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Dangote acquires 64% stake in South African cement firm

Dangote Industries Limited (DIL), has formally increased its stake in Sephaku Cement (Pty) Limited, which is based in South Africa, from 19.76 percent to 64 percent. The transaction, which comprises a R779 million investment into Sephaku Cement by Dangote, is the largest ever foreign direct investment (FDI) by an African company into South Africa.

The deal, which was concluded at the shareholder general meeting of Sephaku Cement on 15 October 2010, was formally announced to the media and investor recently.

This came days after Dangote Industries successfully listed one of its subsidiaries, Dangote Cement Plc on the Nigerian Stock Exchange (NSE), in what has been described as the largest merger ever witnessed in the history of the NSE.

In his remarks at the occasion, the President and Chief Executive of Dangote Industries Limited and the new Chairman of Sephaku Cement, Alhaji Aliko Dangote, commended the transaction as taking place “at a crucial moment in the history of cement demand and supply, and at a crucial moment in terms of Dangote’s pan_African ambitions.”

“We are immensely excited about the future prospects of this transaction and look forward to a long and prosperous relationship with Sephaku Cement,” he added. “This investment is an important milestone for Sephaku, for the Dangote Group of Companies and for South Africa, as the first clinker producing project since 1934.”

According to Dangote, the pace of development at Sephaku will increase in view of the project completion timeline set for 2012. He said the Dangote Group will bring its full experience and resources to the project, having completed other large scale cement projects in Nigeria and with similar projects currently underway in Tanzania, Ethiopia, Republic of Congo (Brazzaville), Senegal and Zambia.

“We are strong believers in the future growth of the South African economy and of continued growth across the whole of Africa,” he said. “The level of our investment here and in other markets is testament to that. We have embarked on an investment programme that will create modern cement plants in strategic locations as we seek to leverage both the local production deficit and increasing infrastructure investment.”

Having built a market leading position in the Nigerian cement market with 8 million tonnes of existing installed production capacity and a further 12 million tonnes due to come on_stream in 2011, the President, Dangote Industries, said the group is looking outside Nigeria for growth opportunities. He pointed out that the long term ambition of the group is to develop 46 million tonnes of production and terminal capacity in Africa by 2015, adding that this is in line with its aspiration of becoming a truly pan_African champion in the sector, capable of competing globally with the largest cement companies in the world.

While noting that these are ambitious targets, he said they are achievable as Africa remains the only continent in the world with a significant cement production deficit, lower cement consumption and the highest cement prices. He attributed these to reliance on imported product from surpluses produced overseas and the lack of strong infrastructure across the continent.


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