DAR ES SALAAM (Reuters) - Nigeria’s Dangote Cement said it will begin production in Tanzania in August, as sub-Saharan Africa’s leading cement producer eyes new markets on the continent.
A $500 million factory it is building in southern Tanzania, with an annual capacity of 3 million tonnes, will double the country’s annual output of cement to 6 million tonnes.
However, Dangote faces challenges in accessing coal and natural gas as sources of cheap power to run the factory, its owner, Aliko Dangote, Africa’s richest man, told President Jakaya Kikwete at a meeting in Dar es Salaam over the weekend, according to a statement released by the president’s office.
Tanzania, East Africa’s second-biggest economy, has made big natural gas discoveries and has coal reserves of up to 5 billion tonnes, but lacks infrastructure to deliver the energy to major factories.
Dangote’s factory is being built in the Mtwara region but there is no infrastructure to connect the plant to gas from nearby offshore natural gas fields.
Dangote applied last year for a license to build a 75 megawatt coal-fired plant in Tanzania that would power the cement factory.
Initially it will power the plant from electricity on the grid.
The Nigerian company plans to roll out plants across Africa to reach an annual capacity of 62 million tonnes by 2017, up from an estimated 42 million tonnes last year.
Its Tanzanian plant will supply the domestic market and export to landlocked countries in the region. It will be competing with other Tanzanian cement producers including Tanzania Portland Cement, owned by a subsidiary of Germany’s Heidelberg Cement AG ; Tanga Cement, majority owned by Afrisam Mauritius Investment Holdings Limited; and Mbeya Cement, owned by France’s Lafarge SA.