Dangote to end importation of coal used for cement production in March 2017
Logistics are getting set by leading cement manufacturers, Dangote Cement Industries to begin the mining and sourcing of coal for its cement production within Nigeria in March next year.
Before now, the company has been sourcing the material overseas at a huge cost. Experts say the backward integration in getting coal will not only reduce cost, but grow the moribund coal mining sector especially now the federal government is aiming to grow the sector.
The Group Managing Director of Dangote Cements, Mr. Edwin Devakumar who spoke at the 46th Annual General Meeting and conference of the Nigerian Society of Chemical Engineers (NSChE) in Abuja, said the company has concluded on this and will go ahead with it.
He argued that with the planned commencement of coal mining, Dangote will use local coal for cement production to replace imported coal. He said there was a huge potential for this which cement producers in the country can benefit from.
Although he did not disclose the expected production volume from the coal mine, he however said the solid minerals sector in Nigeria if properly harnessed would propel economic growth and industrialisation, including cement production.
Devakumar said “The success story in the cement sub-sector is a testament to what the private sector can do when government provides the right policy signals and creates a conducive environment for private capital.
“There is therefore no reason why the same or even greater success stories cannot be recorded with other mineral assets. We intend to open up our coal mining business in the two and half months, and stop importation of coal for our cement production.
“Whilst one acknowledges government’s effort over the past decade, like the enactment of the Nigerian Minerals and Mining Act, 2007, Nigerian Mineral and Metals Policy (2008), and creation of a modern Mining Cadastral Office, a lot still remains to be done.
“The Federal Government should quickly review dormant or under-developed mining leases -“use it” or “lose it” principle. The Federal Government needs to prioritise the solid minerals it wants to focus on based not just on the value of the minerals themselves but also on the multiplier effect it would have on other sectors of the economy.”
“Coal for instance would in addition to generating export revenues also save the nation FX by displacing imports (import substitution), serve as a direct energy source for many energy intensive manufacturing processes, be used as fuel for electricity generation (diversifying the country’s power generation mix and reducing our reliance on natural gas).
“An attractive incentive structure must be put in place given the capital intensive nature and risk-profile of the sector,” Devakumar added.