Dangote Industries Limited

active

Dangote Industries Limited (“Dangote”, “the Group” or “the company”) is a multinational company based in Nigeria whose primary focus is currently on cement production and sugar refining. The Group has 3 cement plants in Nigeria, 6 in other African countries and is in the process of developing cement production operations in another 8 African countries; the latter are in varying stages of development. In addition to this, the Group has salt processing activities in Nigeria and manufactures sacks required for the storage of materials produced across the various operations. Further, the company operates a port terminal in Apapa, Lagos, via which goods required for its operations are imported and products manufactured from the various operations exported. The Group is also in the process of developing an oil refinery and a fertilizer plant which will be located adjacent to each other in the Lekki Free Trade Zone (LFTZ), some 50 km east of the center of Lagos, Nigeria. Initially in early 2015 IFC was considering a $150 million loan to the Group to support the fertilizer plant and the Environmental and Social Review Summary (ESRS) document was published on this basis. Thereafter, in May 2015 the ESRS was updated to reflect that the majority of the proceeds would be directed towards the fertilizer plant with the remainder to support pre-construction design and feasibility work for the oil refinery. However, as of April 2016 and following discussions between Dangote and IFC, it has been agreed that the use of proceeds would revert to that originally defined. As such, all funds will be used to support establishment of the fertilizer plant and there will be no investment directed towards the oil refinery. Thus the ESRS has subsequently been updated again to reflect this approach. The LFTZ is some 16,500 hectares (ha) in extent and is situated in the Lekki Peninsula with the Atlantic Ocean to the south and the Lekki lagoon to the north. The master plan for the entire area includes a new airport, heavy and light industrial areas, commercial and residential areas and a new sea port, amongst other specific designated use areas. For the most part though, the LFTZ is presently undeveloped aside from a few small industrial facilities and an internal road network; the fertilizer plant is the first major development and located within an area designated for heavy industrial use. The fertilizer plant will occupy 200 ha and the main project components involve; i) two, 2,200 metric ton per day (MTPD) ammonia plants; ii) two, 3,850 MPD urea plants; and iii) two, 3,850 MTPD urea granulation plants. The total production capacity of the plant will be some 2.8 million tons per year of granulated urea. Ammonia produced by the associated plants will be fed directly to the urea plants. In the event the urea plants are not operational, the ammonia will be fed to a 20,000 ton intermediate storage tank before later use in urea production. In addition to the fertilizer plant’s primary production facilities, all utilities required for the operations such as power, air, nitrogen, water supply and effluent treatment will be provided via on-site facilities also to be constructed as part of the broader plant development. Natural gas required for production activities and the power plant will be supplied via a new gas pipeline to be constructed. The location of the gas pipeline is yet to be confirmed; however it is currently envisaged to be some 50 km in length and will link into an existing trunk gas line operated by the Nigerian Gas Company. The gas itself will be provided by a private supplier and Dangote is in discussions with respective companies on this issue. Transfer of urea from the fertilizer plant will be by road via the existing road network. In the vicinity of LFTZ the road network is to be upgraded by the Lagos State Government and this includes improving linkages into the city of Lagos and beyond. In addition, as part of the LFTZ a port is planned which will be located immediately south of the plant and fertilizer will be exported from this port once operational. However, until such time, the fertilizer will be exported via the port terminal operated by Dangote in Apapa, Lagos. Dangote has appointed Saipem, an Italian based company experienced in fertilizer plants, as the Engineering, Procurement and Construction (EPC) contractor and there are various other companies either involved on behalf of Dangote and Saipem as outlined in subsequent sections of this document. Land clearance at the site commenced in April 2014 and project commissioning is expected in the final quarter of 2017.