Hopes of Dangote’s Sh35b cement plant dashed as investor vanishes

Possibility of establishing a multi-billion shilling cement factory in Kitui County by Dangote Quarries Ltd seems to have gone up with the wind.

This is after the company, owned by Africa’s richest man Aliko Dangote, stopped limestone prospecting in Kanziku area and vanished.

Aliko Dangote, President and Chief Executive of Nigeria's Dangote Group speaks during the final session of the World Economic Forum on Africa meeting in Cape Town June 6, 2008. REUTERS/Mike Hutchings (SOUTH AFRICA)

Dangote Quarries had promised to put up a Sh34.8 billion cement plant in Kanziku with capacity to produce 5,500 tonnes of cement daily to rival a planned one by ARM Cement worth Sh26 billion in Kyuso Sub County.

More than a year after the multinational pulled out of Kitui claiming to have completed phase one of prospecting, neither residents nor the county government have any information on their plans. The community from the limestone rich Kanziku area is now convinced that Dangote Quarries have lost interest in Kitui limestone investment.

“We have lost hope in Dangote. He is no longer in our minds. He is a wealthy man but his wealth is not benefiting us at all,” said a disappointed Francis Munyalo, capturing the mood of the residents.

Mr Munyalo, a member of Ene Mali (wealth owners), a group of farmers whose land sits on massive deposits of limestone, said the community was now open to other investors. Chrispus Mutinda, another resident said they were shocked by the sudden change of heart by Dangote, saying with such a huge investment, the entire community would have been pulled out of poverty.

“They just left us high and dry. We are totally in the dark about their plans,” said Mutinda, referring to the investor’s unexplained withdrawal in March 2015. Kitui County Chief Officer in charge of Environment, Energy and Minerals Investment Development Dr Muusya Mwinzi noted that the county government was also in the dark over Dangote plans.

“As far as I know, they have not communicated with us for a long time so we don’t know their plans. The last we heard from them is sometime last year when they claimed they were retreating to reorganise themselves financially,” Dr Mwinzi revealed.

The chief officer said they were not aware if Dangote Quarries handed over its prospecting report to the ministry of Mining and Geology and what its findings were. “We are still trying to follow up on that although sometimes the ministry is reluctant to share information with us,” he said.

Dr Mwinzi stated that even when Dangote Quarries was on the ground, it had no physical address and its operations were ‘very opaque’ adding that it seemed to be a ‘faceless’ entity that engaged middlemen who would give scanty and unreliable details.

We tried to contact John Nzuki who in the past acted as the link between the community and Dangote Quarries but his phone was off.

However, in an interview with this writer a month ago, Nzuki sounded non-committal on the possibility of the firm’s return to Kitui County, even suggesting that the community was at liberty to engage other investors.

“You know this wealth (limestone) is like our daughter. Any man who offers the best deal will get her,” he said.

Portland Cement

But what irks the Kanziku community more, especially Kyautunda area where Dangote Quarries scoured people’s farms while prospecting, is failure by the company to pay them disturbance fee as agreed. “We had agreed that each farmer be paid Sh30,000 as the company carried out limestone prospecting. They fled without paying even a single farmer. That’s a blatant breech of agreement and we are contemplating taking legal action,” said Munyalo.

Mr Munyalo lamented that out of disillusionment, some of the poverty stricken farmers had resorted to selling their land cheaply to ‘outsiders’ who stand to benefit more should the community land another deal with a different cement maker.

Despite being disappointed by Dangote, the residents are not short of options through, as they are now wooing other cement manufacturers such as Savanna Cement, Mombasa Cement and East African Portland Cement (EAPC) to invest in the 180-square kilometre piece of land believed to be endowed with huge deposits of limestone.

Indeed, Mwinzi noted that there were many alternatives the community and the county government can explore. “Dangote is not the only alternative. EAPC has shown interest of coming back. They have already visited the area and a section of the community has also visited their factories,” Mwinzi revealed.

He said that although EAPC was approached directly by the people, the company had been advised to involve the county government in its activities. The county’s department of Environment, Energy and Minerals Investment Development has formulated a law denying investors the opportunity to buy land directly from the locals but will be required to lease.

Mwinzi said that regulation is meant to cushion the locals from possible exploitation by the investors. “A lease will enable the land owners be entitled to yearly payments which is not possible if investors buy land,” he observed.

Besides the law, the county government has also constituted a liaison committee which is meant to mediate between the investor(s) and the community. And that is where the Kanziku community and the county government part ways. The Ene Mali group has flatly renounced the liaison committee dismissing it as alien.

“Out of the 24 members of that committee, only three come from the limestone area. How can outsiders discuss our wealth?” wondered Munyalo, saying the committee will not be given opportunity to negotiate on behalf of the community. He said it is only the select committee from 420 members of Ene Mali which has such mandate.

He said residents of Kyautunda area were optimistic that before the end of this month they will get their title deeds, a move that will give them impetus to confidently negotiate with investors.

Kenya shadowed

Africa’s richest person last year unveiled East Africa’s biggest cement factory in Ethiopia at a cost of $500 million (Sh50 billion), what could have shadowed Kenyan plans. The thinking is that Dangote could use the Ethiopian and Tanzania plants to supply regional markets without the need for the Kenyan factory.

The Dangote Cement plant in Ethiopia is the fifth in the series of offshore plants of the company that have rolled out cement within the last one year on the continent, coming after Senegal, Cameroon, South Africa and Zambia. Apart from its plants in Nigeria, Dangote Cement has factories in South Africa, Senegal, Zambia and Tanzania.