Dangote Moves To Minimize Cost, To Mine Own Coal In Q4
Aliko Dangote, Nigerian Billionaire and Business Mogul[/caption]
In a bid to minimize the cost of production and increase margin across his cement factories, Nigeria Billionaire, Aliko Dangote is set to start mining his own coal in the fourth quarter of 2016 so as to seamlessly switch from gas plants to coal by the end of the year.
His new initiative follows the current downturn in the gas industry resulting from activities of militants in the oil-rich Niger Delta region.
According to the Group Chief Executive officer of Dangote Cement Plc, Mr. Onne van der Weijde, the company will commence mining its own coal at Ankpa, Kogi State by fourth quarter of the year.
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Weijde disclosed this while addressing stockbrokers at the company’s Facts Behind Figures on the Nigerian Stock Exchange, NSE.
“We decided two to three years ago to diversify and re-risk fuel supplies.
“Klin fuel is the major cost of cement production; our group margins are affected by the mix of fuel in Nigerian klin. The preference is to run on gas because disruptions and maintenance have led to shortages since 2014, thus affecting our margins. Also back-up LPFO is often not available locally, forcing production shutdowns prior to use of coal.”
“Gas is priced is US dollars, but paid in naira and therefore is affected by foreign exchange, FX. However, locally bought or mined coal will be priced in naira.
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Weijde also said the Dangote Cement grew sales volume by 60 per cent in the first half of 2016, noting that the company expects continued growth in the second half of the year.
