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HOW WE CREATE VALUE 4 1 Procurement of plants 2 Astute market selection Economies of scale at plants 5 Larger, more efficient kilns C6ost-effective fuel strategy 3 1 Favourable procurement of plants Our size and the scale of our ambition enables us to negotiate the procurement and construction of not just one factory but several from the same builder, using best-of-breed technologies from Europe and China. Furthermore, our plants are created with a high degree of standardisation and prefabrication to help reduce our construction costs. We are negotiating attractive financing packages that not only reduce our need to source US dollars, but also enable us to repay much of the cost after the plant has opened and begun to generate profits. 4 Economies of scale at larger plants Our production lines are built in two standard sizes of 1.5Mta and 3.0Mta, significantly bigger than the global average size of about 1.0Mta. Therefore, we gain significant economies of scale, particularly when we put several lines together at mega-factories such as Ibese, in Nigeria, which has two pairs of 3.0Mta capacity lines in a relatively compact site. This enables a single team to manage two lines at the same time and ensures we can always have a line producing clinker and cement even if another is taken offline for maintenance. 28 Annual Report 2016 New quarries, easier mining 2 Astute market selection We choose to build factories in countries with large populations and healthy economies that have plenty of potential for construction and housing to drive per-capita demand for cement from low levels. We look for substantial limestone reserves linked by good roads to nearby growth and export markets. Many such markets are served by older, less efficient factories with higher costs of production than our modern, high-tech factories. Sub-Saharan governments are keen to attract investment and reduce imports, so we are able to benefit from tax incentives. 5 Larger, more efficient kilns A consequence of building larger factories is that we achieve considerable efficiencies through the larger sizes of their kilns, which is where a significant proportion of costs are spent. Raw materials are dropped through a preheater tower where they are heated using exhaust gases from the kiln below. In this way, our large and modern rotary kilns achieve rapid creation of clinker for relatively low energy usage, thanks to the efficiencies of the heat recycling systems deployed. Larger kilns therefore benefit from more efficient use of energy. 3 New quarries enable easier mining When we open a new factory we also open a new quarry from which to mine limestone and other raw materials such as laterite and shale. This means that we can optimise mineral extraction to get the best material more easily and at relatively low cost, when compared with other manufacturers who might be mining a quarry that is perhaps 20-30+ years old. Furthermore, we equip our mines with advanced analytical systems to ensure the optimal quality of material passing to the factory for processing into clinker and then cement. 6 Cost-efficient fuel strategy We have now converted all our large Nigerian lines to run on coal as well as gas – a project we began more than two years ago as part of our efforts to diversify fuel supplies, reduce costs and mitigate risks. By sourcing coal from our parent company, Dangote Industries, we achieve several competitive advantages in NIgeria: protection from disruption of gas supplies, margin improvements compared to gas, elimination of highly expensive LPFO and a significant reduction in the need for foreign currency in a time of shortage.

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