Chinese firm whets appetite for Tanzania’s cement sector

The Tanzania Investment Centre (TIC) has granted an operation licence to Chinese investors who had expressed interest in establishing a cement manufacturing plant in the country.

The Chinese company, Sinoma and Hengya (T) Limited, pledged to commence the construction of a Tshs.2.3 trillion ($1 billion) cement factory in the Tanga region`s Mkinga District, very soon. Sinoma and Hengya (T) Limited is a union of Hengya Cement which is a subsidiary of China`s Hengyuan International Engineering Group and Sinoma Cement which is a subsidiary of Sinoma International Engineering Company.

The Chinese firm is set to construct a cement factory with an initial cement production capacity of 2.5 million tonnes annually with an eventual target of 7 million tonnes following further investment. Alongside cement factory, the company plans to establish a power plant that can generate 1,200 MW. The power plant will help reduce the country`s electricity deficiency which is characterized by multiple power shortages and crippling load shedding and will also help to steer the country towards the envisioned industrialised economy by 2025.

 At least 70% of cement production will be exported through the Indian Ocean to the neighbouring Somalia, Kenya and Mozambique and 30% will be for the domestic market.

The company has also proposed the construction of a dock at the Tanga port that will facilitate the exportation of cement. The proposed investment will offer direct and indirect employment opportunities to over 7000 individuals and will generate annual revenues amounting to Tshs.400 billion ($173 million).

TIC gives investors a licence that gives them three years during which implementation must start and failure to do results into licence revocation. Currently, Tanzania`s cement producers have installed a capacity of about 11 mtpa against a domestic market demand of about 5 mtpa, with average cement consumption of 88 kg/ individual. The overcapacity has resulted in price wars among cement makers, reducing profits and hurting their revenues.

Tanzania`s cement producers include Dangote Industries Tanzania, Lake Cement Limited, Tanga Cement PLC, Camel Cement Company, Kilimanjaro Cement Limited, Lee Building Materials Limited, ARM Cement Tanzania Limited, Mbeya Cement Company Limited, Tanzania Portland Cement Limited, Rhino Cement, Mtwara Cement, Kisarawe Cement Company Limited.

As of 2016, Tanzania Cement Manufacturers produced 2.8 million tonnes annually, with Tanzania Portland Cement Limited the production leader, followed by Tanga Cement Plc and Dangote Industries Tanzania.

By December of the same year, five new manufacturers had set up industries in the country raising annual installed capacity to 10.8 million metric tonnes with total production in 2016 amount to 7.1 million tonnes. Annual consumption in 2016 was 4.1 million tonnes with the balance exported to the neighbours including Burundi and the Democratic Republic of Congo (DRC).

In August 2018, three major cement industries slowed down production, causing an acute shortage of cement throughout the country, pushing up the prices despite the fact that Tanzania has overcapacity in cement production.