Kenya-based cement maker Athi River Mining plans to start production at its two Tanzanian plants early next year, company officials said.
The Dar es Salaam plant will have a capacity of 0.75Mta and should be operational by February. The second plant to be based in Tanga is expected to be running by September 2012 and will have a capacity of 1.5Mta. The combined capacity will effectively make ARM the single-largest integrated cement producer in the region.
“We have invested more than US$145m for the construction of the two plants with an eye at boosting cement production in the region,” said company managing director Pradeep Paunrana.
ARM has over 1200 construction staff working at the two sites. The company hopes to employ close to 1500 staff after the commissioning of the plants. The plants will also generate over 5000 jobs in the service sector through the distribution, logistics and dealer networks.
“The company’s plant in Tanga sits on a 6km-stretch of limestone deposits that could outlive 200 years of mining,” says Pradeep Paunrana. He added that demand for cement in the region would probably grow at twice the current rate of 5-6% 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,” Mr Paunrana said.
East Africa’s cement sector is facing trying times. The per capita consumption of cement remains well below the average for sub-Saharan Africa, analysts at Renaissance Capital said last month.
The region is on course for a massive infrastructure upgrade, which should push up demand for cement, as countries invest in roads, ports, bridges, railway lines as well as energy generation projects.
Statistics indicate that the combined production of Tanzania’s three cement manufacturers – Tanzania Portland Cement Co, Mbeya Cement Company Ltd and Tanga Cement Company – stands at 1.2Mta against a demand of 1.6Mta. Due to the shortfall, Tanzania has been forced to rely on imports.
A bag of cement in Dar es Salaam is selling at between TZS13,000 (US$8.60) and TZS14,000 (US$9.30), while in upcountry stalls the same bag can be purchased at TZS16,000 (US$10.60) or more due to transport costs. Uganda, Rwanda and Burundi on the other hand, are facing huge deficits mainly due to scarcity of limestone, a key ingredient for manufacturing cement, which has raised the cost of construction.
Currently, both Kenya and Tanzania are building up huge surpluses. Kenya invested US$144m in a 2.5Mta cement company, Kenya National Cement, which was commissioned last month. Meanwhile, Tanzania is endowed with considerable limestone deposits.