Leadership (Abuja)
Aminu Imam
10 October 2008
Dangote Cement and Sephaku Holdings announced yesterday that they had entered into a shareholders' agreement that will see the building of a 2.2m tonnes cement plant in South Africa.
The deal was first announced in April of this year, and saw Dangote acquire a 19.8 per cent stake in Sephaku Cement through a private placement, proceeds of which would be used to part-finance the building of the plant.
The agreement that was signed in London on October 1, 2008 by the Sephaku Chairman, Dr Lelau Mohuba, and Dangote Chairman, Alhaji Aliko Dangote, lays the foundation for the relationship between Dangote Cement, Sephaku Holdings and Sephaku Cement (in which Dangote Cement will eventually hold a 45 per cent equity stake).
Dangote Cement is part of Nigeria's largest diversified group, Dangote Industries Limited, while Sephaku Cement forms part of the industrial division of privately held Sephaku Holdings, whose interests also include mining and investment holdings; Dangote Cement is expanding its operations across Africa, with current projects in Senegal and South Africa and negotiations taking place in a number of other African countries as Dangote Cement puts in place the infrastructure necessary to achieve its target of 50 million tonnes of production capacity by 2012.
The joint venture is now in discussions with technical partners before construction commences. Sephaku Holdings, who, as 55 percent shareholder, shall provide a majority of Sephaku Cement management, is in an advanced stage of finalizing debt funding towards the capital construction cost of the project.
The building timeline will see Sephaku Cement begin construction of the 3billion SouthAfrican rand plant in January 2009 with first cement being ready for delivery by the end of 2010. Speaking from Dangote Cement's Lagos headquarters CEO Tony Hadley said: "The joint venture with Sephaku Holdings and Sephaku Cement is a key part of our Pan-African expansion programme and provides direct access to the large South African market. We are delighted to be announcing that the joint venture is moving ahead smoothly and look forward to beginning the construction process as soon as we have finalised terms with our technical partners.
Dangote Cement is set to achieve 26 million tonnes of production capacity in Nigeria by 2010 and 50 million tonnes of production capacity overall by 2012." Sephaku Holdings Chairman, Lelau Mohuba said from Johannesburg," The deal forms part of our broader vision of positioning ourselves in key areas of the rapidly developing South African and African economy. We are delighted to bring to account the NEPAD visions of our political leaders of creating a sustainable and self-funding economic platform.
The co-operation between ourselves and our Nigerian partners is testament to this and we look forward to further co-operation. This joint venture will mark the first new entrant into the cement market since 1934; and the first black-owned plant in our country.
It is a very critical milestone for Sephaku Holdings, growing from exploration to development." Whilst cement demand slowed down from its record levels achieved in 2007, medium and long-term forecast still show significant growth opportunities in the market. Sephaku Cement CEO, Pieter Fourie has said "the new plant will be the largest single cement production line in South Africa and will be the most efficient in terms of energy and power consumption and will set the benchmark for emissions".
Sephaku Cement acquired the rights to substantial limestone reserves in the North West province of South Africa in 2006. It completed a feasibility study for a 2.2 million tonnes per year cement production facility in early 2008.
The transaction that was concluded with Dangote will ensure that the plans to build this cement plant will become a reality. About Dangote Cement Dangote Cement has operations in Nigeria, Benin, Ghana, Senegal and South Africa, with aggressive growth plans to target a total of ten African countries as it seeks to become a truly multi-national corporation.
Dangote Cement is committed to making Nigeria a net exporter of cement. The company owns four terminals, two in Lagos and two in Port Harcourt through which it currently imports cement. These operations will progressively be replaced as new production capacity comes online.
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