A Chinese firm will construct a US$12.5m cement factory in Lindi, south of Dar es Salaam, starting this September.
With a capacity of 300,000tpa, the factory is expected to strengthen Tanzania’s position as a cement supplier in East Africa.
The firm’s country representative, Feng Hu said in a telephone interview last week that Lee Building Materials Ltd will specialise in white cement, which is not produced in abundance locally.
“We also hope this will boost the district’s economic prowess and rejuvenate the dormant Kilwa port,” Mr Hu said.
Tanzania’s cement production stands at 3Mta against a local demand of over 2.1Mta.
Current cement producers include Heidelberg’s subsidiary Tanzania Portland Cement Company, French Lafarge’s subsidiary Mbeya Cement Company Ltd and Holcim Mauritius subsidiary Tanga Cement Company Ltd.
However, local manufacturers are complaining that cheap imported cement from Pakistan, China and India, which enjoy lower production costs, is hurting their industries.
The East African Business Council now wants EAC governments to support local cement manufacturers so that the industry can compete with the imported cement.
“The region suffers high production costs as well as rail and road transport inefficiencies,” Agatha Nderitu, the executive director EABC said in a statement last month.
Manufacturers must also factor in the cost of emergency power supply due to frequent power blackouts from the national supplier, Tanesco.
Under the EAC Customs Union Protocol 2005, cement was considered a sensitive product and the Common External Tariff was set at 55 per cent gradually reducing by five per cent every year, and capping at 35 per cent.
Based on this policy, the industry mobilised investments in capacity expansion amounting to US$1.1bn, according to East African Cement Producers Association.
But in 2009 the EAC dropped the CET on cement from 40 per cent to 25 per cent.
“This abrupt change of policy opened the door for cheap imported cement to enter the region,” Ms Nderitu said. “We need to make the policy predictable in order to encourage investment in the industry that will ensure businesses in the region realise the benefits of integration.”