24 June 2014

Tanzania: Better Cement Prices On Horizon As Dangote Factory Nears Completion

THE new Dangote Cement Factory now under construction in Mtwara is expected to ease pressure on prices of the product once the investment project starts production next year, Group President and Chief Executive Officer Aliko Dangote said in Dar es Salaam.

He told editors from various media houses that the firm intends to find ways of countering costs that arise as a result of distribution difficulties as one way of reducing pressure on cement prices.

The Nigerian business magnate was responding to questions from editors who sought to know how the 500 million US dollars (over 800bn/-) investment would handle such a challenge that affects many local and commercial builders. "When the plant starts work next year, we would look at how to reduce pressure on price of cement.

There has always been a gap in cement production," Alhaj Dangote pointed out. He also confided with the editors that his investment in Tanzania, which would be the biggest cement factory in East and Central Africa, does not belong to any group or cartel if such exist in the industry and as such would not engage in what some may view as 'unfair pricing.'

The price of cement per tonne remains relatively high averaging between 90 and 105 US dollars due to high energy costs and dependence on imported clinker.

A 50-kilogramme bag of imported cement retails at 12,500/- ($7.8) while locally produced brands are selling at between 13,000/- ($8) and 15,000/- ($9.3).

Mr Dangote also reported yesterday that they would first procure 250 trucks to handle distribution of the product across Tanzania. He informed his audience that to handle challenge of getting skilled labour in Tanzania for their operations, they would first take Tanzanian engineers to the Dangote Academy near Abuja for training.

"The academy takes in 1,000 engineers every year. We will absorb them and also attach them to the factory there," he said, adding that there were many smart African entrepreneurs who would take the continent to the next level.

According to the Nigerian billionaire industrialist, the country is set to more than double its cement production capacity next year when the factory is completed.

He said the capacity of the factory is expected to be three million metric tonnes per annum, out of which he expects to get a good chunk of the market share. Currently, the country has an estimated production capacity of three million metric tonnes per annum against a demand of 2.2 million tonnes per annum.

Mr Dangote hopes that the new cement plant would first satisfy the local market. 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 750,000 tonnes per annum.

Mbeya Cement Plant has an installed capacity of 350,000 tonnes per annum. Alhaj Dangote is a Nigerian self-made business magnate who is ranked by the Forbes magazine as 43rd richest person in the world and first in Africa.

As of 2011, cement, is estimated to account for about 80 per cent of his business. Dangote Cement, a subsidiary company of Dangote Group, is Africa's largest cement producer.

According to the company, they have set a goal of becoming one of the world's leading cement companies by 2016.

The company's investment profile in the continent stretches from Nigeria, Tanzania, Cameroon, Senegal and Gambia to South Africa, Zambia and Ethiopia, to name just a few.

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