Displaying items by tag: Kenya

Kenya: Mining and Blue Economy Cabinet Secretary Hassan Ali Joho has ordered the closure of the Simba Cement plant in Kilifi County due to pollution concerns. Residents have reported issues from stone blasting and dust, with one resident reporting that early morning blasting has caused ‘cracks’ in their house and exposed families to respiratory diseases, according to the Kenyan Post newspaper. It was also reported that the company has allegedly displaced residents to expand its mining operations.

Kenya: Detectives from the Directorate of Criminal Investigations (DCI) have arrested three suspects in Baruti, Nakuru County, for impersonating employees of a cement company and defrauding unsuspecting customers by offering cement at low prices. During the raid, assorted SIM cards, a desktop computer and six mobile phones were seized, according to The Star newspaper. The DCI confirms that investigations are ongoing and more accomplices may be arrested. The suspects are currently in custody awaiting formal charges.

Kenya: Hasmukh Patel, the founder of Mombasa Cement, has died at the age of 58 years after a short illness. He was also the chair of Uganda-based Tororo Cement, according to the Standard newspaper. Patel set up Mombasa Cement in 2007. Notably, the Corporate Social Responsibility programmes of his companies had a budget of around US$12m/yr for spending on various philanthropic schemes.

Kenya: Bamburi Cement’s sales increased by 4% year-on-year from US$81.4m in the first half of 2023 to US$84.5m in 2024. The company reported a net loss of US$6.8m in 2024, compared to a net income of US$682,000 in 2023, marking a significant year-on-year downturn.

Kenya: Savannah Clinker has offered to acquire Bamburi Cement outright for US$197m, 8% higher than an existing bid for the company of US$183m from Tanzania-based Amsons Industries. Business Daily News has reported that Savannah Clinker requires a minimum stake of 60% in order to finalise the deal. The company said that it could aim to complete the deal before March 2025.

Savannah Clinker owns an upcoming clinker plant and limestone mine in Kitui. Its owner Benson Sande Ndeta formerly held a majority of shares in Savannah Cement, which went into administration in mid-2023.

Kenya: Mombasa Cement will build a 20MW power plant at its Vipingo plant in Kilifi County, to help reduce energy costs. The US$19.4m project will generate 10MW of electricity using a waste heat recovery system and 10MW from solid fuels. The waste heat will be recovered from flue gases emitted during cement production. The plant has two clinker production lines. The power generated will be used onsite to support cement production.

Kenya: Savannah Cement will sell assets including its Athi River grinding plant to compensate creditors, following its liquidation after entering administration in 2023, Business Daily has reported. Savannah Cement’s administrator PKF Kenya announced that the closing date for expressions of interest will be 16 August 2024. The company owes creditors US$139m. KCB Bank Kenya and Absa Bank Kenya, as preferential creditors, are owed US$68.5m and US$40.3m respectively, and will have their claims prioritised in the liquidation process. The forced sale value of these assets stands at US$58.6m, suggesting losses for unsecured creditors.

Tanzania/Kenya: Tanzania-based Amsons Group has made a significant US$180m bid to acquire the entire stake of Kenya's Bamburi Cement. The group said on 11 July 2024 that it has made a binding offer with Bamburi Cement, according to The East African newspaper. The offer includes a premium of 44.4% over Bamburi's last closing share price.

Managing Director of Amsons Group, Edha Nahdi said "We have great plans to deepen our investment in Kenya and in Bamburi. Our offer to acquire shares in Bamburi is part of our corporate market expansion plan and will mark the formal entry of Amsons Group into the Kenyan market, where we plan to make investments in other industries in the coming months."

Kenya: The government has decided to sell its entire 25% stake in East African Portland Cement Company, as part of a strategic reform of its investments, guided by the International Monetary Fund. The Star newspaper has reported that the government expects to earn US$134m from the sale. It reportedly sold 30% of shares in the producer for US$117m in 2023.

Of East African Portland Cement Company’s multiple minority shareholders, the largest is Lafarge South Africa, with 42% of shares, followed by the Kenyan National Social Security Fund, with 27%.

Kenya-based East African Portland Cement (EAPCC) made the news this week with the reopening of the company’s Athi River cement plant after a month-long shutdown. The closure was conspicuous because the company is gradually working towards increasing the integrated plant’s production capacity. The first phase of the maintenance and upgrade project saw the replacement of the production line’s kiln shell in September 2022. The current aim is to increase the unit’s cement production capacity to 1Mt/yr by mid-2026. The recent shutdown appears to have been a more normal annual renewal and repair job but EAPCC has used it as a promotional opportunity. Notably, a spokesperson for EAPCC described clinker as the “new gold” in a recent video explaining what was going on.

It’s an improvement on the financial trouble EAPC found itself stuck within in the late 2010s before the government ended up taking a controlling share in the cement producer. On this front local media reported in July 2023 that the government had found a 'strategic investor' to buy a 30% stake in the company. Nothing more has been said on this topic since then though.

The highlighting of the recent shutdown is likely to be a public relations exercise intended to project stability, but that focus on clinker is telling given that the government introduced its Export and Investment Promotion Levy in July 2023. This legislation imposed a 17.5% fee on imported clinker in order to encourage the local industry. Cement producers that rely on imported clinker - including Rai Cement, Bamburi Cement, Savannah Cement, Ndovu Cement and Riftcot - attempted to lobby against the levy but it remains in place. This business environment helps to explain EAPCC’s renewed focus on clinker production.

One company that stands to benefit from the levy is National Cement, producer of the Simba Cement brand and a subsidiary of Devki Group. It made the news at the start of April 2024 when its subsidiary Cemtech commissioned a 6000t/day clinker plant at Sebit in West Pokot. National Cement already operates an integrated plant near Athi River, south of Nairobi. However, hot on the heels of the West Pokot plant, it is already considering building another integrated plant in the north of Kitui County, to the east of Nairobi. As reported in the local press this week, Cemtech has submitted an environmental impact assessment for the project to the local authorities.

The country has two other clinker producers: Holcim subsidiary Bamburi Cement and Mombasa Cement. The former company announced at the end of 2023 that it had signed a contract to build solar plants at its integrated plant in Mombasa and its grinding plant in Nairobi. The deal was framed as a money saver but additionally it may have been in response to a less than reliable local grid. It also said that it was removing Ordinary Portland Cement (OPC) from its product line from the start of 2024. This move challenged expectations about sustainability initiatives outside of richer countries. Yet, considering how Bamburi Cement argued against the clinker levy, there might have been some commercial thinking here too in order to sell products that use less clinker. Finally, despite completing its divestment of Uganda-based subsidiary Hima Cement for US$84m in March 2024, Bamburi Cement reported a loss of US$2.99m in 2023 compared to a profit of US$1.36m in 2022. Although it reported a rise in turnover and operating profit, it appears that taxes and legal costs related to the sale of Hima dragged the company into a loss.

Graph 1: Rolling annual cement production in Kenya, 2019 - September 2023. Source: Kenya National Bureau of Statistics (KNBS).

It’s been a difficult business environment in Kenya over the last decade given the number of companies that have faced serious financial difficulties. This list includes ARM Cement, EAPCC and Savannah Cement. The last of these companies, Savannah Cement, is currently in administration and is trying to sell its integrated plant. Yet, rolling annual cement production in Kenya has remained above 9.5Mt/yr since early 2022. The government is sticking to promoting local clinker production, and companies like Bamburi Cement, EAPCC and National Cement are making investments of varying scales. The focus, for now at least, is on clinker production in Kenya.