Tuesday, December 15, 2009

Tanzania comes to the rescue of her cement manufacturers

TANZANIA government seems to have finally heard the cry of its struggling cement manufacturers in the country who have had for the last few months faced with stiff competition following cheap imports of cement products in the country. For the better part of this year, they have been crying foul over competition from cheap imports from far East countries notably from Pakistan, China and India. According to the Minister for Industries and Trade Dr. Mary Nagu, before the end of year 2009, the government is likely to announce a reviewed policy on providing subsidies to local cement manufacturers in the country. The government is working on the policy in order to bring about fair competition despite of the fact that the government does not give subsidies to local industries. In view of this, the government has seen the need to review its policy in order to provide subsidies to local cement factories. One factor the government thought of is the local cement industries which have created job opportunities and pay Value Added Tax (VAT) hence they contribute to the country’s economy, unlike firms from India, China and Pakistan from where the government had invited tenders of importation of cement in a bid to cater for the need of the local users following scarcity whose capacity was low compared to the demand. The demand of cement increased the price of cement in Tanzania whereby in Dar es Salaam alone, the 50 kg bag was costing Tshs. 17,000/- while in up-country regions, the same quantity went for a whooping Tshs. 25,000/-. However, the price decreased tremendously to Tsh. 11,000/- per 50 kg for cement from Pakistan and Tanzania Portland Cement Company (TPCC).

President Jakaya Kikwete and the TPCC officials during the inauguration of the new production plant at Wazo hill factory.

Daniel Simberya, Business Times reporter interviewing the out-going Managing Director of the TPCC during the inauguration of the new plant at Wazo Hill, with him is the Commercial Director of the company Mr. Steinar Harstad.

Dar es Salaam Regional Commissioner was among the invited guests during the inauguration of the new production plant at Wazo Hill

Some workers of the construction firm CBMI Construction Co. Ltd, member of Sinoma Group International, the leading Chinese Cement Plant manufacturer who took the construction work of the plant at Wazo Hill.

Cement prices fluctuates in up-country regions

The Ministry of Industry said recently that if taxes had been on imported cement, its market price would have been much higher than the locally made cement. For instance the price of 50 kg of imported cement would have been sold at Tshs. 13,400/- while the cement price from TPCC in most parts of the city of Dar es Salaam whereby it has the largest market share, stands at Tshs. 11,400/-. Between January and April 2009, a total of 49 companies imported 100,453 metric tones of cement whose value was Tshs. 10.4 billion mostly from Pakistan, India, Egypt and China. According to the Minister Mary Nagu, the local input has been doubled from mere 1.5 million metric tones to 3 million metric tones, hence there will be no need for importation of cement in the near future. According to her, the giant cement company in the country TPCC is very sustainable, but Tanga cement and Mbeya cement have very slim chances of sustainability since their scale is relatively low. The Minister is on the opinion that, having a fiscal policy will enable the companies to engage in healthy competition. In a competitive economy or free market economy has to regulate the market especially in distribution. So in a free market economy regulation can help to remove monopoly tendency in the market. The government’s move would counter what some stakeholders have described as dumping of cement as the vital construction ingredient is heavily subsidized in India, China and Pakistan where the imports are said to be originating from.

An overview of the newly established production plant N0: 4 of the Tanzania Portland Cement Company at Wazo Hill in Dar es Salaam which was expanded with a view to increase production of cement in the country.

President Jakaya Kikwete opens TPCC expansion project Production Line No. 4’

In early July 2009, President Jakaya Kikwete inaugurated a cement project for the Tanzania Portland Cement Company (TPCC) located at Wazo Hill area, about 25 Kilometers north of the Dar es Salaam city. The project known as ‘TPCC-Expansion Project- Production Line No. 4’ is a new production facility whose main objective of the expansion is to increase the cement production capacity so as to cater for the current and future local market demand. The new facility involves the installation of a new kiln machine which is able to produce 2,500 metric tones of clinker per day. This is the intermediary product to a new cement mill with a capacity of producing 650,000 metric tones of cement per year. The newly installed production line is comprised of the following elements, a new crushing machine for limestone from the quarry with its two new storages able to carry 20,000 metric tones for the crushed limestone. Another element is a new dispatch facility with four bays, these are cement silo which are strategically designed to load cement on the trucks brought in the yard by customers. These have a capacity of carrying 7,500 metric tones of cement. The area on which the newly constructed production line No. 4 lies occupies an area of 320,000 square meters covering a surface of approximately more than 75 acres of land (99 years lease) owned by Twiga cement company.

President Jakaya Kikwete is being welcomed by the out-going Managing Director of the Tanzania Portland Cement Mr. Klaus Hvassing. President Kikwete was the guest of honour during the inauguration of the newly installed production plant 4of the factory at Wazo Hill on the outskirts of Dar es Salaam city.

