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East Africa Portland Cement Company ventures into Tanzania

By GAR staff on 24.02.2014.

East Africa Portland Cement Company (EAPCC) has announced plans to commence operations in Tanzania by June, while also adding another production plant in Kenya within the same broader strategy of expanding its east African market share.

“We are looking at Northern Tanzania and have already identified a partner situated in Arusha,” said MD Kepha Tanda during a briefing with its new chairman Bill Lay, noting that lacklustre demand in the Kenyan market had prompted the move to upgrade and seek new markets.

“In Kenya and East Africa generally, we want more housing, more roads, more infrastructure, and all of these require a lot more cement.”

In part due to local competition, EAPCC’s has seen its market share to fall from 34% to 21% over the last three years – a situation that has resulted in a series of shareholder disputes and the removal of former chairman Mark ole Karbolo by President Uhuru Kenyatta.

In a challenge to its Tanzania bid, the firm will also find itself competing with Africa’s largest cement producer, Dangote Cement, owned by Africa’s richest man, Aliko Dangote. An investment analysis from Old Mutual Securities noted: “Given Dangote Cement’s financial muscle and aggressiveness, an unprecedented battle could be in the offing.”

The Nigerian manufacturer is already constructing a $500m cement factory at Mtwara in south-eastern Tanzania, and has plans to build a $400m plant in Kenya with a capacity of about 5,500 tonnes a day in a move likely to further heighten competition and tighten sales growth.

Nairobi’s ARM Cement also recently announced plans to seek $300m fora factory in Kitui town, 180km east of Nairobi that would produce 8,000 tonnes of cement daily, and National Cement, Mombasa Cement and Savannah Cement are all spending millions on new projects.

However, Pradeep Paunrana, MD of ARM Cement, told Ventures Africa: “In Kenya and East Africa generally, our cement consumption per capita has been very low. As our economies are improving, our aspirations of development are changing – we want more housing, more roads, more infrastructure, and all of these ultimately require a lot more cement.”

Following the announcement of the move, EAPCC rose a point on the Nairobi Securities Exchange in a reflection of the cautious but optimistic sentiment among investors.