Gas shortages turn Nigeria’s Dangote to coal to power cement

LAGOS (Capital Markets in Africa) – Nigeria’s Dangote Cement has turned to locally-mined coal to power its plants in a bid to end disruptions caused by gas shortages and lower its production costs.

“All our cement plants have been converted to coal,” Aliko Dangote, the company’s billionaire majority owner and chairman, told a business conference on Thursday, adding they would use 12,000 metric tonnes of coal each day.

Dangote’s move is unusual in an era when power generation is shifting away from coal. Coal used to generate U.S. power fell in April to its lowest monthly level since 1978, the U.S. Energy Information Administration said in a June report.

Natural gas, meanwhile, surpassed coal as the United States’ top fuel source for the third straight month, the EIA said.

However, gas shortages have plagued the West African nation, with militants in the oil heartland of the Niger Delta regularly disrupting Nigeria’s oil and gas production.

Dangote, Africa’s biggest cement producer, has an annual production capacity of 43.6 million tonnes and targets output of between 74 million and 77 million tonnes by the end of 2019 and 100 million tonnes of capacity by 2020.

The company has invested more than $5 billion to expand outside its home market in the past few years.

Dangote said Nigeria has become a cement exporter generating $1.25 billion of sales as against annual imports of $2.5 billion which the country would have spent before the sector was liberalised in 2002.

Source: Reuters Africa News