Displaying items by tag: Dangote Cement
Consolidation in the African cement market
05 August 2015A member of the Global Cement LinkedIn group recently posed a question about the relative sizes of LafargeHolcim and Nigeria's Dangote Cement in the African cement market. The correspondent wanted to get a handle on their relative sizes and how the situation would change as a result of the merger. Would Dangote lose its position as Africa's number one producer? If so, would its aggressive expansion allow it to regain its position at the number one spot?
As both one of the most rapidly-growing markets in the world for cement and the one with the most potential for future gains, Africa has been discussed in this column on many previous occasions. However, we have previously considered Africa's different regional markets, be it Dangote-dominated West Africa, North Africa, rapidly-growing East Africa or the far south, where PPC is looking to counter Dangote's growing strength.
However, the formation of LafargeHolcim and the news that HeidelbergCement will acquire Italcementi (starting with an immediate 45% stake), has massively consolidated the African market. In conjunction with Dangote's rapid development, these deals have transformed the African cement sector from one with a large number of small national and regional markets into a far more homogeneous entity. A number of key players, namely LafargeHolcim, Dangote Cement, HeidelbergCement and PPC, are present in numerous important markets all over the continent.
In answer to the aforementioned LinkedIn group member, the Global Cement Lafarge-Holcim Merger Report, states that LafargeHolcim controls 47.1Mt/yr of capacity in Africa. The new group is present in markets as diverse as Egypt, Morocco, Nigeria, South Africa and Zimbabwe. It is currently Africa's largest cement producer.
The second-largest producer at the moment is Dangote Cement, the only African-based large multinational cement producer. According to its website, it has 31.2Mt/yr of capacity currently active in Africa. The group is rapidly expanding. "We hope to commission four other cement plants in Senegal, South Africa, Cameroon and Tanzania before the end of 2015," said Aiko Dangote, Dangote Group President this week.
The new Dangote capacity that we can identify adds 4Mt/yr. This takes Dangote's total to 35.2Mt/yr. This is close to the 37.1Mt/yr of African capacity that LafargeHolcim actually owns, but Dangote is always planning its next move. Indeed this week it was rumoured to have been looking at purchasing Italcementi itself, hence HeidelbergCement's rapid movement.
In its press-release, HeidelbergCement suggests that the purchase of Italcementi will give it a position as strong as Dangote in the African market at around 30Mt/yr. It will add strong positions in Morocco and Egypt to its existing strengths on the West African coast. For its part, South Africa-based PPC currently has around 8Mt/yr of capacity in South Africa (4Mt/yr), Botswana, Zimbabwe and Ethiopia. It is currently installing capacity in the Democratic Republic of Congo and as far afield as Algeria, where it is involved in a joint venture with a local group.
Between them, these 'Big Four' share approximately 116Mt/yr of capacity in Africa. According to the Global Cement Directory 2015, this is just over half of Africa's 225Mt/yr of cement production capacity. This proportion will only increase as Dangote and PPC enlarge their presences.
The multinational players will likely not expand as rapidly, even in Africa. At the launch of LafargeHolcim, Group CEO Eric Olsen was pretty clear that the company does not plan any 'capital-intensive' expansions in the coming years. HeidelbergCement's future actions are less predictable, especially as we are yet to hear about any divestments that may be required from HeidelbergCement and Italcementi in order to satisfy competition authorities around the world.
Whatever happens in the future, it is clear that the African cement industry has undergone a significant transformation in the past few weeks. With per-capita cement consumption far lower than on other continents, there will be plenty of room for growth as well as for more acquisitions, divestments, mergers and expansion projects from the 'Big Four' and others in the coming years.
Dangote opens Masaiti, Zambia cement plant
05 August 2015Zambia: Nigeria's Dangote Cement opened its US$400m cement plant in Masaiti, Zambia on 4 August 2015, signalling its increasingly international ambitions as it plans new investments across Africa. The plant is expected to produce 1.5Mt/yr of cement per year once it is fully operational, creating at least 1000 direct jobs and 6000 indirectly.
