Dangote Cement Plc has said it would start 100 per cent coal production in September 2016, in an attempt to overcome the shortage of gas supply in the country and reducing the challenging of foreign exchange paid on gas.
The chief executive officer of Dangote Cement, Onne Van der Weijde, made this known at the company’s fact-behind-the-figures presentation on the Nigerian Stock exchange (NSE) in Lagos, yesterday.
Weijde said the company has decided three years ago to diversify and de-risk fuel supplies and go into coal production, saying the coal mills would be in operation by end of September 2016.
He added that the some of the company’s plant in Obajana in Kogi State and Ibese in Ogun State were already using locally-purchased coal for operation, blending with imported coal to assure optimal quality.
“We will begin mining our own coal at Ankpa in Kogi State in fourth quarter,” he said.
He pointed out that coal would transform profitability of Gboko plant which was previously on 100 per cent LPFO.
He added that klin fuel was the major cost of cement production, saying that group’s margins were affected by mix of fuel in Nigerian klins.
He explained that disruption and maintenance have led to shortages of gas since 2014, thus affecting margins.
He pointed out that locally- bought or mined coal would be priced in naira reducing the challenging of foreign exchange paid on gas.
According to him, switching to coal would improve margins versus using LPFO, improve fuel security, eliminate shutdown as 100 per cent coal use would be possible across all lines, reduce foreign exchange needed for imported fuel.
Speaking on the outlook for the remaining part of the year for the company, the CEO said strong volume growth was expected, as Ghana would import more cement from Nigeria, adding that they were focusing on protection of margins in Nigeria, more coal facilities in Nigeria coming onstream and to export more cement to ECOWAS countries.
He noted that Congo plant was set for operation in October, while Sierra Leone plant would be expected ready by October 2016.
Also the CEO of NSE, Oscar Onyema, said that Dangote Cement remains a dominant player in the industrial goods sector on the NSE.