The firm has previously run into trouble with President
John Magufuli’s administration over tax on diesel imports to run its Mtwara
plant, and a ban on coal imports.
Dangote announced that the Mtwara plant increased volumes
by more than 64 per cent to nearly 388,000 tonnes in the firsthalf of 2017,
pushing the six months sales to more than 400,000 tonnes.
From the negotiated talks between the firm’s owner Aliko
Dangote and President Magufuli,
the cement maker was allocated land to mine
coal to fuel the plant in the coming yDangote Cement plans to start using its
own gas-powered plant in Tanzania by September to reduce its reliance on diesel
gensets and reduce its operational costs.
The firm has previously run into trouble with President
John Magufuli’s administration over tax on diesel imports to run its Mtwara
plant, and a ban on coal imports.
This made the cement manufacturer to suspend its
operations last December, citing technical problems and high production costs.
Now, in its first half-year results, Dangote says that it
has invested $90 million in the construction of the coal/gas-fired power
station to be fed with natural gas at a negotiated rate by the Tanzania
Petroleum Development Corporation.
Dangote announced that the Mtwara plant increased volumes
by more than 64 per cent to nearly 388,000 tonnes in the first half of 2017,
pushing the six months sales to more than 400,000 tonnes.
“The factory is still reliant on diesel generators, which
results in net income losses that weigh on our operations outside of Nigeria,”
the firm said.
Source: The East African
Related Content
Rivalry drives down EA cement makers’ earnings
“However, we expect to have gas turbines installed by
September, which will immediately bring the plant into profitability.”
From the negotiated talks between the firm’s owner Aliko
Dangote and President Magufuli, the cement maker was allocated land to mine
coal to fuel the plant in the coming years.
The Energy Ministry awarded a coal mining licence to
Dangote on March 11, covering 9.98 square kilometres in the Ngaka area.
Gas supply
Magufuli also ordered state-run Tanzania Petroleum
Development Corp (TPDC) to supply Dangote Cement with natural gas with
immediate effect.
Previous talks on gas supply had stalled because Dangote
Cement wanted "at-the-well" prices for natural gas, according to
TPDC.
Dangote, Africa's biggest cement producer, has an annual
production capacity of 43.6 million tonnes. It targets output of between 74
million and 77 million tonnes by the end of 2019 and 100 million tonnes of
capacity by 2020.
In Tanzania, Dangote wants to double the country's annual
output of cement to 6 million tonnes.
In August 2016, Tanzania banned the importation of coal,
insisting on use of its own. Dangote Cement used to import its coal from South
Africa at a cost of $103 per tonne. Dar said that its coal was selling at as a
low as $90.
The firm is now banking on the construction of the Dar es
Salaam-Morogoro standard gauge railway and the construction boom in the
administrative capital Dodoma to accommodate government departments to boost
its second half earnings.
The three-week shutdown last year seems to have affected
the cement maker’s market share, which dropped to 17 per cent as at end of June
2017, compared with 23 per cent in the same period last year.
Sales volumes in Dangote Cement’s African operations
increased by 12.6 per cent to 4.7 million tonnes.
Within the region, the Ethiopian market — which were also
briefly affected last year by the Oromo protests and local community bickering
— led in the consumption of cement manufactured by Dangote, with sales rising
to 1.1 million tonnes.
“Our pan-African operations are growing. We saw our first
sales from Sierra Leone in the first quarter, and our new plant in the Republic
of Congo will be in production at the end of July, further increasing our
footprint across Africa and strengthening our position as the leading
manufacturer of cement,” said CEO Onne van der Weijde.