A Growth Story: Part Two

Read Part One of this article here.

Increasing capacity

Dangote Cement P.L.C. started its first cement operation in December 2000 with a small cement terminal and produced cement from its first integrated plant in 2006. However, with very aggressive investment plans, a vision for the future and a mission it had set for itself to accomplish, the company has been making massive investments both at its home base in Nigeria and in various countries in Sub-Saharan Africa. Within a short period of time, Dangote Cement P.L.C. has grown to take the no. 2 position in the global cement industry in terms of market capitalisation, and has become one of the top ten cement companies in the world in terms of profitability.

Within Nigeria alone, the installed capacity of Dangote Cement’s plants has already risen to 21 million t, and is due to reach 30 million t in August 2014. By the end of this year, the company’s installed capacity will move up to 40 million t with the commissioning of its plants in South Africa, Senegal, Cameroon, Zambia, Sierra Leone and Ethiopia. In 2015, additional capacities will come up for commissioning in Tanzania, Liberia, Ghana and Cote d’Ivoire. This will be followed by new capacities in Kenya, Republic of Congo and Nigeria – for all of which contracts have been awarded, including an additional 6 million t capacity in Nigeria. Contracts will be signed for further investments in Nigeria within the next few months.

While rapid growth has been witnessed in the cement industry in the past, such growth has always been through mergers and acquisitions. Growth at such a blistering pace through investments in greenfield plants has never been seen before. Such a massive investment within such a short timespan in Sub-Saharan Africa – a place that has always been looked upon as a high risk area – left many wondering whether fools were rushing in where angels were fearing to tread! However, Dangote Cement P.L.C., driven by a visionary entrepreneur, has proven that its investments were being made with a clear identification of good opportunities, coupled with correct timing, with extraordinary efforts put in for risk identification, risk matrix buildup, risk analysis, risk ranking and a determined risk management focus, as well as the adoption of novel strategies in project, operations and marketing management. The business was developed with a focus on keeping borrowings to the bare minimum – a lesson learnt from the 2008 global economic crisis, which affected many of the cement majors.

Setting high standards

One of the fundamental philosophies driving the Dangote Group along its greenfield growth path is its focus on environmental friendliness, quality and energy efficiency. The plants are built to have dust emission levels below 20 mg/Nm³, irrespective of the approved standards in the countries where the plants are located. They are also designed with low NO_X and SO_X levels, a minimal carbon footprint and low decibel levels. Great emphasis is also placed on energy and fuel efficiency to ensure that the cost of production is minimised, thus making the plants highly competitive. Special attention is also given to quality management, with investment in cross belt analysers, robot labs, etc., to make sure that the company is able to attract a good share of the market. The machinery used has also been standardised, with most of the equipment, including crushers, vertical roller raw mills, coolers, vertical roller cement mills, packing plants, fully automatic truck loaders, deep pan conveyors, big bucket elevators, electrical drives, DCS, etc., all supplied by preferred German manufacturers, helping to standardise spare parts, training, inter-plant staff mobility, etc.

Harnessing experience

Dangote Cement P.L.C. has recently been looking into the merits of outsourcing operations and plant maintenance. This would enable it to place greater focus on the sales and marketing of its existing plants, project execution and the identification of new opportunities.

Dangote has not only been extremely aggressive in investments for its growth, it has also been aggressive in completing projects within the designated timeframe and cost budget. The growth of its parent company, Dangote Industries Limited, from a company focused on international trade into a giant manufacturing conglomerate within 15 years through greenfield investments, has helped it to build up strong in-house project management skills, which it has been able to leverage in driving the growth of Dangote Cement P.L.C. One of the significant advantages of this company is its extremely quick decision making process. It is also constantly defining and re-defining its strategies through the process of continuous evaluation and making difficult decisions without hesitation as it looks towards more prolific growth in the future.

Conclusion

For a virtual newcomer, the company has indeed scripted an unprecedented growth story within the global cement industry. After establishing itself as the most significant player in Africa, Dangote Cement P.L.C. has set its sights on achieving even further growth in the years to come.

Written by D.V.G. Edwin, Group Managing Director & CEO, Dangote Cement P.L.C. This is an abridged version of the full article, which appeared in the September 2014 issue of World Cement. Subscribers can view the full article by logging in.

Read the article online at: https://www.worldcement.com/africa-middle-east/03092014/a-growth-story-part-two-370/