Dangote Cement: Cost of power generating liable for cement price hike

 

dangoteDangote Cement Plc has explained reason behind the sudden increase in its cement price in Nigeria.

The Africa’s largest cement producer said increase in cost of power generating is responsible for the hike in its cement price.

“Disruption to the gas supply, our preferred fuel in Nigeria, has deteriorated in the present quarter. Alternative fuels such as LPFO, and to a much lesser extent coal, are up to three times higher in costs and the need to use them instead of gas has led to a substantial cost increase”, the company’s explained.

It further that, the Naira has experienced a significant devaluation against the dollar over the past few weeks saying, “Both of these external factors have combined to increase our costs substantially in our largest market.”

“We have previously indicated that we would increase the price of cement to offset increased in costs caused by devaluation and other cost factors. The present situation has regrettably forced us to increase the ex-factory price of cement by N600, bringing the price back to levels only marginally above they were before we announced a price decrease in September last year. We have accelerated installation of our coal mills and coal mining initiative in Nigeria and now expect to begin mining our own coal in November. Most of our production lines are now capable of running entirely on coal and this drive towards self-sufficiency will almost eliminate our dependence on gas supplies, imported coal and, more significantly, LPFO”, the company’s stated.

Chief Executive Officer of Dangote Cement, Onne van der Weijde said, “These are challenging times for Nigeria and for Dangote Cement but we are taking strong actions that will position the company for continuing success.

Our coal mining initiative will benefit both the company and the Nigerian economy by reducing the need for foreign exchange and helping us to both protect existing jobs and create new ones.

Although we have indicated a more measured approach to our expansion across Africa, we have new operations opening soon in Congo and Sierra Leone and these will strengthen the company’s profitability and generate additional foreign currency earnings.

Despite the challenges we are facing, we continue to focus on becoming a global force in cement production.”