Dangote Cement's Coal-Powered Tanzanian Plant to Create Price Pressure

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--High energy costs in Tanzania have led to very high cement prices. Now, Nigeria's Dangote Cement, part of the Dangote Group (Lagos, Nigeria), has set the cat among the pigeons by announcing it will develop a coal mine in Tanzania's western region. The mine will feed a cement plant that Dangote is setting up in Tanzania.

By indicating that the Mtwara plant will be coal-powered, and that the fuel supply chain will be locally sourced, Dangote is putting price pressure on other Tanzanian cement producers.

The $500 million plant is scheduled to begin operations in 2015 and will have an annual production capacity of 3 million tonnes.

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Currently, the four cement producers in Tanzania have a combined annual capacity of 3.8 million tonnes. Total production capacity is expected to more than double to 8.3 million tonnes per year when the new Dangote plant begins full production and plant upgrades are completed by other manufacturers.

Current consumption of cement in Tanzania is about 2.2 million tonnes annually and is projected to reach 3.9 million tonnes. As production capacity undergoes a major expansion, the country aims to become a major exporter. Targeted markets will be in neighboring countries such as Rwanda, Burundi, Uganda and the Democratic Republic of Congo (DRC).

For related information, see August 21, 2014, article - Nigeria's Dangote Cement Imports South African Coal Amid Fuel Shortages, and December 4, 2013, article - Dangote Cement Targets 50 Million Tons, Charges to Top of African Production League.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.