Dangote Group to Invest $3.9 Billion on Cement Production

Dangote Cement Plc (DANGCEM), Africa biggest producer of the building material, plans to invest $3.9 billion constructing plants in countries including Ethiopia, Tanzania, Republic of Congo and Gabon.

Each facility will have capacity to produce 1.5 million metric tons a year, with construction work taking off “within the next three months,” the company said in an e-mailed statement today. The company signed an agreement to build the plants with Sinoma International Engineering Co. (600970), a unit of China National Materials Co., the world’s largest producer of cement-making equipment.

Separately, “the group plans to construct a 3 million metric ton per annum plant in South Africa and one grinding plant in Cameroon with a capacity of 1.5 million tons per annum,” the company said. Dangote is planning a new cement line at its Obajana plant in Nigeria with capacity of 3 million tons a year and two additional lines at Ibese in Ogun state, increasing capacity by 6 million tons a year.

Dangote Cement is the biggest company traded on the Nigerian Stock Exchange with a market value of 1.9 trillion naira ($12.3 billion). The company’s parent, Dangote Industries Ltd., has a 64 percent stake in Sephaku Holdings Ltd. (SEP), a South African mineral exploration and development company that also produces cement. Dangote Cement expects production capacity across its operations to advance to 50 million tons a year in the next five years.

Shares Fall

Dangote chose Sinoma as it “understands the peculiarities of doing business in Africa and offers cheaper cost of construction when compared to its European counterparts,” Devakumar Edwin, group executive director of business development at Dangote, said in the statement.

Dangote Cement shares retreated for the first time in 13 days, losing 2.5 naira, or 2 percent, to 123 naira by the 2:30 p.m. close in Lagos, reducing the stock’s gain this year to 2.5 percent, compared with a 1 percent increase in the Nigerian Stock Exchange All-Share Index over the same period.

“Investors are waiting for more news and explanations on” whether the units will report separately or if it will remain a consolidated company, Dare Fajimolu, a Lagos-based cement analyst with CSL Stockbrokers Ltd., said by phone today.

To contact the reporter on this story: Vincent Nwanma in Lagos at vnwanma@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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