Before inauguration, President Kikwete was taken round the factory alongside with his entourage which started from the grinding section whereby he was informed on various activities done as this is the initial stage of the clinker preparation.

This is the new grinding machine of the factory

President Jakaya Kikwete tours TPCC factory plant at Wazo.

The project was internally funded at approximately US$ 108 million (Tshs. 120 billion) through TPCC itself and through its mother group the Germany based Heidelberg Cement Group, a leading group in Cement manufacturing, as well as Ready-Mix and Aggregates businesses. The turnkey contract for the building of the new production facility was signed in March 2007 and ended in June 2009. The new machines are currently in operation and depends entirely on the lime and red soil materials which are obtained from raw material deposit (sustainable for over 45 years located at an average of 3 Km from the plant). Iron oxide materials for cement production is obtained locally from Chunya, Mbeya. Gypsum is purchased locally from Kilwa, Itigi and Dodoma. When the local resources fails to meet requirement, both gypsum and iron oxide would be imported. While the new production line is in operation, the old kiln 2 and kiln 3 of the old plant machine has been stopped for a while, and the machines are undergone for a minor repair The project proponent commissioned the center for Energy, Environment Science and Technology. The design of the project was established by TPCC engineers assisted by Norplan Consulting Engineers who worked in collaboration with technical experts from the center of Heidelberg Cement Group, Africa area based in Brussels, Belgium. These were put in orderly manner by a team of specialized engineers recruited from the Heidelberg Cement Group. The engineers of this group are all experienced in such type of projects through all other locations worldwide.

President Kikwete is shown the clinker machine which consumes about 1,500 volts of electricity in order to be able to dry the final cement product which passes through to be packed into 50kg bags in package section.

President Jakaya Kikwete opens TPCC factory plant at Wazo.

The detailed design was then further developed by the main contractor, CBMI Construction Co. Ltd, member of Sinoma Group International, the leading Chinese Cement Plant manufacturer whose senior staff are from China who were well trained before they started the job at the site. The firm is a class one registered company by Contractors Registration Board and were the main contractor of the project which worked in collaboration with other sub-contractors at the site with their respective assigned jobs to ensure that all is finished as per the standards required. National Estate & Designing Consultancy Company (NEDCO Ltd), a progressive architectural firm based in the city of Dar es Salaam, were the project manager who supervised the work in all areas to ensure that all was set as planned. The development architect conceded that the fast track nature of the project required the main contractor and the urgency of the work who in turn completed the project and delivered it on time. Without compromising on quality or durability, the professional team were able to maximize space while minimizing costs in the development of this project. The style of the project designed for a factory is contemporary and has been designed to the State-of-the-Art facility in the utmost standards. It’s believed that, the factory is the best in all within East, central and southern Africa. The newly constructed factory is comprised of industrial workshops, there is a classical; security systems such as CCTV cameras, fire detectors and alarms. But these devices would be linked later on with the process control system from the main office building. No power generation facility is installed at this time. However, depending on the conditions the electricity power supply, this remains an open option. Generators from the existing factory have started up incase of power blues. Information Technology applications are already occupying a very important position in today’s businesses elsewhere like at the Twiga Cement. The new factory benefits from this existing situation. In addition to that, the State-of-the-art Control System from siemens CEMAT will be used for conducting the process operations thus ensuring a fast, precise and constant flow of information between the central control room and the production workshops.

Journalists at work during the Presidents’ tour of the factory at Wazo Hill.

The President cuts a tape to officially open a plague as a sign of inauguration of the newly constructed production plant whose construction has cost over US$ 700,000 to be finished.

Get o know the three cemen manufacturing companies

TPCC is the leading out of the three cement manufacturing companies found in Tanzania. The company was established in 1966 and its major stakeholders is HeidelBerg Cement and its quarry factory offices are located in Wazo Hill area on the outskirts of Dar es Salaam city. The firm is publicly listed on Dar es Salaam Stock Exchange. Other two companies are Tanga Cement, also known as Simba Cement, opened its factory in 1980 in Pongwe are in Tanga municipality. Holcim Mauritius Investments Holding is the major stakeholder and the company is listed on the Dar es Salaam Stock Exchange. The third cement company is Mbeya Cement company Ltd, this is a member of the Lafarge group and opened in 1983 in Songwe, South of Mbeya town. The company is currently not publicly listed. The three cement manufacturing factories are also members of East African Cement Producers Association (EACPA). The association incorporates all eight giant cement companies which currently operates in East Africa region. The EACPA-Tanzania chapter is composed of three independent and competing companies. The role of association is to coordinate among its members the exchange of information pertaining to cement technology, environment and product standards to enhance the competitiveness of the cement sector within East African Community market. TPCC was established in 1959 as a private company under the name of Tanganyika Portland Cement Co. Ltd by a Switzerland based Cementia Holdings AG. In 1962, Cementia Holdings AG in collaboration with Tanganyika Development Company (now Tanzania Development Corporation). The government of Tanzania owned 20 percent of the company’s shares. After completion of construction of the cement factory, by 1966 the plant was officially opened and started production. In 1967, the government increased its shares in TPCC from 20 to 50 percent. In 1973, the company was nationalized and hence the government increased its shares to 100 percent. In 1978, Scancem International Company who are the current shareholders of the company, got a contract with the government under consultancy agreement, and in 1986, management was established.

