Dangote Group’s cement plant in Cameroon is set to take off in next month, with annual production capacity of 1.5 million metric tonnes (MMTPA) of 42.5 grade cement, thus adding to a vast growing empire spread across many African countries, writes Assitant Editor Chikodi Okereocha, who is just back from Cameroon.
Africa’s quest for self-sufficiency in quality cement is on course.
From Zambia through Tanzania, Nigeria, South Africa, Congo (Brazzaville), Ethiopia, Sierra Leone, Ivory Coast, Liberia and Senegal to Ghana, where either a cement manufacturing plant or terminal operation for bulk bagging of cement is being planted, the continent is getting closer to achieving its long-term ambition to develop a 50 million metric tonnes per annum (MMTPA) of production and terminal capacity by 2015.
The ambition, sustained through aggressive investments almost single-handedly by Aliko Dangote, Africa’s richest man and president, Dangote Industries Limited (DIL), is to transform Dangote Cement, one of the companies under the Dangote Group, into a truly pan-African champion in the cement sub-sector capable of competing globally with the largest companies in the world. With projects and operations in Nigeria and 14 other African countries, the Dangote Group draws excitement across the continent over the prospects of meeting the target and the numerous economic benefits the development would spur.
In Cameroon for instance, where Dangote’s $140 million, about N22 billion cement plant, is expected to roar into life next month, producing 1.5 MMTPA of cement, the country’s estimated 22 million population is upbeat over the numerous socio-economic impacts of the investment. To start with, the plant would generate 300 direct jobs and thousands of indirect jobs. The project, located within the premises of the country’s largest sea port in Douala, Cameroon’s commercial capital, has reached 70 per cent completion. The remaining 30 per cent includes roads within the expansive plant.
The project, which has Sinoma International Engineering of China as Procurement and Construction Engineering (EPC) contractor, sits on eight hectares of land and parades the best technology in cement production.
“We have a jetty to support this operation. That is why this site is very strategic because it is adjacent to the water front where we are building a jetty of 200 meters long for all our clinker and gymson ship to come and berth here. Right from the ship side we are installing some of the best equipment in dust control,” the General Manager, Dangote Cement Cameroon, Abdullahi Baba said.
Baba, who spoke to journalists during a facility tour of the factory on June 24, disclosed that the contract for the construction of the jetty, which is being designed by PI Engineering, a local contractor, would be awarded within the next two weeks. He also noted that the plant parades a clinker silo with a capacity of 30, 000 tonnes as well as a Vertical Roller Mill (VRM) with a capacity of 170 tonnes per hour.
“That is the most efficient grinding mill in the world in terms of energy, noise, and pollution. We have two cement silos each with a capacity of 7, 000 tons. So, all together, we can store a total of 14, 000 tons of cement. We have three bagging machines and six automatic loading machines. That means all the trucks will be loaded automatically,” he said.
But it is not so much the state-of-the-art technology being deployed in the construction of the cement plant that has raised the adrenalin of Cameroonians. Rather, it is the prospect of a drastic reduction in the price of cement on account of the competition the plant’s production would bring to the industry.
“Our price will be quite competitive.,” Mr. Baba said, adding that the government of Cameroon is interested in diversifying the cement market.
“We welcome other cement manufacturers; the more, the merrier, it is better for Cameroonian consumers,” he said.
The cement market in
Cameroon, The Nation learnt,
is dominated by a few foreign manufacturers, such as the ‘Cimenteries du Cameroun’
(CIMENCAM), owned by the French group Lafarge. The French company is said to have enjoyed a monopoly in Cameroon’s cement industry for over 40 years. CIMENCAM has two factories in Douala and Figuil and has begun plant construction works on the outskirts of the capital, Yaoundé, to supply the Central, Southern and Eastern regions of the country. There is also the Moroccan group CIMAF whose annual production capacity is 500, 000 tonnes, and another cement project initiated with support from a Korean firm. The project is being set up in the country’s South-western province of Limbe.
However, the combined capacities of the existing manufacturers can hardly meet local requirements in terms of quantity, quality and pricing. Cameroon, The Nation learnt, has been facing recurrent cement shortages for more than a decade. This was why the country opted for massive imports, with potential domestic demand being 8 million tonnes per year (Mt/yr), while domestic production is currently estimated at just 1.6 Mt/yr. This was why not a few Cameroonians heaved a sigh of relief when the foundation stone for Dangote Cameroon cement factory was laid on September 19, 2012. Their expectation was that the breaking of the monopoly enjoyed by the French company by Dangote cement would crash the price of cement in the local market and also ensure products’ availability.
