26 August 2010

Publication: Business Report
Author: Roy Cokayne

Nigerian industrial giant Dangote Industries, which is to invest an additional R779 million in Sephaku Cement, has given notice it aims to become the largest cement producer in Africa by 2014.

Dangote will increase its equity stake in Sephaku Cement from 19.76 percent to 64 percent through the additional investment.

Dangote was established in 1981 and is one of the largest manufacturing conglomerates in sub-Saharan Africa, with interests in cement, sugar, flour, salt and fish.

Alhaji Aliko Dangote, the group’s chief executive, said yesterday that the group was delighted to increase its investment in Sephaku Cement and its pan-African footprint to include an enhanced presence in the South African market.

“We look forward to bringing our experience and expertise to the project and to producing cement by the end of 2012 as we seek to become the largest cement producer in Africa by 2014,” he said.

The balance of Sephaku Cement’s shareholding will continue to be held by Sephaku Holdings.

Dangote is the largest cement producer in Nigeria and will have a cement production capacity of 16 million tons by the first quarter of next year.

Neil Crafford-Lazarus, the chief executive of JSE-listed Sephaku Holdings, said yesterday that the investment by Dangote and the continued unbundling of non-core assets signalled the rebirth of Sephaku as a recapitalised, financially sound business.

It would focus on the development of two key and highly sought-after industrial products: cement and fluorspar.

Crafford-Lazarus said the additional investment meant the company had now secured the full equity requirement for the cement project and would be exceptionally well positioned to finalise debt funding terms.

Sephaku plans to establish new cement plants in North West and Mpumalanga at a total cost of R3.3 billion.

Sephaku Cement will issue 217.59 million ordinary shares to Dangote at an issue price of R3.58 a share.

Dangote acquired its initial 19.76 percent in Sephaku Cement in 2008.

Crafford-Lazarus said this significant equity investment would be used to fund the development of Sephaku Cement’s Aganang and Delmas projects.

These flagship projects are scheduled to come into production in late 2012, with the Aganang project yielding about 900 000 tons of cement a year and the Delmas project 1.25 million tons of cement a year.

The transactions are subject to shareholder approval and a shareholders’ meeting is planned for the middle of next month.

Sephaku Holdings leapt 7.6 percent to R3.55 yesterday.