"We hope to commission four other cement plants in Senegal, South Africa, Cameroon and Tanzania before the end of 2015," said Aiko Dangote, Dangote Group president. "We have decided to invest in 16 countries across the continent because we believe that Africa's future is linked to cement."
Italy: HeidelbergCement rushed to buy control of Italcementi after fears that Nigeria's Dangote Cement also showed interest in the Italian cement maker, according to PM News. It has been reported that Dangote did not make a formal offer for Italcementi.
Carl Franklin, head of investor relations at Dangote, said that the company did not comment on specific rumours, but said that "As a large company we examine all options for growth." HeidelbergCement has not commented on whether it had faced competition from Dangote.
According to unnamed sources, the talks between HeidelbergCement and Italcementi began four months ago.
Italcementi chief executive Carlo Pesenti told local media that the deal was 'bulletproof' and there was no space for counter offers. The only outstanding condition was clearance from antitrust authorities. "If it wasn't for the antitrust approval, the shares would have already changed hands," said an unnamed source.
Having already agreed to acquire a 45% stake of Italcementi, HeidelbergCement plans to obtain as many of the remaining shares as possible in the upcoming mandatory buy-out offer, then squeeze out the remaining shareholders and make Italcementi privately-owned.
Nigeria: Dangote Cement's pre-tax profit in the first half of 2015 rose by 20.2% year-on-year to US$646m, according to Reuters. Its revenue rose to US$1.22bn from US$1.05bn in the same period of 2014.
Dangote plans new cement plant in Chongwe
31 July 2015Zambia: Dangote Group has announced plans to build a new cement plant in Chongwe, Lusaka, according to All Africa. Meanwhile, its cement plant in Masaiti is due to be officially commissioned on 4 August 2015.
Nigeria: Following criticisms by foreign media, which has called for a massive devaluation of the Nigerian Naira instead of foreign exchange restrictions on certain items by the Central Bank of Nigeria (CBN), Alhaji Aliko Dangote, owner of Dangote Cement, has voiced his strong support of the CBN's decision, calling the ban on 41 items from the foreign exchange market as 'excellent and one of the best decisions taken so far by the CBN governor Godwin Emefiele.' Dangote described the CBN's intervention as appropriate for the Nigerian economy. "We cannot be importing poverty and exporting jobs," he said.
The CBN recently announced the restriction of importers of 41 items from the official foreign exchange market. Some of these items include cement, rice, wheel barrows, head pans, margarine, palm kernel/vegetable oil, meat and processed meat products, vegetable and processed vegetable products, poultry, private airplanes/jets, Indian incense, toothpicks and canned fish in sauce, among others.
Dangote believes that this should be seen as a call for all hands to help with the development of the nation's economy. He said that the measure would encourage Dangote Group, "To look inward and produce locally to create jobs for our growing young population." Dangote said without the ban by the administration of former president Olusegun Obasanjo, he wouldn't have got the opportunity to grow his cement business as it is today, such that he is now exporting cement when only 10 years ago Nigeria was importing cement massively. His cement companies have a combined capacity of 20Mt/yr, providing hundreds of thousands of direct and indirect jobs across Nigeria.
Dangote to build US$150m new cement plant in Yaounde
06 July 2015Cameroon: According to All Africa, US$150m will be invested by Dangote Group to build a new cement plant in Yaounde. The board chair and CEO of the Dangote Group, Aliko Dangote, said that the investment's aim will be to 'totally eliminate' any future cement demand increase in the country."Cameroon will not lack cement. We can assure the government that we are here to stay and will continue to invest," said Dangote.
Nepal: Dangote Cement Nepal has said that it will start the construction of a plant in Makawanpur in three months, when all of the preparatory works, licensing and permissions are complete. D V G Edwin, executive director of Dangote Group, said that the company would also acquire a license for an additional mine by then.
Dangote Cement Nepal plans to start production within three years with an investment of US$550m. It will be Dangote's 15th cement plant and will have 6000t/day of production capacity.
