Dangote cement plant excites market

Saturday February 9 2013

By MIKE MANDE The EastAfrican

Tanzania is set to more than double its cement production capacity in 2015 when a $420 million cement factory by Nigeria-based conglomerate Dangote is completed.

The projected capacity of the factory, to be built in Mtwara, southern Tanzania, is expected to be three million metric tonnes per annum, and Dangote is looking to get a good chunk of the market share.

“We hope to push our production capacity to 50 million metric tonnes per annum within the next five years, based on its ongoing projects, which are at various stages of completion,” he said.

Currently, Tanzania has an estimated production capacity of three million metric tonnes per annum against a demand of 2.2 million tonnes per annum.

The construction, in conjunction with Chinese firm Sinoma International Engineering Company Ltd, has already commenced and head of communication Tony Chiejina says the factory will be completed in the second quarter of 2015.

Also being set up is a $1.85 billion fertiliser plant in Mtwara whose construction will go hand in hand with the cement plant.

Dangote hopes that the new cement plant will supply countries in the East African Community market as well as Malawi and DR Congo.

The region is currently undergoing a massive infrastructure upgrade, which has pushed up demand for cement, as governments invest in the construction of roads, ports and bridges, railways and energy projects.

“The plant, once it starts production, should help reduce the cost of cement in Tanzania and the region,” said Devakumar Edwin, Dangote’s group executive director in charge of business development.

The price of cement per tonne remains relatively high in Tanzania, averaging between $90 and $105 due to high energy costs and dependence on imported clinker.

In Tanzania, a 50kg bag of imported cement retails at Tsh12,500 ($7.8) while locally produced brands are selling at between Tsh13,000 ($8) and Tsh15,000 ($9.3).

In Kenya, current prices range between Ksh700 ($8) and Ksh750 ($8.5) per 50kg bag while in Uganda, the average price is Ush32,000 ($12) as at December 2012.

Tanzania Portland Cement is currently the country’s biggest producer with a production capacity of 1.4 million tonnes per annum.

Comparatively, Tanga Cement has a capacity of 1.25 million tonnes per annum while Athi River Mining Tanzania produces of 750,000 tonnes per annum. Mbeya Cement plant has an installed capacity of 350,000 tonnes per annum.

Trade Minister Abdallah Kigoda said demand for cement in the region is expected to grow at a rate of between five and six per cent in the next few years. Mr Kigoda said that the construction and housing sector which has an annual growth rate of about 10 per cent is the main driver of cement consumption, thus pushing up demand.

Dangote Cement Group said it is investing more than $2.5 billion to build manufacturing plants and import terminals in 13 African countries.

Current plans are for eight cement plants in Cameroon, Ethiopia, Gabon, Republic of Congo, Senegal, South Africa, Tanzania and Zambia, as well as import and packing facilities in Cote d’Ivoire, Ghana, Guinea, Liberia and Sierra Leone.