Business
Devalued naira, others push price of Dangote cement N600 higher
By CHIOMA OBINAGWAM
DANGOTE Cement Plc, Africa’s largest cement producer, has said that the price of cement in Nigeria has been increased by N600.
Speaking in a statement issued to the Nigerian Stock Exchange(NSE), it said that alternative fuels such as LPFO, and to a much lesser extent coal, are up to three times higher in costs and the need to use them instead of gas has led to a substantial cost increase.
“Disruption to the gas supply, our preferred fuel in Nigeria, has deteriorated in the present quarter.
In addition, the Naira has experienced a significant devaluation against the US dollar over the past few weeks,” it disclosed.
It stated that both of these external factors have combined to increase the costs of the product substantially in its largest market (Nigeria).
To mitigate the impact of these cost increases, the company has taken some actions, which include increasing the price of cement to offset increase in costs caused by devaluation and other cost factors.
“The present situation has regrettably forced us to increase the ex-factory price of cement by 600 Naira, bringing the price back to levels only marginally above they were before we announced a price decrease in September last year,” the company explained.
Dangote Cement also disclosed that it has accelerated installation of its coal mills and coal mining initiative in Nigeria, which is expected to begin mining of its own coal in November.
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The company said: “Most of our production lines are now capable of running entirely on coal and this drive towards self-sufficiency will almost eliminate our dependence on gas supplies, imported coal and, more significantly LPFO.
Our mined coal will be cheaper than gas, which is priced in US$ but paid in Naira.”
Furthermore, being transacted entirely in Naira, it said it will reduce the need for foreign currency, especially at such difficult times for the Nigerian Economy.
Onne van der Weijde, Chief Executive Office of Dangote Cement said: “These are challenging times for Nigeria and for Dangote Cement but we are taking strong actions that will position the company for continuing success.
Our coal mining initiative will benefit both the company and the Nigerian Economy by reducing the need for foreign exchange and helping us to both protect existing jobs and create new ones.”
“Although we have indicated a more measured approach to our expansion across Africa, we have new operations opening soon in Congo and Sierra Leone and these will strengthen the company’s profitability and generate additional foreign currency earnings.
Despite the challenges we are facing, we continue to focus on becoming a global force in cement production,” he assured.