30 July 2013

Tanzania: Dar es Salaam Savours Cement Production Boom

THE booming construction sector, coupled with increasing huge investments in infrastructure development in every fiscal year, is said to be one of the crucial incentives for the continued inflows of investments in cement production.

The 2013/14 has witnessed the government increasing spending on infrastructure to 2.16tri/- compared to 1.94tri/- allocated in the previous fiscal year. Similarly, activities in the construction sector have recorded an annual growth rate of 8 per cent over the past five years.

The Confederation of Tanzania Industries (CTI) Director of Policy and Research, Mr Hussein Kamote, said in an interview yesterday that, "the increased inflows of investment in cement production is good news for the country's economy and should be given all necessary support."

He added, "There is a direct relationship between construction sector and the growth of national income which is also a sign of improved living standards of the people."

Mr Kamote noted that the local demand has been growing drastically due to increase in both public and private construction activities in such big projects like storey buildings, bridges and roads.

Currently, Tanzania has an estimated production capacity of 3.5 million tonnes per annum shared mainly among big producers including Twiga, Tanga and Mbeya Cement. But the coming of other players will see the capacity shooting to 8.65 million tonnes annually.

Domestic demand, currently stand at 4 million tonnes and has grown at annual average of 10 per cent over the past five years to 2012. Apart from the huge local demand, the position for which the country is surrounded by many land locked countries provide grand opportunity for investors' rush for the cement manufacturing.

Also, the availability of raw materials like limestone, sand, shale, clay and iron ore particularly along the coastline that reduce production costs is among the major factor for attracting cement investments in the country. Likewise, the increased government spending in the energy sector and in particular gas discovery for generating electricity has also contributed to attracting investments in the cement industry. For 2013/14, a total of 1.43tri/- has been allocated compared to 731.8bn/- set in the preceding fiscal year. Mr Kamote said the coming in of new players in the cement production will stiffen competitions that will increase efficiency and pull down prices of the commodity in the market. New players expected in the cement industry include Dangote Cement, Nigeria industry conglomerate and the new entrant in the country and the East African regional cement market.

It is planning for a 2 million gas fired cement plant in the country as part of their pan-African strategy to expand across the continent. Athi River Mining, with their 2012 commissioned plant in Dar es Salaam intends to commission a new plant in Tanga which will add local production capacity by 1.2 million tonnes.

Lake Cement with a joint venture between local investors in the tune of 49 per cent and Banco India 51 per cent intends to commission by 2014 with a capacity of 500,000 tonnes per annum.

The Chinese firm Lee Building Minerals has started construction of a 12.5 million US dollars cement factory in Lindi with a capacity of 300,000 tonnes per annum. Similarly, the Pakistan investors plan to invest in a cement manufacturing plant in Tanzania with the intent to reduce imports from Pakistan.

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