President Jakaya Kikwete reading a statement to the audience who attended the inauguration day while journalists are also in action. Down is a cross section of the people who attended.

TPCC the leading cement company in tanzania

In 1992 privatization processes took place whereby a joint venture agreement was made with two foreign investors i.e. Scancem International ANS, 13 percent and Swedfund 13 International AB, 13 percent each of the shares. The government retained 74 percent of the shares. The company was later privatized in 1998, with Scancem International acquiring 41.0 percent of the shares, the government of Tanzania 39.4 percent, Swedfund International 19.0 percent, and 0.6 percent owned by the company’s employees. The major objectives behind establishment, was to produce quality cement and to satisfy customer needs. In order to achieve this objective, currently the factory produces two different brands of cement known as Twiga extra and Twiga ordinary. Building with Twiga cement brand, that is ideal for the majority of all cement consumers in Tanzania, assures maximum quality product and maintain affordable price. The quality superiority of the brand in the market gives customers value for their money. Introduced in August 2002, Twiga Extra (Cem II 32.5R) is a composite cement that is rapid and is easy to work with. Requiring a short setting time, the brand is ideal for majority of users in Tanzania, particularly block makers. This is produced in compliance with Tanzanian standards TZS 727:2002 as well as in accordance with international quality requirement. Twiga Extra has conquered the market and represents 90 percent of the market of the total sales while Twiga Ordinary (Cem I 42.5N) accounts for 10 percent. Twiga Ordinary brand, on the other hand is differently priced and ideal for special construction purposes like bridge construction and large building projects. It’s mostly preferred by building contractors engaged in projects which need cement of Grade 42.5N specifications. TPCC has reached another milestone in its proud history of business in Tanzania. In August 2006, the company marked its 40th Anniversary celebrations of the first bag of cement since 1966 when the company provided this vital product to the local market. The company has also managed to increase its cement production in parallel to the growth and holds today a market share of approximately 40 percent of the domestic market. The company holds a unique and a very competitive position located close to the commercial capital city of Dar e Salaam serving the region with the biggest cement consumption. This together is a bright future for the company.

President Kikwete handing over a dummy that shows a grant of 4,000 bags donated by TPCC to him to the Dar es Salaam regional commissioner Mr. William Lukuvi

Here a representative from the Ministry of Trade and Industries who represented the Minister in the ministry Dr Mary Nagu, is receiving a dummy that shows a grant of 2,000 bags of cement donated by TPCC.

President Kikwete receives a present from a representative of the Chinese based CBMI Construction company during the ceremony

Youth's artist’s group entertaining the guests during the ceremony.

TPCC was privatized in order to save its stake

With an estimated population of about 37 million Tanzanians, Tanzania is per capita consumption of cement stands at about 35 kilos per annum, which is low when compared to world or even regional standards. TPCC factory is able to deliver cement in bulk to big contractors because the company has special tanks which are able to carry up to 25 tonnes at once. Twiga Cement today accounts for about 40 percent market share of the cement supply countrywide with Dar es Salaam leading with 75 percent. TPCC has a very stable and trained workforce of about 400 permanent personnel. The company trains its staff up to the higher learning levels in various disciplines. The company, being a member of Heidelberg Cement Group, has participated in different development programs. The management is optimistic with the current changes that will see to a brighter future as their development programs and training have been the right choice.
Taking advantage of the rich experience in the Heidelberg Cement Group, the company has joined a Heidelberg Cement’s training program for middle level managerial cadre known as Academy Candidate Program. This training involves a number of Heidelberg Cement Africa Group companies whereas managers undergo practical managerial training meant to prepare them or eventual succession. Specialized and general skill development training for larger groups of employees as well as furtherance of artisanal and technical skills are being conducted within and outside the country continuously to equip workers with more knowledge and enable them to remain abreast of technological development in the field. In keeping with their commitment to staff welfare, the company provides full medical care to staff and their families and has rigorous HIV/AIDS awareness and counseling programs. The company’s mission is to adopt modern technology through competent staff and investments in machinery and equipment hence maintain market leadership in quality of product and services. This is exemplified by an award of International Standards Organization (ISO 9001:2000) which the company has ever achieved. On environmental issues, TPCC has made drastic improvements on production line 3 leading to dust emissions being reduced by 90 percent following a huge investment the company made on its production lines which leads to even less dust emission. The company is currently using a natural gas from Songo songo Island after converting use of Heavy Fossil Oil (HFO) since early 2004. Use of natural gas has ensured reliable and reduced energy costs as well as controlling the problem of pollution. The company is now saving foreign exchange it used to spend on the importation of the HFO. The factory is faced with a number of problems which he says are associated with the high cost of operation which are incurred as a result of the high electricity tariff and tax rates. Lack of good infrastructure is still a problem in upcountry regions in Tanzania, a situation which impedes transportation of the cement to those regions. The situation is high in Mwanza region which is rich in minerals, hence construction is a big problem. This is a logistic challenge as cement is not supplied properly. The problem is more compounded by imports from the neighboring countries of Kenya and Uganda which has invaded the lake zone business.

