COAL DEBATE LINGERS DESPITE DANGOTE'S ASSURANCE TO JPM

Africa’s richest man and the owner of Mtwara-based Dangote cement factory, Mr. Aliko Dangote

According to Africa’s richest man, importing goods that are locally available amounts to importing poverty into Tanzania and exporting jobs outside the country, adding that his company is not going to be part of that.

Dar es Salaam. The owner of the Mtwara-based Dangote cement factory, Mr Aliko Dngote, says he is against his company’s decision to import coal and gypsum for use at the factory.

According to Africa’s richest man, importing goods that are locally available amounts to importing poverty into Tanzania and exporting jobs outside the country, adding that his company is not going to be part of that.

“We will utilise whatever we have locally, and already we have been assured of getting the amount of coal that we want…I also gave the President my firm commitment for further investments, and we are looking into other areas like agriculture and coal,” the Nigerian billionaire said after holding talks with President John Magufuli at State House on Saturday.
President Magufuli reiterated at the meeting what his ministers had been saying in the wake of the controversy surrounding cement manufacturers’ energy needs.

“It is unthinkable for the country to allow the importation of coal while quality stocks that can last for over 200 years are available,” he said.

However, Mr Dangote’s assurance did little to dismiss concerns on the quality and quantity of local coal, which were recently revealed by a government-commissioned report.

Dangote Cement country manager Harpeet Duggal said in October that the plant had to switch to diesel after the government banned importation of coal from South Africa, adding that they could not use local coal because it was of “poor quality”.

The government last year appointed a five-member committee chaired by Dr Augustine Hangi, and the team concluded in its report compiled between August and September 2015 that local coal is of “poor and/or fluctuating quality”.

Executives of two other cement factories who spoke to The Citizen over the weekend said the quality and availability of locally mined coal were worse now than at the time when the study was conducted.

“Back then there was no ban on imported coal so we had options and ways to balance both the quality and supply chain, but now we have no alternatives. To make matters worse, our concerns on local coal have not been addressed,” said one of the executives on condition of anonymity. According to the study, the quality of local coal is compromised since Tancoal, the only active coal producer in the country, lacks a processing plant needed to produce coal of consistent quality demanded by the market.

There is also the issue of protecting coal from rain at Kitai stockpile yard. Rainwater increases the moisture content in coal, which is not acceptable to customers if it exceeds eight per cent.

“A washing plant roughly costs about $2 million, and once installed it will provide the best quality coal. It should be understood that cement manufacturers in the country have injected hundreds of millions of dollars in building and expanding their plants,” the executive said, adding, “It’s only fair for these companies to look for quality materials. We don’t buy coal just for the sake of buying it...we are after energy within coal, and washed coal is the best.”

He said Tancoal had yet to expand its machinery capacity, and it is a challenge to cater for all manufacturers, adding that “if Dangote will really resume buying local coal then the situation will worsen”.

The situation at Kitai stockpile yard, which has a holding capacity of 165,000 tonnes, also remains the same.

“On Thursday last week it rained cats and dogs and about 30 to 40 loaded trucks were stranded for a whole day on a three-kilometre stretch of a muddy road between the yard and the main tarmac road...definitely, in such a situation transportation costs rise sharply,” another executive, who also wished to remain anonymous, told The Citizen.

Source: The Citizen