On the Tanga Cement PLC’s 68.33% shares being acquired by ScanCem issue, there are so many debates which are misconnected and not well explained to make the public and Tanzanians understand about the whole process and their benefits to the stakeholders, in cement industry and the public at large.
Due to concerns and complaints from the other players as well as the so-called consumer advocacy concerning market dominance, that the acquisition between Tanga Cement and Scancem International Da, will create market dominance of one player, the dominance which will give more than the legal threshold of 35%; This isn’t true.
If one does simple research which doesn’t need much investment, to just look at the cement plants in Tanzania, fully integrated and the griding plants, the number is big. These plants produce more than what the country can consume. In other words, there’s more supply than demand for now. So there is no way that one player can dominate the market which is full of producers.
If we look at the company which is to be acquired (Tanga Cement PLC), for past five years, the company has been making losses due to operational expenses which through the statements which we have been reading, the causes are energy costs as well as cost to transport cement to their markets.
If the acquisition becomes successful, it is definite that the acquiring firm (ScanCem DA) will be able to revamp the company situation especially technical side, and make sure it runs smoothly and profitably of which Tanzanians will benefit by getting products consistently as well as the Government get its revenue through taxes which Tanga Cement could not pay all the taxes for some time. Tanga Cement will be transformed from a loss-making company to a profit-making company. In general, the acquisition will bring in new model in cement operations in the country as change on circumstances. May be other players are worried because they will be challenges by the new technology which will force them from changing to the new and upgraded technology for them to be able to compete.
This acquisition is also supported by cement sellers both big and small and the employees of Tanga Cement as well. I called one of my friends who works for the company just to get to know their feelings on the acquisition, his comments were. “We can’t wait for the day this deal is done and accomplished. The whole team is excited due to our current situation. We do not need to end up missing our salaries if this situation continues like this or gets worse. I see the acquiring firm as the saviour who is coming to save us and bring back our old well performing company. At the same time, we need the Government to support us especially on the issues which are challenging us as the company. For example, now, the plant is under performing due to unavailability of good quality power. Apart from that, when we happen to produce, you find no wagons to carry cement to the markets.” He said. I do not know why others, who are not directly involved or affected by the cement business as well as this process are so much concerned. He also said that ‘…this Chalinze Cement is not even a Cement Producer or seller. This guy has a paints hop in Dar es Salaam!. And now, even some customers are playing games due to these people causing chaos in that they do not pay their accounts, because the think Tanga is weak”. If it turns to be successful, I believe the benefits will be more than the speculated disadvantages especially by those who are not directly involved. For Tanga Cement employees, they are all exited with a change.
There are changes in circumstances which allowed Scancem International Da to file for another request for acquisition as the decision was made in 2022. I strongly support the authority which allowed the acquirer to file again their application due to the very visible changes which happened in between the old application and the new one.
After another merger application of 2023, FCC granted permission for the acquisition due to new facts being presented. ScanCem International Da, will continue to show its interest on the acquisition of Tanga Cement with the aim of contributing towards the growth of cement sector and the economy in general.
Further investments in Tanga Cement that will amount to more than USD150 million is being planned. This is proof that they definitely plan to keep both plants running and even expand the operations. People will not be retrenched and will even have more certainty than now.
Since announcement of first application, the share price almost doubled, and it is foreseen to increase significantly more when the deal is concluded.
It is very clear that the Board of Directors and Management of Tanga Cement are working hard to make this deal a success story and that it will be remembered as one of the biggest DSE transactions in the history of our country!
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