Dangote Cement, the largest listed company in Africa, has signed a $4.3bn contract with a Chinese contractor to build seven new plants across Africa, and one in Nepal.
The plants, which will together add 25 million tonnes to Dangote’s current annual capacity of 45 million tonnes, are to be built by the China National Material Group, the largest cement equipment maker in the world.
In Africa the new plants will be in Ethiopia, Kenya, Niger, Senegal and Zambia. In addition, work on two new grinding units have begun in Mali and Cameroon, to be completed in 2018.
Dangote told CNBC Africa that he was going ahead with the expansion despite the fact that investment in the continent continued to lag that in developed countries.
He singled out his home country, Nigeria, for failing to invest sufficiently in infrastructure. “Nigeria’s consumption per capita is half of Ghana and Senegal which is not right, but going forward we expect to see an adjustment when the country starts investments in infrastructure,” he said.
He added: “If the population is growing there is an obvious need for infrastructure. Nigeria is going to be 207 million people in the next four years. The future of Africa is in infrastructure but there is no way there can be infrastructure without cement. How are we going to contain traffic in cities like Lagos and Abuja without investment in infrastructure?”
By scattering plants around the continent, Dangote wants to move production closer to customers.
Cement has such high transport costs in relation to its value that most projects use local suppliers.
This is a major issue for Africa, where cross-border transport costs are prohibitive.The Nepalese plant will be the company’s first plant outside Africa. Dangote, 58, told Bloomberg that a move into Asia would help to spread the company’s economic risk.
“It’s going to be one of our first factories outside our comfort zone, outside Africa,” he said, adding that the firm was looking to expand beyond Africa by making acquisitions.