Dangote Cement, owned by Africa’s richest man, Aliko Dangote, now controls 22 percent of the market in Tanzania since it launched operations in June as its low cost cement continues to upset companies that have for years dominated the East African market.
Lafarge Holcim of France which is the biggest producer in Africa controls the biggest share of the East African market with a 27 percent; Tororo Cement of Uganda has 21 percent; while ARM Cement has 17 percent.
Kenyan-based ARM Cement recorded a $3.64 million loss in the first half of the year and attributed the loss was attributed to the increased competition in Tanzania, Global Cement reported.
Dangote Cement currently has operational plants in Ethiopia and Tanzania with a total production capacity of 1.6 million tones as per June data, an increase from 922,000 at a similar period the previous year.
The company’s cement retails at $74 per tonne in Kenya and about $80 in Tanzania, nearly 40 percent cheaper than competitors.
The company plans to start manufacturing cement in Kenya in 2019, as it steps up efforts to oust Lafarge Holcim as the largest cement producer in Africa, Business Daily reported.
Dangote Cement exports cement to Kenya, the biggest economy in East Africa. Its current retail price for a 50-kilogramme bag is $ 4.70 while in Tanzania it is $4.50 and $6.90 in Ethiopia, Geeska Afrika reported.
In Kenya the average retail price for a 50-kilogramme bag is $6.7 and $5.85 in Tanzania.
The low retail prices have shaken up the market in Kenya and Tanzania. Dangote Cement slashed prices to penetrate the market in the two nations. The company’s cement is 20 to 40 percent cheaper than the price offered by local companies.
Dangote Cement made a regional profit of $3.43 million. Its revenues in the region and Southern Africa rose was $82.2 million in June, an increase from $54.5 percent last year, The East African reported.
Low production costs attracted the company to the region. In Ethiopia, the government supplies Dangote Cement at a discounted rate of $0.03 kWh, which reduced the cost of production by about 60 percent compared to Nigeria, The East African reported.
Dangote Cement, which is the second largest cement producer in Africa, is undertaking an expansion into Rwanda, Dar-es-Salaam in Tanzania, Jinja in Uganda and Burundi.
Currently, its East African plants are in Mugher, Ethiopia and Mtwara in Tanzania. It has 16 countries and makes annual revenues of about $2 billion.