Business
Dangote Cement expands into Tanzania – to ease on pressure on current pricing
Aliko Dangote – Founder and Chairman of the Dangote Group
Dangote Cement, a subsidiary company of Dangote Group, continues its dominance on the African continent, with a new cement factory expected to begin production in 2015 in the Mtwara – south eastern port town in Tanzania.
According to Aliko Dangote – the founder and chairman of the Dangote Group, the impact of the project will be to ease pressure on prices of the construction product in the east African country.
Dangote cement intends to find ways of countering costs that arise as a result of distribution difficulties as one way of reducing pressure on cement prices.
The Nigerian entrepreneur was responding to questions from reporters who sought to know how the US$500 million investment would handle such a challenge that affects many local and commercial builders. “When the plant starts work next year, we would look at how to reduce pressure on price of cement.
“There has always been a gap in cement production,” Dangote pointed out. He also confided with reporters that this investment in Tanzania, which will create the biggest cement factory in East and Central Africa, does not belong to any group or cartel – if such exist in the industry, and as such would not engage in what some may view as “unfair pricing.”
The price of cement per tonne remains relatively high averaging between US$90 – US$105 due to high energy costs and dependence on imported materials. A 50 kilogram (110 pound) bag of imported cement retails at US$7.8 while locally produced brands are selling at between US$8 and US$9.3.
Dangote also reported that in order to handle the challenges of getting skilled local labor in Tanzania for the company’s operations, they would be taking Tanzanian engineers to the Dangote Academy near Abuja, Nigeria for training.
“The academy takes in 1,000 engineers every year. We will absorb them and also attach them to the factory there,” he said, adding that there were many smart African entrepreneurs who would take the continent to the next level.
Tanzania stands to more than double its cement production capacity next year when the factory is completed and production commences. The capacity of the factory is expected to be 3 million metric tonnes per annum, out of which the company expects to obtain a sizeable chunk of the market share in both Tanzania and the region.
Aliko Dangote is a Nigerian entrepreneur who is ranked by the Forbes magazine as 25th richest person in the world and first in Africa.
As of 2011, cement, is estimated to account for about 80 percent of his business. Dangote Cement, a subsidiary company of Dangote Group, is Africa’s largest cement producer. According to the company, they have set a goal of becoming one of the world’s leading cement companies by 2016.