Africa’s richest man, Aliko Dangote, has signed a $4.3-billion deal with a Chinese government-owned engineering company to build factories for his Nigeria-based cement company, BBC reported.
African economies have been hit hard by the drop in commodity prices but many are seeing a boom in infrastructure, and need cement.
China’s Sinoma International Engineering Co. will build seven cement plants for Dangote Cement outside of Nigeria throughout Africa, and one in Nepal. Dangote Cement is Nigeria’s largest listed firm, Reuters reports. Dangote is the majority owner.
In July, Dangote Cement said sales outside Nigeria contributed to 14 percent of total revenue for the year ending June 30, compared to 3 percent the previous year.
The new factories are expected to be completed within 2.5 years and add around 25 million tonnes to the firm’s existing cement capacity of 45 million tonnes.
The African plants will be built in Cameroon, Ethiopia, Kenya, Mali, Niger, Nigeria, Senegal and Zambia, according to Reuters.
By 2020, Dangote said he wants to be producing 100 million tonnes of cement a year.
The Dangote Group will be affected by China’s economic turmoil, Dangote said, according to BBC. But it is diversified. In addition to investing in oil refineries, it also produces food and fertilizer.
“Of course we are affected,” Dangote said, “but we are not badly affected because we are not 100 percent in oil…We are a fully diversified company. So today if oil is doing (badly) it doesn’t mean we are doing (badly) and that’s the good thing about diversification.”
The company may, however, be affected by intense competition in the African cement sector, particularly from Lafarge Africa, which combined its South Africa operation with its publicly traded Nigerian business in 2014 to accelerate growth on the continent, according to Reuters.