Dangote Cement Targets 80m Tonnes Capacity, To Fund Expansion From Cash Flow – THISDAYLIVE
Dangote Cement is planning to increase its total cement production capacity to 80 million tonnes in the medium term, with its expansion strategy focused on low-cost brownfield projects in existing markets.
The Group Managing Director/CEO of Dangote Cement, Mr. Arvind Pathak, disclosed this at the Dangote Cement Capital Markets Day presentation held in London, where he outlined the company’s growth roadmap and funding strategy.
According to him, the next phase of expansion will add about 25 million tonnes to the company’s current capacity, bringing it to 80 million tonnes.
The philosophy, he said, is to press all possible levers to achieve the goal, predominantly through brownfield expansions.
“The majority of the investments are in brownfields, and that is by design. We want to grow Pan-Africa so that we get the advantage of scale, which Nigeria enjoys,” he said.
He explained that brownfield expansions offer significant advantages, including lower capital expenditure, faster execution timelines, and a payback period of 2.5 years, noting that the company has already acquired land and extended power lines and water infrastructure to the factory locations, reducing both cost and time to execute projects.
Pathak noted that the new capacity requirements are driven by growing demand across the group’s operations.
The company recently inaugurated a grinding plant and has additional expansions planned, including projects such as Srirangam in India and capacity additions in Cameroon and Senegal, which will require more clinker.
“A very sizable percentage of it, around 60 per cent, will come from our own clinker, which ultimately leads to better utilisation of our output. The balance is a mixture of third-party customers and focuses on market areas with adjoining countries,” he said.
On funding, the managing director said the company intends to finance the CAPEX expansion primarily from internal sources while retaining room for debt if needed.
“The first one is strong cash flow, which you can see is very strong. The second is that we have very good supplier credit systems, whereby you can take on equipment and pay for it later. This makes this project very easy to fund, and we can conserve cash,” he stated.
He added that Dangote Cement’s leverage is currently very healthy at 0.1 times, actually negative, which provides additional headroom for any funding, but strong cash flow remains the first and primary source for the project.
The GMD stressed that by leveraging scale, reducing costs and increasing volume across Pan-African operations, the company will replicate the successful low-cost model it adopted in Nigeria, positioning itself as the last man standing in competitive markets.
