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Tanzania 2015 | REAL ESTATE & CONSTRUCTION | FOCUS: CEMENT PRODUCTION

A booming economy, coupled with increased foreign investment, is driving the cement industry pushing Tanzania to be the largest producer of cement in East Africa.

Tanzania's cement industry is being driven by the country's unprecedented growth in the construction sector. And predictions are that this growth is expected to remain as investors continue to flood money into the country to develop their interests in the economy's emerging sectors. In 2014, the country is expected to host 8.45 million tons per annum of cement production capacity, thanks in part due to the inauguration of a new factory in Kisarawe district on the coast. This is a considerable jump on its 2013 capacity of a little over 3.5 million tons per year. Domestic demand currently stands at around 4 million tons per annum from 2.5 million tons per annum in 2013 and will continue to grow by an estimated 10% per year. This increase in capacity and demand is set to propel Tanzania to becoming one of Africa's top cement producers. Due to the country's proximity to a number of landlocked countries, and its current over supply, Tanzania is now in a prime position to begin exporting to its close neighbors if the opportunity arises. According to numerous cement producers in the Tanzania, the country is expected to become a net exporter of cement in 2015, which will be supported and driven by strong demand from Burundi, Rwanda, and East DRC. Domestically, while the mining sector's appetite for cement may be waning slightly, other sectors are taking up the mantle as foreign and domestic investments flow in, especially in the residential and infrastructure sectors. The residential and commercial housing sector is expected to account for 85% of demand for cement over the medium term.

Currently, there are five cement mill projects underway in Tanzania, with the biggest being the Dangote Cement Factory in Mtwara, which will have a capacity of 1.4 million tons per annum. The projects are expected to come online shortly and contributes to the country's 8.3 million ton capacity. After the Dangote plant, Tanga Cement is the largest with a capacity of 1.25 million tons, with the next largest, the Athi River Mining Tanzania plant, producing 750,000 tons per year. As more of these projects come online, cement costs are expected to fall, which will further drive demand. In addition, as the government carries out its plan to reduce the number of blackouts and create a stable electricity supply through gas-fired power plants, the cost of energy is expected to fall in turn lowering the production costs of making cement, again, something that is expected to help increase demand and growth in the sector. At the moment, a ton of cement is averaging around at $90 to $105 per ton in Tanzania, which is mainly due to high energy costs, something the government is looking to rectify. In addition, Prime Minister Mizengo Pinda believes that the cement industry has the potential to become the largest contributor of revenue to the government and a major job creator for the country.