By investadvocate

Dec 11 2010 09.56 GMT

Lagos (INVESTADVOCATE)-Dangote Industries Limited is set to invest $400 million (N60 billion) in Zambia Cement Factory.

 

This was contained in a Statement made available to investadvocate by the Dangote Group over the weekend in Lagos Nigeria.

 

The Statement affirmed that the Investment Promotion and Protection Agreement between Dangote Industries Limited (DIL) and the Government of Zambia was signed at the weekend; marking a significant milestone in Dangote’s quest to establish a cement plant in that country. “The value of the investment is estimated at $400 million (N60 billion)” the statement said.

 

According to the Dangote Group, the Investment Promotion and Protection Agreement is a requirement for all major investors in Zambia, which offers them additional incentives and safeguards their investments in case of changes in legislation.

 

Aliko Dangote, the President of the Dangote Group in his reaction towards the deal affirmed his delight in the signing of agreement between both parties

 

 “Dangote’s   investment in the Cement Plant is among the largest investments outside the traditional mining sector and Chinese investments in Zambia, it has understandably attracted a lot of attention,” Dangote said.

 

He further affirmed that based on the fact that it is an African investment, it generates a great deal of interest. “Let me assure you that we are equal to the task; we have similar investments in more than 10 other African countries. We spent about nine months negotiating and I am delighted that we are now at a point where all parties have come to an agreement” The President of Dangote Group said.

 

The Statement said the proposed cement plant in Zambia with an installed capacity of 1.5 million metric tonnes per annum (PA); will be up and running 27 months from February/March 2011.

 

Dangote’s Industries also noted that the choice of Zambia for this multi-million dollar investment is quite strategic; because the World Bank had in 2010 named the country one of the world’s fastest reforming economy.

 

Apart from the above, Zambia is also rated as one of the most highly urbanised countries in sub-Saharan Africa with 44 percent (44%) of the population concentrated in a few urban areas.

 

Dangote had said the high level of urbanisation poses a challenge to the government in terms of how to provide adequate infrastructure for the people. He cited a report by the McKinsey Global Institute issued in June 2010, which affirmed that Africa would require at least $46 billion annually to meet infrastructural need.

 

“It has become quite obvious that African governments alone cannot hope to meet this demand. It is in this light that we have decided to invest in Zambia,” he said.

 

The President of the Dangote Group said they were motivated to create an African success story because of their believe that entrepreneurship holds the key to the future economic growth of the continent. “We are spurred on by the fact that the rate of return on foreign investment is higher in Africa than in any other developing region” Dangote affirmed.

 

“We are also particularly encouraged with the Zambian government’s robust economic diversification programme designed to reduce the reliance on the copper industry, which is the mainstay of the economy.

Our investment in cement in Zambia will help to complement the government’s efforts in stimulating economic growth and creating jobs.” he noted.

 

Dangote said DIL is currently increasing the capacity of its existing plants and building new ones in line with the trends in the industry, projecting that by July 2011, the Group would be in a position to produce 20 million metric tonnes of cement annually. This, will more than meet local demand, and opportunities outside the country would be explored” he said.

 

He further affirmed that the long term ambition of the Dangote Group is to develop 46 million tonnes of production and terminal capacity in Africa by 2015 and would embark on the venture because it wants to become a truly pan-African champion in the sector, capable of competing globally with the largest cement companies in the world.

 

Dangote also said that DIL is currently consolidating its cement businesses across Africa to reap the benefits of scale, “the listing of Dangote Cement Plc (DANGCEM) on the Nigerian Stock Exchange (NSE) in October 2010 is part of this strategy” he said.

 

Dangote Group in the Statement said that outside of Nigeria, DIL had formally increased its stake in South Africa’s Sephaku Cement (Pty) Limited, from 19.76 percent to 64 percent in October 2010 in a transaction estimated at R779 million, making it the largest ever Foreign Direct Investment (FDI) by an African company into South Africa.