For Cameroonians, the icing on the cake is perhaps, the quality of cement the Dangote Cameroon plant is bringing to the table. While existing cement manufacturers in the country are churning out 32.5 grade of cement, Dangote Cameroon plant, in line with the standard in all its factories across the world, is raising the bar with the production of 42.5 grade cement. “As a policy, Dangote cement worldwide produces 42.5 grade of cement because we take the safety and health of our people very seriously,” Mr. Baba said.
In Nigeria where ‘Mr. Cement’ as Dangote is popularly called, his company produces only 42.5 grade cement in all its three plants in Obajana, Kogi State; Ibese, Ogun State; and Gboko, Benue State.
According to the Group Managing Director (GMD) of the company, this is in line with the company’s adherence to global best practices of cement production of a minimum of 42.5 grade. He said Dangote Cement chose to produce 42.5 cement grade because it is stronger and has better qualities such as higher strength capability and rapid setting, which makes it the preferred grade among block makers, builders and construction workers.
Dangote Cement’s current total production capacity in Nigeria from its three existing cement plants namely Obajana (10.25 MMTPA), Ibese (6.0MMTPA) and Gboko (4.0MMTPA) is 20.25MMTPA. The Obajana Cement Plant (OCP) is reputed to be one of the single largest cement plants in the world with a combined capacity of 10.25 MMTPA. By the time Line Four, which adds 3.0 MMTPA to the existing capacity, is completed in 2015, the total capacity of the Obajana cement plant will be 13.25 MMTPA, making it one of the eight largest manufacturing concerns in the world.
Apart from manufacturing cement, Dangote also calls the shot in the bagging of bulk cement in various locations in Lagos and Port Harcourt. The terminal operations have a combined capacity of 9 MMTPA.
Tanzania, others also in line
Yet, Nigeria and Cameroon
are not the only African coun
tries where the serial investor has taken the campaign to drive self-sufficiency in cement and in the process put the African economy on the global map.
Dangote’s pan-African outlook and philosophy has also seen him inaugurating a $500 million cement plant in the East African country of Tanzania. That was on May 27, 2013.
Operation is scheduled to begin in October 2015 at the 3 MMTPA gas-fired plant in Mtwara, Tanzania. At the foundation laying ceremony for the plant, Dangote said its commencement was part of the strategy of the conglomerate to increase its capacity by 2015. The company is also investing in new cement production in Zambia and South Africa.
After the opening of the 1.5 MMTPA Dangote Ndola plant in Masaiti,
Zambia, the company has concluded plans to also open another $400 million cement plant in Lusaka, the capital of Zambia, with a production capacity of 1.5 million MTPA, bringing its total investment in Zambia to $800 million.
The acquisition of 64 per cent equity in local company Sephaku Cement has also goven Dangote a foothold in South Africa’s cement market. The deal, according to experts, represents the largest single foreign direct investment in South Africa by an African company. The South African plant has a capacity of 2.2 MMTPA. The company also plans to build a 1.5 MMTPA grinding plant in Abidjan, Ivory Coast, with operations projected to begin in early 2015.
Same for Ghana where the company plans to open 1.5Mt/yr grinding plants in Tema and Takoradi by early 2015. Dangote’s terminal operations in Ghana has a total capacity of 3.0 MTPA. And in Liberia, order for equipment has been made for an import facility in Freeport, Monrovia. Imports into Liberia are expected to commence in early 2015.
The Dangote cement plant in Senegal and Ethiopia is 1.5 MMTPA each, while Congo (Brazzaville) is 1.5 MMTPA.
$10 billion on cement plants
In all, Dangote Group is said to have invested close to $10 billion on cement plants. The huge and mind-boggling investment, according to the business mogul, is fuelled by the need to complement African governments in tackling the continents’ developmental challenges, which are quite tremendous. The billionaire businessman reiterated this much when, as a panelist on ‘More Inclusive Growth and Creating Jobs’ at the recent World Economic Forum Africa (WEFA) in Lagos, he said the solution to poverty in Africa is for Africans to invest their money at home rather than take the continent’s wealth away to others parts of the world.
He noted that the problem of poverty and lack of development on the continent had a lot to do with activities of Africans who deny the continent of its resources by taking them to other parts of the globe.
Dangote, who said he would invest $16 billion on the continent in the next four years, emphasized that massive investment in Africa should be the pre-occupation of both state and non-state actors in Africa.
While noting that there was no alternative to industralisation of the continent, he said “when you import goods, you import poverty and you export jobs to other parts of the globe where such goods are produced.”
