MORE intense competition is expected in the cement industry as more players enter the market attracted by prospects of making profit big time from a spate of planned infrastructure mega projects and lucrative export market.
The new kid on the block will be a 1.0 billion US dollar cement factory to be constructed in Tanga from May, this year, by a Chinese investor Hengya Cement. It will enter the market complained by local players to suffer from over capacity which has forced cement prices down and reduced their profit margins.
The envisaged cement plant in Tanga billed to be the largest plant in sub-Saharan Africa will focus on export market and the investors will build a wharf to aid exports.
The Chinese investor announced last week 70 per cent of cement to be produced at the plant will be exported to Somalia, Kenya, Mozambique, Sudan, the Democratic Republic of Congo (DRC) and Uganda.
Over capacity complaints had increased with the entry of another big player, Dangote Cement in 2015 which had helped to drive cement prices down in the market to about 10,000/- per 50 kilogramme bag from around 15,000/-.
The 500 million US dollars Dangote cement plant by Africa’s richest man, Alhaj Aliko Dangote, is strategically constructed in Mtwara to take advantage of cheap natural gas that is extracted in nearby fields. While the Mtwara cement plant is vital to mint revenue that will drive profit to Dangote cement investments across Africa, to Tanzania it is important to ensure reliable supply of the product which has helped to lower prices to the benefit of Tanzanians.
It is no surprise that President John Magufuli gave the Ministry of Energy and Minerals to offer Dangote Cement a chunk of lucrative coal field at Ngaka coal mine in Ruvuma Region so that the cement plant can get cheap energy source that will lower cement production costs.
Speaking during the launch of a fleet of 580 heavy-duty trucks which will be used to deliver cement to the market across the country, Dr Magufuli also ordered the ministry to ensure the cement plant is supplied with natural gas without further delay. Negotiation between Dangote and Tanzania Petroleum Development Corporation (TPDC) over the price of the gas supplies had taken too long.
The Mtwara cement plant is a star among other investments across Africa. For the 2017 growth strategy, the Mtwara plant is considered to be the star performer and plans to allocate a major part of its capital expenditure in 2017 forecast to be $300 million for improvements in Tanzania.
The market is assured of more cement supplies to add to the current production of around 7 million tonnes a year to feed into estimated rapid growing demand due to a spate of planned major infrastructure projects and the battle for market share with other players will certainly intensify.
Other cement makers are Kenya’s ARM Cement and subsidiary plants of Germany’s Heidelberg Cement AG, Afrisam Mauritius Investment Holdings Limited and France’s Lafarge SA.
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