The richest African business tycoon, Aliko Dangote, is set to boost his investment in Ethiopia, it was learnt.
In a letter written to the Ethiopian government recently, Aliko Dangote, chairman of the Dangote Industries, affirmed his commitment to boost his investment in Ethiopia. Dangote has set up a cement factory in Ethiopia at a cost of 600 million dollars. The factory, with an annual production capacity of 2.5 million tons, began running in June 2015. The factory lying on 134 hectars of land in West Shoa Zone, Adaberga Wereda, near Muger town, 85 km west of Addis Ababa, employs 1500 workers.
Mesfin Abera, Dangote Cement (Ethiopia) head sales and marketing, told The Reporter that considering the fast economic growth Ethiopia is registering and the booming construction industry, Dangote Industries has decided to undertake a massive expansion project at the existing plant. Mesfin said Dangote Cement Ethiopia is set to build a second cement manufacturing plant with an installed capacity of 2.5 million tons at a cost of 600 million dollars.
The company has asked the Oromia Regional State for additional land for the expansion project. “We now have 134 hectares of land and we need only an additional 18 hectares. We submitted our request to the Oromia Regional State and we have got a positive response,” Mesfin told The Reporter.
The Chinese cement specialist Sinoma International will undertake the construction of the second plant. The same company had built the first unit. According to Mesfin, the construction of the second unit will take two years. “When completed we will have a total annual production capacity of five million tons of cement,” he said.
Asked about over-capacity problem, Mesfin said “We do not worry about the market. We have conducted a thorough market study. This country is growing in a double digit. Massive infrastructure development projects are being undertaken. If the development plans set in the second growth and transformation plan are properly implemented, there will be no market problem. The market situation does not worry us.”
Mesfin said that his company is also exploring the export market. Dangote Cement has started exporting cement to North Kenya. Since February, the company exported 2200 tons of cement valued at 240,000 dollars. “We are studying the South Sudan, Somalia and Djibouti markets and we have noted that there is a significant market potential in those neighboring countries.
Dangote Cement managed to produce and sell one million tons of cement in the first six month of operation (June-December 2015). Aliko Dangote is impressed with the performance of his new company in Ethiopia and granted the sales team a 45,000 dollars prize. This year the company plans to sell 2.3 million tons of cement.
In addition to the second cement plant, Dangote Cement is planning to build a cement-bag manufacturing plant. The cement-bag plant will be built in front of the cement manufacturing plant near Mugher town at a cost of 19 million dollars. The planned plant will-have the capacity to produce 120 million cement bags annually. “We will use only 30-35 percent of the produce. We will supply the rest to local cement factories,” Mesfin said.
There are about 20 cement factories in Ethiopia but only Messebo Cement has its own cement bag factory.
Mesfin said that Dangote Cement Ethiopia will expand the cement bag manufacturing plant and start producing PP bags used to bag sugar, cereals, fertilizer and other products. “Once we have completed the first bag plant we will build the second phase that will produce different PP bags for other purposes.”
Dangote Cement Ethiopia uses coal imported from South Africa to satisfy its energy demand. With the view to reducing its energy cost, the company is currently testing locally-mined coal. “We are buying coal from Jimma and blending it with the imported one. If our test is successful we could replace the imported coal with the locally produced one and that would enable us to bring down our cost and selling prices,” Mesfine said.
Mesfin said that if the coal mined in the Jimma locality has the required calorie value to produce cement, Dangote Industries would be interested in obtaining exploration license from the Ministry of Mines, Petroleum and Natural Gas Resources and prospect for coal deposits.
Dangote Industries is also interested in engaging in potash mine exploration in the Afar Regional State in north-east Ethiopia. The company has expressed its firm commitment to prospect for potash mine in the Dallol depression. The company wants to use the potash mineral to produce fertilizers in Nigeria. Currently, Dangote Industries is building a giant fertilizer factory in Nigeria.
Dangote Cement Ethiopia has opened 5,000 direct and indirect jobs for Ethiopians. More than 1500 workers are directly employed by the factory – 80-90 percent of them are local residents.
Dangote Cement has imported and deployed 443 trucks from China that haul cement products throughout Ethiopia. “We are now trying to import more trucks so that we can also expand our export market. When the railway lines are completed we shall also be using rail transport,” Mesfin said.
The Dangote Investment Group owns Dangote Cement, Africa’s biggest cement company and number one cement supplier in Africa, Dangote Sugar Refinery, Dangote Industries and Dangote Oil Services. According to Bloomberg Billionaires Index Mr. Dangote is worth 12.9 billion dollars.
[www.thereporterethiopia.com/]