Displaying items by tag: Tanga Cement

Tanzania: Tanga Cement has won the award for the overall best-presented financial report for the 2020 financial year at the National Board of Accountants and Auditors (NBAA). The Daily News newspaper has reported that the award is the company’s fifth consecutive win in the category.

Chief accountant Isaac Lupokela said, “Everyone who prepares auditing knows that there is a competition behind that gives us a lot of motivation to do better. But professionally large accountants are the ones who make sure companies operate. Properly prepared calculations help those who use them to make better decisions.” The producer also won best-presented report in the manufacturers category.

Cement scalpers in Tanzania have been threatened with jail time for hoarding cement! The country faced a shortage of cement and other building materials in October 2020 and Prime Minister Kassim Majawali ordered an investigation into the issue following the conclusion of the presidential election earlier that month. Both regional commissioners and the National Prosecution Service have been dragged into the initiative. Director of Public Prosecutions Biswalo Mganga promised to local press that wrongdoers could face up to 30 years in prison for daring to hoard products or distort the market.

Rhetoric aside, the situation is curious given that HeidelbergCement’s local subsidiary, Tanzania Portland Cement, seemed to think in its 2019 annual report, that the country faced a 5Mt/yr overcapacity from integrated and grinding plants compared to a total production base of 10.6Mt/yr. However, the East African newspaper reported that despatches fell to 150,000t in October 2020 from 450,000t in September and August 2020, with a 30% surge in the price in some parts of the country.

In the wake of this, Dangote Cement apologised publicly for failing to communicate a planned stoppage at its Mtwara plant to the wider public. Tanga Cement then denied that its production was down. It said instead that production was at the highest level and that large chunks of its output was servicing government-backed infrastructure projects like the Standard Gauge Railway (SGR) and the Kigongo-Busisi Bridge, which will span the southern end of Lake Victoria. It also blamed a lack of trains on the Tanga-Moshi, which was reopened in mid-2019. It seems reasonable that cement prices might vary quite markedly, even before the profiteers got involved, due to the reasons above. Other issues locally include poor transport links, long distances in a country like Tanzania, the recent election and lingering hiccups from the blockage of imports from Kenya in 2018 that may not have helped either. The investigation continues.

A wider issue here is how much cement production capacity the country and the region can support given a propensity for spikes in prices. As Global Cement has covered previously (GCW456 and prior issues) Chinese producers have been heading into Sub-Saharan Africa over the last decade. Huaxin Cement bought ARM Cement’s assets in Tanzania in May 2020. It renamed the company African Tanzanian Maweni Limestone and then started trial production of clinker at the newly upgraded 0.75Mt/yr Maweni Limestone clinker plant in July 2020. Depending on how long ARM Cement’s former subsidiary was out of action, this one seems unlikely to rock the market too much. Tanga Cement also took the opportunity in November 2020 to say that talks with the government about a new 0.5 – 0.75Mt/yr grinding plant in Arusha were progressing

The proposed 7Mt/yr CNBM/Sinoma ‘mega’ plant is another matter entirely. Most of its output is intended for export but any disruption to local transport links, current or future, could swamp the local market. The export of Chinese infrastructure development around the world through its loan system could offer (occasionally literal) bridging solutions here as cement from a Chinese-backed factory is used to build the transport networks backed by Chinese loans that allow exports to proliferate. Tanzanian President John Magufuli’s comments that the poor terms for a US$10bn Chinese loan supporting a port project could “…only be accepted by a drunken man,” may not have helped international diplomacy. Still, Chinese money is actively getting things built here and elsewhere around the world at a rate previously unheard of.

Returning to the present, it makes a change to highlight a market where cement is truly demanded. A coronavirus-related lockdown may have slowed sales in the first half of 2020 but Dangote Cement estimated that the total market for cement in Tanzania was about 4.2Mt in the first nine months of 2020 and it reported its highest ever orders and dispatches in September 2020. That the country’s prime minister decided to discuss cement prices is a reminder of how important the commodity remains in parts of the world.

