Aliko Dangote Halts Steel Project Amid Monopoly Concerns

In a significant shift regarding his company’s expansion plans, Aliko Dangote, the chairman of Dangote Industries Limited, has announced that his organization will no longer pursue entering Nigeria‘s steel sector. This decision follows a recent surge of criticism over accusations that his enterprises are striving to establish a monopoly in various industries, particularly after the unveiling of his enormous refinery.

During a press event held at the refinery in Lagos on Saturday, Dangote elaborated on the reasoning behind this strategic pivot made by his company’s board. He explained that the intention to venture into the steel industry had been scrapped to avoid further negative labels such as monopoly, which have been directed at his company.

Just two months ago, Dangote Industries had announced plans for a considerable investment in steel production, intending to enhance Nigeria’s industrial landscape. However, recent developments have led to a more cautious approach, with Dangote underscoring the potential for imports to be encouraged should his company pursue the steel venture.

“We have decided not to proceed with the steel project as we do not want to be associated with terms like monopoly,” Dangote remarked. He highlighted that companies should be allowed to provide similar services without undue hindrance, emphasizing the importance of a competitive market environment.

Historically, Dangote Industries made its debut in Nigeria’s cement production when it faced the lone competition of Lafarge. He refuted the notion that his company operated as a monopolistic entity, stating that all competitors had access to the same opportunities for growth.

“Monopoly exists when you actively eliminate competitors through legal means. Our market provides equitable chances for every player,” he added following queries regarding the accusations surrounding his business practices.

Encouraging local investments, Dangote urged fellow Nigerians with the financial capacity to seize opportunities in the steel industry to bolster the economy. “Let other Nigerians take on the steel challenge. Our market is vast, and there are individuals with substantial capital out there,” he noted, appealing for investment from those abroad as well.

The announcement comes on the heels of government allegations that Dangote attempted to monopolize the diesel and aviation fuel markets by conceiving to suspend imports of these essential products. The controversy surrounding this has seemingly spurred Dangote’s decision to steer clear of the steel industry.

Dangote referred to claims of monopolistic practices as “distressing,” defending the integrity of his operations and underscoring that other entities have been afforded similar support during their development phases.

His refinery, a pivotal project worth $20 billion, has been fully operational since January and currently churns out aviation fuel, diesel, and naphtha. Dangote highlighted the significant investment in this project, stating that he acquired the land in Lagos’s free trade zone for a staggering $100 million.

Moreover, in response to allegations from Nigeria’s downstream regulator concerning the quality of diesel produced at the refinery, which was said to be subpar compared to imports, Dangote presented lab results that refuted these claims. His refinery’s diesel reportedly boasts a sulfur content of 87 parts per million (ppm), considerably lower than some imported variants.

With plans in the works to achieve a sulfur content target of 10 ppm by the end of the month, the operation aims to supply most of its output to major global customers, including prominent names such as Trafigura, Vitol, BP, and TotalEnergies.

Additionally, Dangote announced that the refinery is poised to start gasoline production soon, with plans to increase its total output from the present 350,000 barrels per day to an impressive 550,000 barrels a day by the year’s end.

According to Olakunle Alake, the vice president of Dangote Industries Ltd., the construction phase of the refinery is approaching completion, with the remaining units expected to be finalized by August.