Dangote Cement has announced plans to begin its own coal mining operations as it switches away from gas as a means for powering its plants.
The company will begin producing coal at the Ankpa mines in Kogi State from 4Q16. Previously, Dangote had used natural gas as a fuel for its plants, but interruptions to supply and the revaluation of the naira have caused the company to seek alternatives.
Group CEO Onne van der Weijde stated: "We decided two to three years ago to diversify and re-risk fuel supplies. Klin fuel is the major cost of cement production; our group margins are affected by the mix of fuel in Nigerian klin.
“The preference is to run on gas because disruptions and maintenance have led to shortages since 2014, thus affecting our margins. Also back-up LPFO is often not available locally, forcing production shutdowns prior to use of coal.
"Gas is priced is US dollars, but paid in naira and therefore is affected by foreign exchange, FX. However, locally bought or mined coal will be priced in naira.”