DCP in a statement released through the Nigerian Stock Exchange (NSE) titled “Update on Trading and Conversion to coal” explained that the increase in the price was to offset increased 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.” it stated.
The decision was taken by the firm almost a year after it cut its price by 18 percent in a bid to increase market share, sales volumes and profitability. However, DCP noted that sales growth remained robust in Nigeria with volumes up 15% in July and August.
Explaining the reasons behind the price hike, Dangote Cement 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 to 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 contributed to increase our costs substantially in our largest market.
“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 is priced in US$ but paid in naira. Furthermore, being transacted entirely in naira, it will reduce our need for foreign currency at this difficult time or the Nigerian Economy.”
Commenting on this development, Onne van der Weijde, Chief Executive Officer of Dangote Cement said: “These are challenging times for Nigeria and for Dangote Cement but we are taking strong actions that will position the company for continuing success.
He added that the company’s coal mining initiative will benefit both the company and the Nigerian Economy by reducing the need for foreign exchange and helping us to both protect existing jobs and create new ones.
