Cement production in Africa suffers from a myriad of problems. These include high energy costs, cheap imports and over capacity but it still attracts new entrants each year given the fact that the continent is ripe with major infrastructure projects in the pipeline and demand continues to rise year on year. However, high production costs and low priced imports plagues the development of the local cement production industry. Add to this a growing over capacity. In 2020 the market faced the additional challenges paused by the Covid pandemic.
In Tanzania the country faced its worst crisis in recent years when all four cement producers closed down ostensibly for maintenance purposes in the latter part of 2020. This resulted in diminished supplies to the construction industry which saw the price of cement rise significantly prompting the government try to intervene and clamp down on dealers who were hoarding the commodity. Surprisingly this came despite the county having an overcapacity as demand stands at about 5.5million tons against a production capacity of about 10 million tons. Cut throat pricing and cheap imports has meant razer thin profit margins
Tanzania cement production capacity stands at 10 million tons per annum
The four main cement manufacturers are Twiga Cement based in Dar es Salaam, Tanga Cement in Tanga, Mbeya Cement in Mbeya and Dangote Cement located in Mtwara in Southern region.
In Kenya the price of cement has remained relatively steady in 2020 with cement price per 50kg bag standing at around Ksh650 when compared to the turmoil witnessed in Tanzania and Nigeria. The cooling off of investor interest is evident with no new plants having come up recently. In West Pokot region Cemtech, a subsidiary of India’s Sanghi Group has sold off its interests in the limestone rich area to a local firm after failing to move forward in establishing a new cement plant in the area that had been slated at a cost of over US$100 million.
Kenya cement production capacity stands at 13 million tons per annum
The market in Kenya is gearing for sustained growth owing to infrastructure projects that have taken off and the pandemic has had little impact in the market for the long term. Current demand is estimated at 6 million tons per annum against a production capacity of 13million tons.
Constructionreviewonline.com | Apr, 2021