This is the entire outlook of the newly constructed production plant 4 at Wazo Hill

How cement industry contributes to Tanzania\s economy

IT is undisputed factor that the cement industry sector contributes to the development of the important infrastructural facilities needed to speed up economic development of any country in the world, Tanzania included. Cement product is more useful to enable the construction go on. Cement in its raw form technically has no ability, but it is the key ingredient for making concrete as well as the foundation of any construction purposes. Concrete is used more than any other man-made material and is second only to water as the most used consumer good, not only in construction but in all walks of human life. For the Tanzanian economy to grow, it needs infrastructure development through the construction of major means of transport such as roads, bridges, railways as well as main telecommunication network towers. All these infrastructural development requires cement product. Other important features are such things like residential properties, commercial buildings, hospitals, fibre optic cables, service centres etc. are also important for national development. In 2007, Tanzanian industrial production comprising of construction and manufacturing grew by 9.2 percent compared with 8.5 percent in 2006. Whereas in 2007, the construction industry contributed 7.9 percent to the country’s Gross Domestic Product (GDP), this is an increase of over 2 percent compared with 5.8 percent in 2006. The continued growth in the industry corresponds with the increased cement demand and production in the country. The industry estimates that 90 percent of cement consumption is used for residential purposes, the majority of which is for the construction of new buildings. Tanzania consumes an average of 42 kilos per capita per year of the cement production in the country. These statistics serve as an indicator of the economic activity in the country which indicates a substantial room for growth. According to the latest cement industry report, the usage of cement product in the country, has increased substantially as the demand of the product is high. Cement manufacturers have seen the need to increase their production level to meet the national demand as the product is the cornerstone of the construction industry as a whole. The volume of cement required in construction are substantial. On average, the construction of a family home requires 14 tones of cement, whereas a kilometer of road contains as much as 2,500 tons of cement.

At the end of the ceremony, President Jakaya Kikwete took a group photo with part of the TPCC Management staff.

Production of cement raises the value of the national economy

In 2007, the total amount of income generated in the Tanzanian economy by the cement industry is Tsh 199 billion, Tsh. 90 billion of which went directly or indirectly to the government. Comparing the total benefits generated for the stakeholders to the total revenues generated, the government made 1.5 times the amount of money from the sale of a bag of cement than the stakeholders of the companies did themselves. In the Tanzanian cement industry, the majority of the production is contained in the 50kg bags of cement. This cement is used either for making blocks or concrete which are then used for a variety of purposes that includes the following. Residential buildings, commercial offices, manufacturing and mining facilities, roads and bridges, water and sewerage treatment facilities, harbours and reservoirs. Infrastructure made with cement has a number of benefits such as newly constructed roads and those which are under repair which allow for reduced travel time. Residential structures built with cement products have a longer lifespan for they provide more security and more soundproof and fireproof and have better temperature control than homes built with other products. Buildings made of concrete need less energy for heating and cooling than those made of other materials. Cement is an excellent insulator and concrete buildings remain cooler in the heat and warmer in the cold. Under corporate social investments, the cement industry is committed to sustainable development in Tanzania and plays the leading role in contributing to health, education, environment and community development programs. In 2007 alone, the industry spent Tsh. 436 million on such programs and initiatives. Highlights of the recently funded programs includes education which involves the construction and renovating classrooms in various parts of the country. Under the education sector, the cement companies has extensively rehabilitated schools, and provided them with the necessary facilities such as water management and sewage systems, toilets, desks and teachers’ tables. They have also provided founding sensitization training to school on HIV and malaria issues.

Youth group entertaining the audience who attended the ceremony

It was all a smile as members of the Heidelberg group gathered waiting for the President to come that morning of 8th July 2009 when a newly constructed production plant N0: 4 of the TPCC factory was inaugurated.

Mr. Daniel Gauthier, a member of the Board of Heidelberg who owns Twiga Cement Ltd giving his speech during the inauguration of the new plant at wazo hill.