$320 million investment set to dramatically boost cement output

Dar es Salaam. Tanzanian government and local conglomerate Amsons Group recently announced a $320 million investment to expand cement production over the next three years.

The government has a 25 percent shareholding in the company which intends to boost its cement production from the current 1.1 million tonnes to 4.2 million tonnes once the planned new factories start operations.

The investment will involve expanding the Mbeya II factory at a cost of $130 million and constructing a new factory in Tanga region, along Mombasa Road for $190 million, according to Treasury Registrar, Mr Nehemiah Mchechu.

“With the population increasing daily, there is growing demand for cement for constructing housing and infrastructure projects such as the Julius Nyerere Hydro Power Project, Bus Rapid Transport (BRT), bridges and roads. We must ensure that Tanzanians have consistent access to the product,” said Mr Mchechu.

Speaking to reporters, he noted that the government is currently in the process of mobilising funds and finalising internal issues such as business plan to begin construction.

Mr Mchechu indicated that shareholders have agreed to invest further in the region to maintain market dominance in the southern regions and neighbouring countries.

“We are ready for competition and continue to maintain the market share in the southern zone.”

According to him, the factory has not received significant investment for a long time, but the shareholders decided to convene and determine the best course of action.

According to the Ministry of Industry and Trade, Tanzania has a total of 14 cement factories, of which seven are large integrated plants, and the remaining are small factories.

The ministry’s production statistics indicate that the country’s cement factories produced 9,107,973 tonnes of cement in 2023, while the domestic demand was approximately 8,000,000 tonnes per year.

That means Tanzania has a surplus of 1,107,973 tonnes that is exported.

The sector has also employed 17,885 workers, of which 4,176 are direct employees and 13,709 are indirect employees, according to the ministry.

Mbeya Cement finance director Ahmed Mhada said the company currently produces 1.1 million tonnes of cement per year and following the expansion and new factory construction, production is expected to reach 4.2 million tonnes per year.

He said the clinker production will also increase from 1,000 tonnes per day to 10,000 tonnes per day across both factories.

“This is a substantial investment and we thank the government, as we anticipate increasing our dividends tenfold compared to last year,” he stated, adding that over 12,000 direct and indirect jobs will be created as a result.

For his part, Mbeya Cement board chairman Siasa Mzenzi expressed gratitude to the government for fostering a conducive environment for investors, emphasising that the expansion will enhance revenue and employment opportunities for the youth.

He noted that the investment was made possible due to favorable policy reforms that attract both local and foreign investors.

In August this year, Amsons Group announced its intention to acquire Kenya’s Bamburi Cement, which, if completed, would become one of the largest takeover deals in East Africa and establish a significant cement producer in the region.

The decision to bid $180 million (approximately Sh475 billion) for Bamburi Cement reflects Tanzania’s strategic positioning to enhance its economic competitiveness.

Reports indicate that the deal has garnered support from major shareholders of Bamburi Cement, including Holcim, the Swiss-based global building materials and aggregates company, which holds 58.6 percent of Bamburi’s total issued share capital through Fincem Holding (29.3 percent) and Kencem Holding Ltd (29.3 percent).

Amsons Group is a family-run business operating in Tanzania, Zambia, Malawi, Mozambique, the Democratic Republic of Congo, and Burundi.