Dangote Cement secures mining licence in Tanzania following dispute resolution

13 Mar 2017
Financial Nigeria

Summary

Tanzania's Ministry of Energy and Minerals provided a 10-square-kilometre plot of land to the cement manufacturer to mine coal to fuel its operations.

Aliko Dangote, President/Chief Executive, Dangote Group

Subsequent to a deal that was reached last year between the Tanzanian government and Dangote Cement over the supply of natural to fuel the latter's cement plant, the country's Ministry of Energy and Minerals provided a 10-square-kilometre plot of land to the cement manufacturer to mine coal for its operations.

In December, Dangote Cement shut down its $500 million factory in Mtwara, located in Tanzania’s south-eastern region, due to high energy costs and technical issues. The plant, which was commissioned in 2015, was reportedly consuming six million litres of diesel per month at a cost of $4 million. The company had requested the Tanzania Petroleum Development Corporation (TPDC) to supply gas to its plant at subsidized prices, but the request was denied.

The company ostensibly sited the factory close to Mtwara in order to access subsidized natural gas from TPDC as part of a deal with the previous administration of president Jakaya Kikwete. The incumbent President John Magufuli, who came into office in 2015, refused to honour the agreement. According to Forbes, the government also stopped Dangote from importing coal from South Africa to fuel its plants, requesting the company to source its coal locally.

A local media, The Citizen, reported that the coal mining concession was sanctioned by President Magufuli.
 
With nearly 44 metric tonnes per annum capacity, Dangote Cement is Africa’s leading cement producer with operations in 15 African countries and Nepal. The Tanzanian plant has a production capacity of three million metric tonnes. The company plans to raise its capacity to 100 million metric tonnes by 2020, including doubling its Tanzanina output.


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