Dangote Cement: Advancing Backward Integration in Sub-Region

The quest for countries in the sub-region to be self-sustaining in areas of competitive and comparative advantages, has in the recent past been given real impetus with the investments of African cement manufacturing giant, Dangote Cement Plc.

Such countries include, Nigeria, Senegal and Cameroun, where the company has not only established state of the art cement plants, but has also taken its campaign for the production and proper application of high quality cement grades to the right type of structure.

After creating much awareness on the need for Nigerians to adopt the right cement types in 2014, which led to some global standards being made mandatory in the country, Dangote cement has extended the campaign to Nigeria’s regional neighbours Senegal and Cameroun.

The impact that the new development has made can be attributed to the commitment of Dangote to invest in the backward integration concept, this further has helped Nigeria a one-time importer of cement to become a net exporter of the commodity, due to expanding production capacity led by the Dangote cement group which produces 20.25MMTPA, of the country’s total capacity of 28mmt.

Dangote Cement’s current total production capacity in Nigeria from its three existing cement plants namely Obajana (10.25MMTPA), Ibese (6.0MMTPA) and Gboko (4.0MMTPA) is 20.25MMTPA, however the company has also revealed plans to escalate Nigeria’s total capacity to 37mmt with expanded capacity soon.

The Dangote cement company has been praised for its success in crashing the market prices of cement in Cameroun and its neighbours , when it rolled out 42.5 grade cement from its newly built $150m Douala cement plant with 1.5 million metric tons per annum capacity.

The company’s ex-factory price is the cheapest in Cameroun when compared to other products in the Cameroun market, Dangote Cement is even cheaper than the most common 32.5 grade sold in the open market as stated by the company’s general manager, Engr. Abdulahi Baba.

The company which rolled out its product massively into the Cameroun market also assured the host country that it would help shore-up local production of the vital product following the ban on importation of cement into Cameroon.

Dangote Group who saw the ban as an opportunity for the growth of the cement sector in the country, has put in place expansion plans, which would enable the company attract more foreign earnings across the neighbouring countries, as local demands of the product would easily be surpassed when in full capacity.

The assurance was given during the formal launching of the Company’s high grade 42.5 cement type into the Cameroonian market after a successful inauguration of the company’s 1.5m MTPA capacity cement plant in Douala.

Expressing gratitude, the management of the company commended the government of Cameroun for taking a bold step by banning importation of the product, stating that the ban was a vote of confidence on the ability of cement manufacturers in the country, especially Dangote Cement, to meet and surpass local consumption demands.

Baba stated that with the company’s 1.5m MTPA, the three manufacturers of cement in the country are about surpassing local consumption demands, explaining that Dangote management is already looking towards export prospects to neighbouring countries.

“Cameroon with a consumption growth of eight per cent, and with a local production of 2.9m MTPA, the Dangote management was looking at export potentials in Chad, Central African Republic, Garbon, Equitorial Guinea and Togo even as the Company considers future expansion,” Baba stated.

He explained that the plant has one of the most recent facilities of ensuring that there are no dust emission during production, which is in line with the world’s best practices.

The General Manager stated that the company has put strategies in place to achieve 30 per cent market share, noting that there was also plans of achieving 30 per cent export of total production.

“The demand is growing every day because of the infrastructural developmental efforts of the government. We will take the advantage of the ban on cement import here in Cameroon. We have structured distributorship system. Our route to market is very clear and defined. We are building a jetty so that we are not held down but have smooth distribution during congestion at the ports.”

“We are set to achieve stability of operations in 2015 Q1, pursue aggressive market penetration and consolidation through appropriate above the line and below the line activities. 170 distributors have been selected after the interview process. 85 distributors will start, while the number will gradually increase with increasing production.”

“Mines at Tombel has been opened up and it is under exploitation. The Mines at Batoke would soon become operational. Exploration licence for Foumban deposit has also been secured. EIA and other activities for securing mining lease are being processed. About 5,000 MT of pozzolana is stockpiled at the living area.” Baba stated.

During a media tour of the plant, a distributor, Fonoggi Serge, Managing Director, ETS Limited, attested that the product was of a very high quality and sold at a very affordable rate.

“Consumers and other dealers are already making demand for the commodity. I sell 20 tons daily and the acceptability of the product is rapidly increasing and it goes for between 4,000 – 4,500 CFA.” He stated.

Also, a block maker, Kamdoum Rodrigue, certified that the product is very good, stressing that it takes a shorter period to dry.

“Before now, we used to stay for one week waiting for the blocks to dry, but with this new product, we only stay for two to three days and our blocks are ready for supply. Now we meet our customers demand earlier than it used to be,” Rodrigue stated.

Last month in Senegal the Dangote Group also rolled out products from its $300 million Cement Plant there amidst excitement by the country’s government for creating 5,000 direct employment.

The giant stride of Dangote in the establishment of the cement plant marked the single largest investment by an African in Senegal.

The new plant located in Pout district of Senegal, about 75 kilometres East of Dakar, the country’s capital, has a nominal capacity to produce 4000MT per day and 1.2MT per annum and with the capacity to create 5,000 jobs.

Indeed Dangote Cement became an instant hit in the market because of the 42.5 high quality grade.

Luke Haelterman, the Country Head of Dangote Cement, noted that Dangote Cement offered the best choice for consumers as it is the only 42.5 grade high quality cement available in Senegal market, adding that the commencement of production will boost the housing sub sector of the Senegal building industry.

Haelterman noted that the entrance of Dangote cement into the Senegal market has altered the equation in the cement market, saying that the company has targeted the exportation of its product to Mali with the tune of two million tonnes per annum.

With a dedicated commitment to investing in the growth of the African continent, Dangote cement has truly proven to be the pride of Africa, the Sub-region and most of all Nigeria.