Africa’s largest cement company, Dangote Cement is keen on expanding its business into the South American market and has agreed a preliminary joint venture with an undisclosed firm.
The company’s CEO Devakumar Edwin said the cement producer has earmarked 3 countries for entry, saying “the countries we’re looking at have huge natural resources and growth”. He however declined to name the countries.
Despite significantly large operators such as Colombian manufacturer Argos – the largest in country – backed with financial and market capabilities to outmuscle or crush new entry, Dangote is fairly confident it can carve a niche for itself.
“There are many large players in that region” that “may easily try to shut down entry to new players, but there’s still large scope of doing business,” said Edwin in interview with Business Day.
South America’s cement market offers great prospects for a potential entry. Cement industry growth over the last few years have staggered around 6-7% with construction market booming in several countries including Peru, which expanded by 18% in 2013, while Chile steadied at 5.2%.
This growth has been backed by fledging real estate sector across the region and an economic growth that should provide adequate demand for construction materials for an new entrant.
Dangote’s cement is Nigeria’s largest cement manufacturer and the largest listed company on the stock exchange with market cap of $15 billion and annual revenue reaching $1.8 billion. Despite this feat, it is keen to shore up its international business in a bid to become a significant global player in the construction industry.
Founded by Africa’s richest man, Aliko Dangote, the cement giant recently announced a $16 billion investment plan to drive its global expansion programme.
Part of that included more than $2.5 billion in building manufacturing plants and import terminals across Africa.
It also made strides in expanding into Asia, with $800 million reserved for a cement plant in Nepal.
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