Lafarge’s South-West Tanzania plant cuts output as imports rise

Lafarge’s South-West Tanzania plant cuts output as imports rise
Published: 24 June 2009

Lafarge SA, the world’s biggest cement maker, cut output at its plant in south-western Tanzania after supply exceeded demand because of an increase in imports.

“We extended the shutdown after normal maintenance because we are carrying significant stocks,” Mbuvi Ngunze, managing director of Mbeya Cement Co. Ltd., said in a phone interview from Tanzania’s commercial hub, Dar es Salaam.

The company’s cement clinker production line may stay closed until month-end, while the cement grinding facility has re-started following a stoppage of “several weeks”, he said. Clinker, or powdered cement, is made by blending raw materials and firing them at a high temperature to achieve precise chemical proportions of lime, silica, alumina and iron, according to British Geological Survey.

The factory, situated in Tanzania’s Mbeya region near the Zambian border, has the capacity to make about 350,000t of clinker and cement annually, Ngunze said. Output may fall this year if demand remains poor, he said.

“We’ll see how it goes in the second half of the year, but in the current context, there’s doubt,” said Ngunze.

Internal demand in Tanzania for cement rose 12 per cent to 1.8Mt in 2008 against an installed capacity of 1.7Mt, David Njoroge, the chairman of the East Africa Cement Producers’ Association, said in an interview on June 19 in Kenya’s capital, Nairobi.

Growth in demand may increase to 2.9Mt by 2015 as the east African nation increases spending on roads and property developers build homes and offices, Njoroge said.

Still, local cement makers are struggling with the high cost of electricity and competition from cheaper imports arriving from Asia and the Middle East, said Njoroge.

The association is calling on East African nations to raise the tax on cement imports to protect the local industry.

Tanga Cement Co., the Tanzanian unit of Swiss cement-maker Holcim Ltd., has shut down its 750,000t cement plant for three weeks “for maintenance purposes,” Kati Kerenge, head of marketing, said in an e-mail.

The company is on schedule with a plan to expand its plant, located about 125 miles north of Dar es Salaam in the port city of Tanga, and increase production to 1.25Mt by September, she said.

“There is no telling at this point how profits would be affected this year” by cheaper imports from Pakistan and China, she said.

“We do expect to be able to produce over 1Mt. However, production is also driven by market demand,” Kerenge said.