ARM Sh2bn plant heats up rivalry in cement market

ARM huge gamble in Tanzania is informed by the rapid growing demand for cement in the country and also its membership to the larger Southern African Development Community (SADC) trading block.

“Our investment in Tanzania is driven by the expected exponential growth of cement use to be driven by infrastructural projects in roads, power and mining with the existing producer not able to meet the growth alone,” said Mr Paurana.

Currently Tanga Cement controls less than less than 10 per cent of the Tanzanian market with the bulk being imported cement from Egypt, South Africa and Zambia.

“We are looking at future demand of cement in the region and we want to be key players,” said Mr Paurana.

But all players have had to contend with high cost of electricity which has impacted on their bottom line and made energy efficiency a key factor in production.

“The East African region has experienced improved energy efficiency in cement production, leading to a 16 per cent saving in energy cost (about Sh25 million) in 2008 which is expected to rise to about Sh50 million in 2009”, says the Sterling research note.

The entry of new players such as Mombasa Cement which opened a factory in Athi River early this year and the expected roll out of a cement factory in West Pokot by a subsidiary of India’s Cemtech group is expected to make proximity to key markets a potent competitive tool.