South Africa and Senegal in 2014 and our grinding plant in Cameroon has just become operational. We have started commissioning our plants in Zambia and Ethiopia and are on track to open more factories in Africa in the coming years. The success of our expansion is evidence that we are delivering on our strategy to become e a much larger, more international company,” Edwin said.
According to him, in spite of the challenging conditions of the erratic fuel supply and prolonged rainy season that affected revenues and profitability in Nigeria, the fact that the company increased its dividend payout ratio is a clear sign of confidence in its future. Dangote Cement ended 2014 with a revenue of N392 billion as against N386 billion in 2013.

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