Tanzania: Tanga Cement says that talks with the government about a new 0.5 – 0.75Mt/yr grinding plant in Arusha are progressing. Discussions about the project with the authorities originally started in 2016, according to the Daily News newspaper. At present the cement company transports cement to the region using a freight train that was recently inaugurated.

Tanzania: Tanga Cement says it expects to reduce its losses by around 50% in 2018. It said that the local cement market improved notably in 2018 and that the cement producer improved its trading results and profitability, according to the Daily News newspaper. In 2017 the company reported a loss of US$11.5m due to local competition.

Kenya: ARM Cement’s net loss more than doubled to US$55m in 2017 due to poor demand in Kenya and Tanzania. Its sales fell by 32% year-on-year to US$85m from US$127m. Elections in Kenya reduced cement demand, a coal import ban in Tanzania caused production issues at its Tanga cement plant and both countries saw increased competition.

“2017 was the most challenging for the group since the company’s listing on the Nairobi Securities Exchange in 1997. Whilst the management has navigated many business difficulties well in the past, raised capital for expansion, increased net profits and market capitalisation continuously over a 14 year period up to 2015, the challenges of the past year have been unprecedented,” the company said in a statement.

The cement producer says it is undergoing a ‘significant’ review of its current operations, asset base and financing structure to address its problems. It has also been cutting staff benefits as part of its plan to save money.

UK-government investor CDC Group, which holds a 41% stake in the company, has also replaced its board members Ketso Gordhan and Pepe Meijer with Sofia Bianchi and Rohit Anand.

Tanzania: Tanga Cement’s earnings have fallen significantly due to low cement prices. It operating earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 72% year-on-year to US$2.26m in the first half of 2017. However, its sales revenue grew by 2% to US$35m from US$34.2m.The cement producer cut its prices in response to competition, raising its sales volumes and increasing its market share.

Tanzania: Tanga Cement has issued a profit warning for the first half of 2017. It expects its operating profit before interest and tax for the six months that ended on 30 June 2017 to be 125 - 135% lower than that achieved in the same period in 2016. The cement producer blamed the competitive local market leading to lower prices. It also attributed the profit loss to new competitors using imported clinker.

Tanzania: Tanga Cement’s revenue dropped by 20% year-on-year to US$75m in 2016 from US$94m in 2015 due to competition and lower government spending on infrastructure. However, despite falling net profits it managed to increase its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) to US$17m from US$13m following cost cutting. The cement producer commissioned its second integrated production line in August 2016, increasing its production capacity to 1.25Mt/yr.

Tanzania: Tanga Cement has launched its Mkomboz Cement brand. The 32.5N cement class is an all-purpose cement aimed to meet the construction needs of Tanzanians in infrastructure and residential housing in particular.

“Tanga Cement’s new cement brand is yet another step by the company to approach Tanzanians with an innovative product that is affordable to the people yet with an assured high quality product and technological superiority that has been the trademark of Tanga Cement”, said Tanga’s National Sales Manager Leslie Massawe.

Tanzania: Charles Mwijage, the Minister for Industry, Trade and Investment, has advised local cement producers to complain to the government regarding imports of cement and a ban on imported coal. Mwijage made the comments at the inauguration of Tanga Cement’s second clinker production line, according to the Tanzania Daily News newspaper.

"We ask the government to either stop the imports or at least impose higher tariffs on imported clinkers. We are also pleading with the government to ensure clinkers on transit reach their destinations. This will remove unfair competition in the market," said Reinhardt Swart, the managing director of Tanga Cement.

The cement producer has complained to the government previously about the same issues. He added that the some of the cheap products were clinker on transit that are diverted to the local market and then sold cheaply because they are not taxed. In addition the government ban on coal imports has raised the company’s energy costs. Swart said that the company is also appealing to the government to secure more reliable electricity supplies.