Dangote cement embraces alternative fuel to cut cost

Dangote cement embraces alternative fuel to cut cost

Dangote Cement Plc has embraced alternative fuel to cut down cost and boost its performance as recorded in the third quarter (Q3) period ended September 30, 2022.

The company has increased corporate focus and strategies for reducing its footprints by committing to the use of alternative fuel sources in its energy mix.

In 2020, Dangote Cement started exploring fully the feasibility of significantly increasing the use of alternative energy in its cement production, through co-processing of wastes. The implementation strategy began with its Nigerian operations, and it has been replicated across other African operations.

The company, in its 2020 annual report, said waste materials that have been identified as viable in the alternative fuel project and are available within a 450km radius of its operations include: saw dusts, agro-waste like palm kernel shells, rice husks, maize cobs, and cashew nutshells, commercial and industrial wastes, refuse-derived fuel (RDF), waste lubricants, polypropylene bags and scrap tyres.

“We are also considering the feasibility of utilising our cement bags plant rejects and the retrieval and re-utilisation of waste cement bags. Waste materials are currently sourced from nearby Dangote Cement operations sites; municipals close to the Plants; and nearby farms,” it said.

For the third quarter of 2022, the management of Dangote Cement recorded an increase in the overall volume of cement sales by 6.2 percent to 20.8metric tons. This was achieved despite the elevated inflation that is due to a very volatile global environment.

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To further increase the supply of cement across its operational base, the company has also commissioned its power plant at Okpella and is progressing well to deploy grinding plants in Ghana and Cote d’Ivoire.

Capital market analysts noted that Dangote Cement’s revenue performance in nine months, 2022 was in line with their expectations.

Analysts at Coronation Asset Management said: “we are encouraged that the group was able to take advantage of higher prices despite weak volumes across its Nigerian and Pan-African markets. There appear to be positive responses to the third season of its National Consumer Promotion ‘Bag of Goodies 3’.

“Overall, we maintain our BUY recommendation on the stock. On our estimates, the stock is trading on 2022F P/E and EV/EBITDA multiples of 8.8x and 5.1x, discounts to emerging market peer multiples of 15.7x and 8.6x respectively.”

Chief executive officer of Dangote Cement, Michel Puchercos disclosed this while presenting the third quarter results to the Nigerian Exchange, recently.

He explained that “to mitigate the impact of the significant increase in energy and AGO costs, we are strengthening our efforts to ramp up the usage of alternative fuels. So far this year, we have co-processed 101,553 tonnes of waste representing a 77 per cent increase over nine months, 2021. We are on track to commission our Alternative Fuel feed system at Obajana lines I and V, and Ibese line II in November. In addition, we are ramping up our investment in Compressed Natural Gas (CNG), to reduce our AGO usage”

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To that end, he explained that the company recorded an increase in revenue of N1.177.3 trillion, up 15.2 per cent compared to last year, and Group EBITDA of N515.9 billion, up 0.2 per cent with an EBITDA margin of 43.8 per cent.

Speaking recently, the chairman of Dangote Cement, Aliko Dangote said: “Over the last decade, Dangote Cement has recorded exponential growth across all areas. Group volumes are now at almost 30Mta, our capacity has tripled to 51.6Mta and we export cement from five countries across Africa.

“As the volatile global environment propels us into a new era of uncertainties, we are fortunate that the last two years have taught us resilience, adaptability and grit. These values are what we need to face unpredictable times in the future.”

He noted that the company remains the leading cement company in Africa, well-positioned for a positive and sustainable future, adding that, ‘we are resolute in transforming Africa, while creating sustainable value for our stakeholders.’

According to Dangote, “in 2021, we began operations in our new 3Mta Okpella plant in Edo state, where we are successfully ramping up production and have contributed to creating a new industrial hub. We are actively deploying our alternative fuel strategy across all countries of operations, to optimise energy efficiency, reduce reliance on fossil fuels and ultimately reduce CO2 emission.

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“Whilst we focused our efforts on meeting the robust demand of our local market in Nigeria, at the expense of our export markets, we still made significant progress in our cement and clinker exports. Our vision is for West and Central Africa to be cement and clinker self-sufficient, while making the regional and continental free trade agreements a reality.”

Dangote Cement chairman said: “our strategy remains steadfast, focused on organic growth in Nigeria and Pan-Africa, while ensuring that Africa’s regional integration becomes a reality. We will continue to contribute to improving regional trade within Africa by building plants across West and Central Africa, therefore eliminating the need for the importation of cement.”

Dangote Cement, it would be recalled is Africa’s leading cement producer with nearly 51.6Mta capacity across Africa. A fully integrated quarry-to-customer producer, it has a production capacity of 35.25Mta in its home market, Nigeria. Obajana plant in Kogi state, Nigeria, is the largest in Africa with 16.25Mta of capacity across five lines while the Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta. The Gboko plant in Benue state has 4Mta while the Okpella plant in Edo state has 3Mta. Through recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and has transformed the nation into an exporter of cement serving neighbouring countries.


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