Dangote Cement Plc is set to start coal production in full capacity in the fourth quarter of this year. The company new production plan will help 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 who made this statement while addressing Stock brokers in Lagos said that the company took decision three years ago to diversify and de-risk fuel supplies and go into coal production, saying the coal mills will be in operation by end of September, this year.
He stated that some of the company plant in Obajana in Kogi State and Ibese in Ogun State have 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 will transform profitability of Gboko plant which is previously on 100 per cent LPFO.
He added that klin fuel is the major cost of cement production, saying that group margins are affected by mix of fuel in Nigerian klins.
He explained that disruption and maintenance have lead to shortages of gas since 2014, thus affecting margins.
He pointed out that locally bought or mined coal will be priced in naira reducing the challenging of foreign exchange paid on gas.
According to him, switching to coal will improve margins versus using LPFO, improves fuel security, eliminates shutdown as 100 per cent coal use will be possible across all lines, reduces FOREX need for imported fuel.
Speaking on the outlook for the remaining part of the year for the company, the CEO said, strong volume growth expected, Ghana to import more cement from Nigeria, focus 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 set for operation in October, while Sierra Leone plant expected ready by October 2016.
