Tanzania says it may draw US$9.2 Billion in cement investment
Three companies plan to invest as much as 20 trillion shillings ($9.2 billion) in Tanzanian cement production in projects that could double the nation’s installed capacity, Trade and Industry Minister Charles Mwijage said. The government has infrastructure projects planned, including the $10 billion Bagamoyo port development, a $7-billion railway and a $4-billion crude oil pipeline from neighbouring Uganda that will require cement.
“There are big projects which are attracting people to put cement industries here,” Mwijage said. He declined to identify the potential investors or give their timelines.
Units of HeidelbergCement AG of Germany, Jona, Switzerland-based LafargeHolcim Ltd and AfriSam Investment Holdings Ltd. of South Africa already operate in the country and have installed annual capacity of 10.3 million metric tons. Production in Tanzania is about 7.1 million tons a year, while local consumption is 4.1 million tons, according to Mwijage. The surplus is exported to neighbouring countries such as the Democratic Republic of Congo.
Demand for cement is expected to grow as much as 8% a year in the “medium-term,” London-based Exotix Partners said. Last month, Lake Cement Ltd announced plans to almost quadruple capacity to 1.9 million tons by building a new plant at Bagamoyo at a cost of $150 million.
Dangote Cement Plc last year commissioned a 3-million-ton plant in Mtwara. The plant stopped production last week on some technical issues that have now been fixed, spokesman Carl Franklin said.
When Dangote began production in Tanzania in February, it undercut competitors such as Tanzania Portland Cement Co. and Tanga Cement Co. by selling at about $80 per ton, compared to a national average of about $90-$100 per ton.
“We expect aggressive cost management strategies from all players to protect the bottom line,” Exotix said in its note.