Cement maker eyes top status with Sh15bn plant in Tanzania

ARM company's cement plant in Tanga which is still under construction is set to produce 4,000 tonnes of cement a day which is about 1.5 million tonnes a year. This makes the company the largest of it's kind in East, Central and Southern Africa. PHOTO/Emma Nzioka

What you need to know:

  • The East Africa cement market is dominated by Lafarge at 27 per cent and Tororo Cement at 21 per cent but Mr Bhatia expects ARM’s share of the market to increase from the current 15 to 18 per cent by 2017.
  • The Tanga-based plant will enable ARM to have a piece of the well-developed mineral extractive industry in Tanzania and Zambia by supplying lime, a key ingredient in neutralising metal ores, to exploration companies in the two economies.

Athi River Mining limited (ARM) plans to commission a Sh14.6 billion cement manufacturing plant in May this year as it strives to dominate the East and Southern Africa market.

Located in the coastal town of Tanga in Tanzania, the factory is primed to be the largest in Eastern Africa with a production capacity of 1.5 million tonnes of cement per year.

“This is our biggest plant and there is no integrated facility that beats this capacity in the region,” said Mr Surendra Bhatia, ARM deputy managing director. The company has operations in Kenya, Rwanda, Tanzania and South Africa.

There are already four operational cement firms in Tanzania though ARM is banking on its innovation and cost-cutting measures to take the battle to competitors in the country and the region.

“Competition only increases the size of the cake…whoever concentrates on innovation and cost reduction measures will surely lead the pack,” said Mr Bhatia.

CHANGING FORTUNES

The company, for instance, relies solely on harvested rain water for its plants with all its forms fully computerised to cut down on human capital.

It also depends on coal to power its machines as opposed to electricity that is considered expensive and unstable.

The East Africa cement market is dominated by Lafarge at 27 per cent and Tororo Cement at 21 per cent but Mr Bhatia expects ARM’s share of the market to increase from the current 15 to 18 per cent by 2017.

Construction of the mega plant started in 2012, having been listed by the Tanzania government as a priority infrastructural project that would change the fortunes of Tanga town.

“The project magnitude even convinced aviation authorities to change the flight path of Tanga airstrip due to the tall structures that would be built,” said Mr Bhatia.

The rhino cement maker believes low cement consumption in the region is a clear testimony to the huge unexploited potential that exists.

Regional per capita consumption of the building material averages 45 kilogrammes compared to Egypt’s 560 kilogrammes, South Africa’s 230 kilogrammes and Angola which stands at 80 kilogrammes.

With infrastructural projects taking centre stage, Mr Bhatia said demand for cement can only get better.

The Tanga-based plant will enable ARM to have a piece of the well-developed mineral extractive industry in Tanzania and Zambia by supplying lime, a key ingredient in neutralising metal ores, to exploration companies in the two economies.

ARM started in Kenya as a mineral, extraction and processing company and is now a public limited company quoted on the Nairobi Securities Exchange since 1997. It got into cement manufacturing in 1996 with its flagship rhino cement.