In investing in Africa, particularly in the cement sub-sector, Dangote believes in the school of thought, which says that Africa is the last remaining frontier for real growth. This perhaps, explains why at every turn or opportunity, he has never failed to remind whoever cares to listen that Africa offers one of the highest returns on investment (ROI) in the world for discerning investors who can take calculated risks. It also explains why at a time many investors are citing inadequate infrastructure as one of the reasons for holding back, Dangote is charging on.
He has a knack for investing heavily into infrastructure anywhere his companies have operations, such as building roads, hospitals, providing electricity, borehole, and other necessary infrastructure to improve the lives of people in the host communities and also ensure that his companies’ operations are not in any way hampered by the nation’ huge infrastructure deficit. This is why the company has a power plant to power its operations anywhere it has its footprint. The excess from the power plant is usually sent to the national grid for the use of the host communities.
Although, Dangote Cameroon, after studying the power utilisation and the outages in the country, and being a grinding plant, believes that the national grid can support its grinding operations, the company has in place a plan B with regards to power supply for its operations. Mr. Baba disclosed that if the need arises, Dangote cement would build a power plant to support its operations and also feed the host communities in Cameroon.
Navigating many a
investment landmine
But it has not been a smooth
jolly ride for the serial inves
tor. He has had to contend with challenges the magnitude of which could only be surmounted by a lion-hearted investor like him. Apart from general issues around poor infrastructure and policy inconsistency, among others, which are thorns in the flesh of investors, the billionaire businessman had peculiar challenges.
For instance, in the Senegalese town of Pout, 40 kilometers west of Dakar where the new Dangote Cement plant is located, the company had to contend with legal action from competitors who say the new plant was built in violation of safety standards and without a proper environmental impact assessment. There was also opposition by those who claimed the plant encroached on their land. However, Dangote, a man well-schooled in commercial diplomacy especially how to navigate investment landmines, was able to pull through.
Similarly, Dangote Cement, which was first registered in Cameroon in
2008 and signed an investment agreement with the Government of Cameroon in September 2011, could not mobilise Sinoma of China to site until September 2012 when actual construction started. Before the commencement of construction, a soil investigation of the area was conducted and the result showed that the site was all water, which needed to be reclaimed.
“This whole area was reclaimed. We never knew this. However, during our soil investigation, we got to get all these information and of course, that led to a complete re-engineering of our foundation.
Because of that, every single structure you are seeing here is standing on piles. We sank a total of about 8, 500 piles on this site. Without piles, there is no way this place can support an investment or structure of this nature,” Mr. Baba said.
The company also had a problem with the host community, which was promptly resolved.
“We had a problem with the community because there is only one cement industry they are used to and they felt that if another cement industry is coming here, it’s going to give them the same level of pollution they have been used to. It took us a lot of time to convince everybody that this technology is different, it’s new, and there is no way we can give that level of pollution,” the General Manager said, adding, “Our number one priority is pollution control; we have 100 per cent dust control mechanism using the best technology in the world,” he said.
There is also the challenge posed by those who allegedly do not want the monopoly in the cement industry broken. For instance, a reliable source informed The Nation in Cameroon that even before Dangote cement successfully sealed the deal to establish a plant in that country, the existing operators were jittery, fearing that the coming of the company particularly its decision to produce 42.5 grade of cement in a country where existing operators are still producing the lower grades of cement, might mean bad business. To the competitors, the coming of Dangote means that they may be forced to thinker with their current pay or wage structure. This is so considering the fact that Dangote has a track record of holding down the best hands in the industry with irresistible and mouth-watering pay package.
“We have not come here to rock the boat; we have not come here to create employment problem for our competitors, Mr. Baba assured. But it is doubtful if the competitors are swayed by such assurances. Also, in Nigeria where the company became the first to produce 42.5 grade of cement, the price of the product remains the same for 32.5 grade.
The Director of Sales/Marketing, Dangote Cement Plc, Mr. Etim Ekanem, said in the last five years, the price of cement from Dangote has remained constant despite the high inflationary rate, high cost of fuel, and infrastructure deficit, and other operational challenges.
“Even though, we have consistently been producing 4.2 grade cement the price is the same for 32.5 grade,” he pointed out, noting that the company invested so much in logistics hence, the company’s cost of moving cement products is the lowest in the industry.
The same scenario is expected to play out in Cameroon and, indeed, other African countries where Dangote Cement has presence. And when this happens, experts say that it would help boost the drive for self-sufficiency in quality and cost-effective cement in Africa.
