Dangote Cement sold 0.6 million t of cement from its new plant in Mtwara, Tanzania, in 2016 after start-up of production in February last year, gaining a 26% market share in July. However, a reliance on diesel generators for power saw the plant well below break-even for the year.
An agreement with the Tanzanian government over gas pricing will reduce fuel costs this year, as the company switches to cheaper gas-fired generators. Gas will be supplied by the government-owned Tanzania Petroleum Development Co., according to local media reports.
The new gas supply will provide an interim solution to its power needs, while the company constructs a permanent coal-fired power plant at the site. Construction will begin on the plant this year, the company said in its 2016 annual report. The move to coal mirrors a similar transition at the company’s Nigerian cement plants, which were forced to rely on fuel oil for parts of last year as a result of gas shortages.
Local media have reported that the Tanzanian government has offered Dangote land on which to mine its own coal for use at the Mtwara plant. Tanzania currently bans the import of coal and local coal company, Tancoal, is unable to meet current dement.
Dangote will begin mining coal in Nigeria this year, providing fuel security to its plants there, following the completion of the company’s project to switch its plants from coal to gas.
The Mtwara plant is Tanzania’s largest with a capacity of 3 million tpy of cement. In addition to its fuel supply, its location also provides challenges, as it is the furthest of Tanzania’s cement plants from the capital, Dar es Salaam.
In response, the company said it is building a fleet of 600 trucks to underpin distribution to al markets in Tanzania, as well as developing jetty facilities that will allow the shipping of cement to Dar es Salaam, as well as offshore demand centres in the Indian Ocean.