Displaying items by tag: Kenya

National Cement is preparing to open its new integrated West Pokot plant in September 2023. Readers may recall that the long-running project was taken over by Devki Group from Cemtech and Sanghi Industries after the Competition Authority of Kenya (CAK) gave it permission to do so in 2019. The original feasibility report by the Kerio Valley Development Authority dates back to 2010. The new plant will have a production capacity of 2.5Mt/yr.

However, this isn’t the only new clinker production capacity that Devki Group, which sells cement under the Simba Cement brand, is preparing to commission. Local media also reports that the company is also preparing to restart the former Athi River Mining Cement integrated plant at Bondora in Kaloleni, Kilifi County. After five months of trial runs the unit should be ready for full operation from April 2023. Devki Group also picked up this plant in 2019 following the long breakup of ARM Cement, after the latter producer entered financial administration back in mid-2018.

Devki Group started out in the steel sector but it has been steadily carving out a presence in the cement industry. The group opened its first cement grinding plant in 2013 and then built a 1.95Mt/yr integrated plant in Kajiado County, south of Nairobi, in 2018. Once the West Pokot plant is commissioned, the company will reportedly have a clinker production capacity of 7.5Mt/yr from three plants.

This kind of growth is making waves in the local cement sector. Since Global Cement Weekly covered the situation in September 2022 (GCW576), an argument has been brewing in Kenya over whether the country should import clinker or manufacture more of its own. This has moved to lobbying the government on whether the duty on imports of clinker should rise from 10% to 25%. Unsurprisingly, the country’s largest clinker producer, National Cement, even before the new plants are operational, has been a major advocate for putting up the import tariff. This carried over into 2023, when local press revealed the minutes of a meeting between the State Department of Industry and the Kenya Association of Manufacturers (KAM), with input from the cement producers. Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot were all against raising the tariff, saying that it would enable the largest clinker producers, National Cement and Mombasa Cement, to dominate the market. However, unlike the last such meeting, Mombasa Cement was said to be non-committal on the proposal to increase the duty. Despite the disagreement over the tariff, all of the cement companies imported clinker in 2021.

Graph 1: Rolling annual cement production in Kenya, 2019 - October 2022. Source: Kenya National Bureau of Statistics (KNBS).

Rolling annual cement production in Kenya peaked at just over 10Mt in May and June 2022. Data from the Kenya National Bureau of Statistics (KNBS) shows that monthly production started to fall on a year-on-year basis from July 2022. This is likely to be connected to the elections that took place in August 2022, although wider economic trends such as inflation and high input material prices may not have helped either. Despite this, cement production rose by 5% year-on-year to 8.02Mt in the first 10 months of 2022 from 7.65Mt in the same period in 2021.

Other recent news of note in Kenya includes the restart of clinker production at East African Portland Cement’s (EAPC) Athi River Plant in mid-2022. The upgrade was conducted as part of a general five-year upgrade and expansion campaign by the company. The next steps were announced in January 2023 with a stated intention to consider entering markets in the Democratic Republic of Congo and Rwanda. The other story of note was in December 2022, when China-based Sinoma International Engineering announced that it had signed a deal with Savannah Cement to build a new 8000t/day clinker production line with a 2400t/day cement grinding unit, a 35MW captive power unit and a 13MW waste heat recovery unit. As is standard for Sinoma’s new contract releases, it said that the contract would become active once an “advance payment guarantee” had been received. Later in December 2022 the Kenya High Court intervened to stop two creditors from seizing assets from Savannah Cement and putting it into administration, although the court did acknowledge the company’s debts and a loan repayment default. In January 2023 Mauritius-based Barak Asset Recovery, another related creditor, was approved by the competition regulator to buy a majority stake in Savannah Cement. The current state of that new production line is unknown.

As the two stories above show, it is not just National Cement that is trying to move towards increased clinker production in Kenya. The whole situation is reminiscent of the time before Nigeria declared itself self-sufficient in cement in the early 2010s. Local producers became prominent and the market battle between producers and importers became public. Kenya’s range of different cement companies seem to be more diverse than Nigeria’s were, but a similar type of national interest argument may be rolled out by one side. The other parallel to note with Nigeria is that Dangote Cement is said to have attempted to buy National Cement previously and has also been trying to build its own plant in the country since the mid-2010s. Kenya’s demographics and location make it a prime place for this kind of producer-importer tussle. Let’s wait and see how much the situation has changed when the new plants open over the next six months.

Kenya: National Cement Company expects to commission its upcoming West Pokot clinker plant in September 2023. The cement company says that the plant will produce clinker for export to neighbouring countries in Central and East Africa. A previous survey by the Kerio Valley Development Authority proved reliable reserves of 1.2Mt/yr of limestone in the area. When commissioned, National Cement Company expects the new plant to generate 2000 direct jobs.

