Plans have been concluded by Dangote Cement Plc, a subsidiary of Dangote Group, to commence mining its own coal at Ankpa in Kogi State. This, the company said, will begin by the fourth quarter of 2016.
Dangote Group Chief Executive Officer, Mr Onne van der Weijde, while addressing stockbrokers at the company’s Facts Behind Figures on the Nigerian Stock Exchange (NSE), noted that the company was switching its plant lines to coal in order to minimize cost and increase margin because of acute gas shortages in the country caused by Niger Delta militants.
Mr Weijde assured that the quality of the coal to be mined by the company would be of high quality and good enough to be used 100 per cent without blending.
He stated that in the interim, Dangote Cement has started using locally purchased coal blended with imported one to assure optimal quality, while saying that the company could potentially run all its lines 100 per cent on local coal at lower cost than gas.
According to him, two coal mills at its Obajana Cement factory became operational in July, adding other coal mills will resume operation by the end of September.
“Klin fuel is the major cost of cement production; our group margins are affected by the mix of fuel in Nigerian klin. The preference is to run on gas because disruptions and maintenance have led to shortages since 2014, thus affecting our margins. Also back-up LPFO is often not available locally, forcing production shutdowns prior to use of coal,” he explained.