In a statement, Chinese based Huaxin Cement which acquired Maweni in May, said upgrading work of the kiln line started in June although only 14 Huaxin Cement management team members remained in the country due to the company withdrawing staff to China prior to the coronavirus lockdown.
Huaxin Cement said that it will not upgrade the plant’s grinding unit for some reasons noting that “Subject to the epidemic prevention and control situation, the company will send an excellent management team to implement advanced cement process technology and management.”
“We are committed to turning Maweni Limestone into a benchmark industrial enterprise in Tanzania and promoting the local cement industry to achieve quality,” the company stated in its statement.
The Chinese cement producer said it targets to invest U$116 million into Maweni Limestone to settle its liabilities while another U$30 million will be used to complete plant construction and an upgrade after acquisition from ARM Cement.
The Huaxin Cement and ARM agreement dates back to September 2019, when it was publicly announced. The acquisition is part of the Chinese expansion plan in Sub-Saharan Africa which started in 2013.
ARM Cement has seriously suffered financial constraints since 2017 when cement demand fell in Kenya, a coal import ban in Tanzania caused production issues at its Tanga plant and increased competition hit both countries.
It entered administration in the summer of 2018 and previous owner Pradeep Paunrana has been fighting PricewaterhouseCoopers’ attempts to sell the business to local rival National Cement in Kenya.
In some respects the timing of this deal may also be bad for Huaxin Cement given that it’s just suffered a 36 percent year-on-year drop in sales revenue to US$542m in the first quarter of 2020, due to the coronavirus outbreak.
The real trend here in Chinese expansion strategy by its cement sector is a move from imports, building plants and co-financing projects to outright asset acquisition. West China Cement completed its purchase of a majority stake in Schwenk Namibia for US$104m in January 2020.
An outlier from the more traditional Chinese routes of either supplying equipment and/or co-financing cement plants in Africa has been the CNBM/Sinoma plan to build a seven million tons per annum mega plant in the country.
Once completed it will nearly double local clinker production. Together with the Huaxin Cement purchase, once the CNBM project completes, Chinese companies will own the majority of cement production capacity locally.