Dangote Refinery enters polypropylene market

The Dangote Oil Refinery has commenced operations at its polypropylene facility in Lagos, marking a major step in the commissioning of its expansive oil refining and petrochemical complex. The facility, expected to be officially unveiled soon, is poised to become Africa’s largest polypropylene production site.

According to S&P Global, the launch of Dangote’s 830,000 metric tonnes per year polypropylene plant is one of the final milestones in the refinery’s commissioning process, which began in January 2024.

“Polypropylene production has now started, with supplies being distributed in 25kg bags, and has already threatened to upend the domestic market,” industry sources told Platts, part of S&P Global Commodity Insights.

A trade source revealed that Dangote Group began offering polypropylene supplies as early as February, preempting official production.

A Game-Changer for Domestic and Regional Markets
The Dangote Petrochemical Plant, valued at $2 billion and located in Ibeju-Lekki, Lagos, is designed to produce 77 high-performance grades of polypropylene, which is widely used in plastic packaging, textiles, and industrial applications.

The facility consists of two polypropylene units with capacities of 500,000 mt/year and 330,000 mt/year, positioning it to meet the nation’s 250,000 mt/year domestic demand while targeting export markets across Africa and beyond.

Aliko Dangote, President of the Dangote Group, has expressed confidence that the complex will not only meet local demand but also reduce reliance on imported raw materials.

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Disrupting Established Trade Routes
Market analysts warn that the new production capacity could rapidly capture market share, challenging existing suppliers such as Indorama Eleme’s Port Harcourt refinery and Middle Eastern exporters.

In the oil sector, the Dangote complex has already disrupted local markets by undercutting competitors, leading to price reductions in the gasoline retail market, particularly impacting the Nigerian National Petroleum Company Limited (NNPC).

The refinery has also reshaped regional trade flows, reducing Nigeria’s dependence on fuel imports from Europe while covering a growing share of domestic oil product demand.

Although the Dangote Group previously indicated that the refinery would reach its full 650,000 barrels per day capacity by March 2024, progress remains dependent on crude oil availability. There is no updated timeline for when the petrochemical plant will reach full operational capacity.

Driving Economic Growth and Investment
Devakumar Edwin, Group Executive Director of Strategy, Capital Projects & Portfolio Development at Dangote Industries Limited, emphasized the transformative impact of the new petrochemical facility.

“Our plant can produce about 900,000 tonnes of polypropylene annually, making it the largest in Africa,” Edwin stated.

He highlighted that local production will address foreign exchange shortages faced by manufacturers who previously relied on imported polypropylene.

“When raw materials are available locally, more investors will be willing to participate in the economy. Beyond saving foreign exchange, this facility will stimulate the downstream sector, creating jobs, increasing tax revenues, and boosting the country’s Gross Domestic Product (GDP),” Edwin added.

Polypropylene: An Essential Industrial Material
Polypropylene is a petroleum-based thermoplastic derived from propylene gas, a by-product of oil and natural gas production. It is used across various industries for manufacturing plastic packaging, machinery components, textiles, medical equipment, and piping systems.