Tanzania: Tanzania to double its cement output.

Tanzania: Tanzania to double its cement output.

Tanzania’s total cement production is expected to more than double over the next two years, thanks to the new entrants which expect to amplify competition. The current four firms that produce Twiga, Simba, Rhino and Tembo brands have a combined installed annual capacity of 3.75 million tonnes and output is expected to reach 8.65million tonnes per year in 2015.

The new producers are Dangote Cement, Lake Cement, and Lee Building Material plus the existing firms’expansion expected to boost production by 4.9 million tonnes per annum. Tanzania Securities’ CEO, Mr Moremi Marwa, said the firms are taking advantages of increased cement demand pushed by construction activities that grew at an annual average rate of eight per cent over the past five years. 

“We expect local demand to grow at over 10 per cent if infrastructure investments are sustained at the current levels and the economic momentum remains as projected,” Mr Marwa said. The demand, currentlystanding at four million tones, has been growing at a compound annual growth rate of 10 per cent over the past five years to 2012. 

“We note that Tanzania is currently a net importer of cement, importing about 500,000 tonnes per annum or 12 per cent of the total consumption,” the CEO said in a cement analysis report. He added: “We estimate that current sector utilization of the installed capacity is 90 per cent, offering minimal room for upside unless the projected new capacity is added”.

The existing companies that are expected to increase capacity in the next one to two years are Tanzania Portland Cement Company (Twiga) 700,000 tonnes, Tanga Cement (500,000tonnes) and Athi River (Rhino) 1.2million tonnes. The new entrants are locally owned Lake Cement in which Banco of India has acquired 51 per cent stake.

The new joint venture formed a Greenfield plant to be erected in Lindi with an investment of 12.5 million US dollars. Plant which is scheduled to commence production next year has the capacity of 500,000 tonnes annually. The Nigerian Dangote Cement— an industryconglomerate—plans a two million tonne gas fired cement plant in Mtwara as part of their pan- African strategyto expand across the continent.

Another is a Chinese firm Lee Building Minerals that has started construction of a 12.5 million US dollars cement factory in Lindi with a capacity of 300,000 tonnes per annum. The key sector concerns, according to Mr Marwa, include the escalating energy cost, stable power supply; transportation related challenges and costs as well as competition from increased market shares going to new manufacturers, along with increased imports at low costs.