Dangote Industries Limited Signs $4.2 Billion Natural Gas Agreement with GCL Group
On March 16, 2023, Dangote Industries Limited, Africa’s premier industrial conglomerate, announced a significant partnership with GCL Group, a leading Chinese energy company. This groundbreaking $4.2 billion natural gas supply agreement extends over 25 years and aims to energize a major fertiliser production project in Ethiopia.
Strategic Partnership for East Africa’s Industrial Growth
Signed in Lagos, this agreement is set to propel Dangote Group’s expansion into East Africa while fostering deeper industrial collaboration between China and the African continent. Under this arrangement, GCL Group will provide a consistent supply of natural gas to power a new urea fertiliser production complex aimed at producing three million tonnes per year, currently under construction in Ethiopia.
Investment and Operational Timeline
The fertiliser facility, estimated to cost around $2.5 billion, is being developed through a partnership structure of 60% Dangote Group and 40% Ethiopian Investment Holdings (EIH), the government’s investment arm. Operations at the fertiliser plant are expected to commence in 2029, positioning it as the largest modern fertiliser production hub in East Africa.
Meeting Regional Demands
This initiative is poised to cater to Ethiopia’s entire urea import needs while also supplying fertiliser to neighboring countries across East Africa. The project aims to significantly diminish the region’s reliance on imported fertilisers.
Natural Gas Supply and Infrastructure Development
To fuel this ambitious project, natural gas will be sourced from the Calub Gas Field located in Ethiopia’s Ogaden Basin. The gas will be transported through a dedicated 108-kilometer pipeline to the fertiliser complex in Gode, situated in the Somali region.
A Sustainable Future for Africa
This integrated initiative aligns with Africa’s broader goals of developing energy-to-food industrial value chains. Utilizing domestically sourced natural gas is crucial for supporting both fertiliser production and agricultural growth across the continent.
Aliko Dangote, President and CEO of Dangote Industries Limited, noted the collaboration represents an essential step towards enhancing Africa’s industrial capabilities and food security. He emphasized the need for African countries to progress beyond raw resource exports and develop industries capable of converting these resources into finished products.
Closing the Loop on Value Creation
The partnership with GCL embodies a closed-loop value chain, facilitating a seamless connection between natural gas extraction and fertiliser production—ultimately helping Africa strive for agricultural self-sufficiency.
Strategic Milestone for Ethiopia
Zhu Gongshan, Chairman of GCL Group, described the agreement as a strategic milestone that will unveil new opportunities within Ethiopia’s energy, chemical, and agricultural sectors. He remarked that this collaboration reflects a shift towards a mutually beneficial partnership model, effectively marrying Chinese technology with Africa’s rich resource potential and market opportunities.
