Mining Weekly

Perennial cement shortages in Uganda, which have pushed prices to astronomical highs, could be a thing of the past with the planned entry of two new manufacturers.

Kuwait-based company DAO Group and China National Machinery Import & Export Corporation (CMC) are investing in new manufacturing plants in the East African nation with a combined production capacity of 1.6-million tons a year.

DAO Group is set to begin construction of its $150-million plant, in Budaka district, in the east of the country, while CMC's $250-million is to be built in Karamoja, in the north-east.

“The setting up of this plant will help stabilise cement supply, which will bring down prices,” said Uganda President Yoweri Museveni during the ground-breaking ceremony for the DAO Group plant.

Construction of the two plants, coupled with investments by existing manufacturers to increase their production capacity, is expected to significantly increase supply in the country.

The two cement companies operating in the East African country are Tororo Cement and Hima Cement. The latter is owned by Bamburi Cement of Kenya and is part of the Lafarge group.

The two cement makers have a combined capacity of 1.9-million tons, which will increase to 3.6-million tons by 2014.

Currently, Tororo Cement is Uganda's biggest cement manufacturer, with a 51% share of the market, while Hima Cement accounts for 9% and imports the remainder.

According to the Uganda Bureau of Statistics, domestic consumption of cement has been expanding steadily in recent years, driven by a boom in the building and construction sector.

Owing to the huge demand and constrained supply, the price of a 50 kg bag of cement increased from $10 in 2010 to $12 last year.

Cement manufacturers have largely avoided investing in Uganda because of a lack of limestone, one of the key ingredients for manufacture of cement, and rising costs of production owing to unreliable power supply and high transport costs.