Tanzania: Two big cement investments to lower prices in next two years

The price of cement is likely to go down in the coming two years in view of the massive investment in the industry going on in Tanzania.

According to the Managing Director of Arthi River Mining (ARM), Pradeep Paunrana, the firm has started construction of two cement plants in the country.

“We are constructing a 750,000 tonne grinding plant in Dar es Salaam which will be commissioned at the end of this year,” he said in an email interview.



When completed, the plant is expected to increase cement production and stimulate competition among players hence bring relief to the consumers.

Paunrana said the firm will put up another cement plant in Tanga Region which is expected to serve consumers in the country’s northern part.

“We are also putting up a 1.5 million tonne integrated cement plant in Tanga Region. The 8.6bn/- factory will be commissioned in quarter two of 2012,” he said. The foundation stone was laid down by President Jakaya Kikwete in 2008, he said.

The plant will have the capacity of producing 4,000 tonnes a day or 1.5 million tonnes a year and would start operations in two years time.

The Tanga plant is anticipated to be the largest in east and central Africa.

Entry in the Tanzania market will put ARM in a position where it will easily access the Southern Africa Development Community (SADC) markets of Zimbabwe, Namibia and Mozambique.

Financing of the project is both in debt and equity arranged by a number of banks including Barclays and Stanbic.

He said borrowing for the project was concluded before the 2009 global financial crisis.

Paunrana said demand for cement in the region would probably grow at twice the current rate of five to six per cent in the next few years.

“Economic growth could be much faster in Tanzania and we expect cement consumption to double in the next five to seven years,” Paunrana said.

Statistics indicate that the combined production of Tanzania three cement manufacturers - Tanzania Portland Cement Company, Mbeya Cement Company Limited and Tanga Cement Company – stand at 1.2 million tonnes against the demand of 1.6 million tonnes a year.

Due to the shortfall, Tanzania has been forced to rely on imports to meet the demand.

At the moment a bag of cement in Dar es Salaam is sold at between 13,000/- and 14,000/-, while at upcountry stalls the same bag can be purchased at 16,000/- or above due to transport costs.

It is anticipated that construction of the plants in Tanga and Dar es Salaam regions would make ARM the leading cement producer in the region.

The company’s plant in Tanga sits on a six kilometre stretch of limestone deposits that could outlive 200 years of mining, says ARM managing director.
SOURCE: THE GUARDIAN