Meanwhile, Dangote Group has provided US$1m of to Nepal's Disaster Relief Fund. The support was provided through Dangote Foundation, the corporate social responsibility arm of Dangote Group. Zouera Youssoufou, managing director of the foundation, handed over the cheque to prime minister Sushil Koirala on 17 June 2015. According to company officials, Aliko Dangote, chairman of Dangote Foundation, has also sent a message of sympathy to the government and assured the foundation that support in the rehabilitation of earthquake victims would be provided.
Dangote to expand Ethiopian cement plant
09 June 2015Ethiopia: Accoring to Nigeria News, Dangote Group president Alhaji Aliko Dangote has said that 'plans are afoot' to double the capacity of the newly-opened US$500m, 2.5Mt/yr capacity cement plant in Mugher, Oromia, Ethiopia. Dangote said that the expansion work would begin before the end of 2015.
The decision to set up and then expand the plant was informed by the 'enabling' environment created by the Ethiopian government with massive investment in several large-scale infrastructure projects, including the construction of the continent's largest hydropower dam. The Ethiopian plant will create direct employment for 2000 people in the main plant operations and logistics, with a fleet of 600 trucks. 5000 indirect jobs will also be created.
Dangote said that achieving real economic integration in African would require political stability and a breakdown of the barriers and borders between countries, which hinders free flow of goods, services and people. "We need to make deliberate efforts to encourage Africans, not just foreigners, to invest in Africa. Dangote Cement is currently in 16 African countries with plans to invest in many more over the next years. There are a number of other successful pan-African brands today such as MTN, Shoprite and Ecobank," said Dangote. "We need to encourage this trend to see more investments in Africa by Africans. Above all, there is need to encourage the private sector to collaborate with governments across Africa to address the issue of infrastructure deficit, which has plagued the continent for decades."
Ethiopia's prime minister Hailemariam Desalegn said that as one of the fastest growing economies in the world, the country's investment potential had barely been scratched. He said that the government was spending millions of dollars on critical infrastructure to address investment and align with policies that were already in place to aid investors. "Ethiopia represents a lucrative market that has barely been tapped with its 95 million people and growing economy," said Desalegn.
Ethiopia's Minister of Industry, Ahmed Abitew, said that, with the new plant, the country's cement sector would make significant growth in meeting local demand, which has grown due to infrastructural development. According to him, production has risen from 11.2Mt/yr to 17.5Mt/yr. "The government is giving due attention to the industrial sector with its average growth of 20%/yr," said Abitew.
House of Representatives try to avert clash between Edo and Kogi over limestone deposit
03 June 2015Nigeria: On 2 June 2015 the House of Representatives intervened in a dispute between Ohinoyi of Ebiraland, Alhaji Ado Ibrahim and Company (AICO) in Kogi State and Okpella in Edo State over the ownership of a limestone deposit. The motion on the issue, which came as a matter of Urgent National Importance, moved by Edo lawmaker Abubakar Momoh, was unanimously adopted by the House.
"This peaceful co-existence is being threatened by the purported sale of OBU Limestone in Okpella, owned by Okpella Cement, to Dangote Company by Alhaji Ado Ibrahim. This is with a view to frustrating BUA Cement Company, which acquired Okpella Cement as a private investor," said Momoh.
According to Momoh, BUA has also built a cement plant in Okpella, which is due for inauguration in June 2015. "The House recalls that when in 1994, this same ownership of OBU Limestone deposit arose, the Okpella community went to court on the issue. The suit was filed against AICO, which prompted AICO to file application in 1997 to the Okpella community for local consent. The consent was turned down on account of having already granted the same to Edo Cement, which owned the mining license of the deposit," said Momoh.
According to Momoh, if nothing was done immediately to settle the matter, it might lead to a clash between the parties. He urged the security agencies to make adequate security arrangements in the location. "The governments of Edo and Kogi should intervene and settle the matter amicably, before it degenerates into serious inter-communal clash between the two states. The National Boundary Commission is urged to intervene with a view to permanently establishing the boundary between Edo and Kogi."
The acting speaker, Emeka Ihedioha, who presided over the plenary session, advised the two communities to maintain peace and assured them that the house would do its best to resolve the issue.