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Wednesday, March 29, 2023

Dangote Fertilizer Capacity Utilisation Put at 25% on Gas Constraints

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The Dangote Fertilizer plant which was commissioned in 2021 following delays operated on a 25% capacity utilisation rate in its line 1 in 2021 and 0% in line 2 as at the end of last year.

Both lines were operational as of April 2022, according to Fitch ratings.

“Gas compressor issues and, as a result, low pressure of the gas supplied to the plant were the main factor behind the delay together with a delay to obtaining regulatory approvals,” Fitch said.

The Dangote Fertilizer capacity utilisation on line 1 is to gradually ramp up to an average 60% in 2022-2023 and to around 80% by 2025, from 25% in 2021.

Line 2 which is to start production in April 2022 will ramp to around 80% capacity rate by 2025 from 50% in 2022.

The gas pressure has reportedly recovered in 2022, and management has conservatively assumed utilisation rates for respective lines to increase, according to Fitch.

The Fertilizer plant is forecast to have 66% EBITDA margin in the 2022-2025 period.

The $2.5 billion Dangote Fertilizer plant which is one of the world’s biggest fertilizer plant has the capacity to produce 3 million tons of urea and ammonia per year.

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