In January 2011, Tehran’s embassy in Dushanbe announced that an Iranian company will invest about US$ 300 million in building two cement plants in Tajikistan. When completed, the new coal-driven plants are expected to produce two million metric tons of cement a year. According to the embassy, Iran is now choosing from four sites with large limestone reserves, which have been proposed by the Tajik government, to decide where to build the plants.
Tehran has long been interested in investing in Tajikistan’s cement industry. Since 2009, Iranian specialists have carried out feasibility studies at two locations with proven limestone deposits, in the Danghara and Qabodiyon districts in southern Tajikistan. Tajikistan’s Ministry of Energy and Industry announced in December 2010 that Iran proposed to build a cement plant near the Khoji Qoziyon limestone reserve in Qabodiyon and a coal power plant to meet its energy needs. Although it remains unclear at the moment where exactly the new cement plants will be constructed, it is most likely that Tehran will choose the locations that have already been studied by its experts.
For Iran, the new and hitherto largest investment in Tajikistan is a key component in a strategy to secure a stronger influence in the country that has been its major ally in Central Asia. Tehran has already invested over US$ 180 million in the construction of the Sangtuda-2 hydropower station on the Vakhsh River. It has also invested more than US$ 30 million in loans and grants to build a five-kilometer tunnel, which is an important part of the Chinese-renovated road connecting Dushanbe with northern Tajikistan. These projects and a number of smaller joint ventures have resulted in a steady increase in trade between the two countries, which reached US$ 202 million in 2010.
Tajikistan’s cement market has recently been expanding as the country launched large-scale energy and transport infrastructure projects. The country’s annual demand for cement is estimated at 1 to 1.5 million tons and is expected to continue rising. The domestic production has not been able to meet Tajikistan’s needs in recent years. In 2010, Tajik companies produced about 290,000 tons of cement. The country’s largest, state-owned cement producer, Tajikcement, was responsible for around 90 percent of the output. The remaining 10 percent was produced by five smaller cement plants. Another two small plants, with a combined annual output projected at 170,000 tons, are now under construction in the Mastchoh and Varzob districts. Even with these two facilities completed, domestic producers will not be able to meet the country’s growing demand for cement.
The demand is strongest for high-quality cement, an important component of hydropower projects. The Tajikcement plant located at the outskirts of Dushanbe has a projected annual capacity of 1.1 million tons of such cement. However, in recent years, the company has operated at a fraction of its capacity, largely because of the technological obsolescence of the facility built in the 1950s. A highly unreliable supply of natural gas from Uzbekistan has also affected production. The company is now attempting to update its production technology, including by switching from natural gas as a fuel source to local coal. In 2010, the Tajik government announced that it will sell the state-owned enterprise in a bid to raise its competitiveness and help attract investment.
Unable to produce enough cement to meet its needs, Tajikistan has been importing cement, mostly from Pakistan and Iran, followed at a long distance by Russia and Kyrgyzstan. According to the national statistics office, the country imports about 400,000 tons of cement annually. In practice, the imports are likely to be higher. The Tajik authorities expect that the newly built and renovated plants will soon turn Tajikistan into a net exporter of cement. However, it is unclear where Dushanbe plans to export its surplus cement in the future as its neighbors in the region, including China, Pakistan, Uzbekistan, Kyrgyzstan and Kazakhstan, produce much more cement than needed for domestic consumption and compete for larger shares of the regional cement market.
(By Alexander Sodiqov, 02/02/2011 issue of the CACI Analyst)