Kenya: Five cement producers are opposing an increase in import taxes on clinker that has been championed by National Cement owner Narendra Raval Guru. They claim that he has ‘been given the ear’ of the country’s current administration and is using his position as a domestic clinker manufacturer to disadvantage cement companies that grind imported clinker. The company is reportedly seeking an increase on the duty from 10% to 25%.

The five cement companies - Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot – argue that this would create an unfair playing field in the local cement sector. The say that two manufacturers, National Cement and Mombasa Cement, would dominate due to their clinker manufacturing plants. Mombasa Cement has not stated a position in the dispute.

Kenya: Holcim has announced the successful completion of the largest 3D-printed affordable housing to date through 14Trees, its joint venture with British International Investment, the UK’s Development Finance Institution (DFI) and impact investor. The 3D printing of the 10 housing units in Kenya’s Mvule Gardens project was made possible with TectorPrint, Holcim’s 3D printing ink product, produced in Kenya for the first time. The project’s advanced sustainability profile has attained an EDGE Advanced sustainable design certification by IFC, the World Bank's development finance institution, which recognises resource-efficient buildings with the potential to be zero-carbon. It is the first time a 3D-printed housing project has attained this certification.

François Perrot, managing director of 14Trees, said “With 3D printing, you can solve two problems at once. You can build faster and with better cost efficiency, which will help make affordable housing a reality for the majority. In addition, you can build with less materials, which preserves the resources of the planet for future generations.”

Miljan Gutovic, Region Head for Europe at Holcim, added “I am very proud of the work done by 14Trees in Africa, where their innovations in 3D printing technology are accelerating affordable and sustainable building. I look forward to 14Trees replicating these successes in Europe and other parts of Africa in the very near future.”

Kenya/South Africa: The liquidators of Kenya-based ARM Cement have written off the company’s investment in South Africa-based Mafeking Cement due to a legal dispute with the minority shareholder. Representatives of PricewaterhoueCoopers said in an update to creditors that there was unlikely to be any residual value in Mafeking Cement as the underwriter of the mining business, Lombard insurance Company, had withdrawn its guarantee, according to the East African newspaper. The move has increased the loss by creditors in ARM Cement to around US$99m or around 66% of the total claims.

ARM Cement was put in liquidation in October 2021. It owns a 70% stake in Mafeking Cement, a company that owns limestone mining rights in north-west South Africa. The remaining 30% share is owned by local communities and trusts.

East African: Kenya-based East African Portland Cement Company (EAPCC) has announced plans for an international expansion into the Democratic Republic of Congo. The planned expansion will accompany continued capital expenditure investment in the company’s existing Athi River cement plant in Kenya over the five-year period up to 2028.

CEO Oliver Kirubai said that EAPCC expects ultimately to ‘outgrow the regional cement market.’

Kenya: The Supreme Court of Kenya has ordered lenders Absa Bank and KCB Group to not seize Savannah Cement's assets or appoint administrators or receivers for it after the producer defaulted on its debts. The producer's debts include US$2.41m in interest and US$110,000 in penalties. The temporary block will stand until the court issues further directions. Business Daily News has reported that the court has ordered Savannah Cement to pay US$81,200 to Absa Bank by 28 December 2022.

Savannah Cement director Benson Sande Ndete alleged that lenders coerced the company into repaying US$40.6m-worth of debt. The law forbids interest payments greater than the principal sum of a loan.

Ndete said, "The firm is working to complete the funding of its Kitui clinker plant project, which will allow it to get all the funds necessary to clear the debts."

Kenya: Savannah Cement has hired China-based Sinoma International Engineering for construction of its upcoming 2.92Mt/yr Kitui clinker plant in Eastern Province. The plant will additionally have a 900,000t/yr grinding unit, a 35MW fossil fuel-fired captive power plant and a 13MW waste heat recovery (WHR) system. Savannah Cement chair Benson Ndeta said that the plant will convert to 100% solar and WHR-powered production by the end of 2029.

Sinoma International Engineering plans to commence the project immediately, and to complete it in late 2024.

Kenya: Savannah Cement has ordered a new US$300m production line from China-based Sinoma international Engineering for its Kitui plant. The project scope covers supplying an integrated clinker production line from limestone crushing to cement packaging and logistics. The line will have a clinker production capacity of 8000t/day. Commissioning of the new line is scheduled for about two years after the contract takes effect.

Kenya: Bamburi Cement says that it expects its full-year earnings before interest, taxation, depreciation and amortisation (EBITDA) to fall by 25% or more year-on-year during 2022. The Kenyan Wall Street newspaper has reported that the producer attributed the anticipated decline to increased energy costs and reduced cement demand.

During 2021, Bamburi Cement recorded a turnover of US$338m and a profit for the period of US$11.3m.