Gas supply disruption, naira devaluation affect Dangote Cement cost- CEO

• increases cement price by N600/bag

Chief Executive Officer, Dangote Cement Plc, Onne van der Weijde, has said that gas supply disruption in the Niger-Delta region of the country and devaluation of Naira are negatively impacting on the company’s cost of production.

He noted that though the sales growth remains robust in Nigeria with volumes up five per cent in July and August, the cement manufacturing, he said, was strategizing on cutting cost and increasing the price of cement by N600.

Weijde said the leading cement producing company would increase the price of cement to offset increased in costs caused by devaluation and accelerate coal mining installation expected to begin in November

Dangote Cement boss in a statement to the Nigerian Stock Exchange (NSE) said, “Disruption to the gas supply, our preferred fuel in Nigeria, has deteriorated in the present quarter. Alternative fuels such as LPFO, and to a much lesser extent coal, are up three times higher in costs and the need to use them instead of gas has led to a substantial cost increase.

“In addition, the naira has experienced a significant devaluation against the US Dollar over the past few weeks. Both of these external factors have combined to increase our costs substantially in our largest market”.

To mitigate the impact of the cost increase, he said, “We have previously indicated that we would increase the price of cement to offset the 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 N600, bringing back to levels only marginally above they were before we announced a price decrease in September last year.

“We have accelerated installation of our coal mills and coal mining initiative in Nigeria and now expect to begin mining our own coal in November. 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.

“Own-mined coal will be cheaper than gas, which in priced in US$ but paid in Naira. Furthermore, being transacted entirely in Naira, it will reduce our need for foreign currency at this foreign-currency at this difficult time for the Nigerian economy,” he explained.