Displaying items by tag: National Cement

Rwanda: Kenya-based National Cement has begun selling its Simba brand cement on the Rwandan market. The New Times newspaper has reported that the company is aiming to compete against importers from further afield with cement produced at its Nakuru cement plant in Salgaa, Nakuru County in Kenya, thereby alleviating supply chain bottlenecks.

National Cement reportedly selected the market due to the “pace of development and infrastructure establishment,” and is offering its cement at a promotional price.

US: Vicat subsidiary National Cement has received a fine of US$148,000 from the Alabama Department of Environmental Management (ADEM) for exceeding mercury emissions regulations over a 123-day period between May 2019 and February 2020 at its integrated Ragland plant in Alabama. The Daily Home newspaper has reported that unexpectedly high mercury levels in coal and other raw materials burned as fuel during that time caused the breach, which the company immediately reported to ADEM.

National Cement president Spencer Weitman said, “The issue took several months to fix.” Multiple upgrades and operational changes solved the issue, including installation of a US$400,000 mercury absorption carbon injection system. ADEM said, “National Cement did not economically benefit from the emissions violations.”

In January 2020 National Cement began work on construction of a new US$250m kiln line, due for completion in 2022.

US: National Cement has broken ground on its US$250m upgrade to the Ragland plant in Alabama. City, county and state officials attended the ceremony, according to WBRC. The subsidiary of France’s Vicat is building a second kiln at its 1.9Mt/yr plant in Alabama. The project is expected to be completed in 2022.

Kenya: Devki Group subsidiary National Cement has launched its second Kenyan plant in Salgaa in Nakuru county at a cost of US$58.0m. Business Daily News has reported that the 0.75Mt integrated plant will supply cement to Kenya, South Sudan and southern Ethiopia.

Devki Group chairman Narendra Raval said that the completion of a 0.75Mt/yr second line at National Cement’s 1.2Mt/yr Kajiado County plant would bring the group’s total capacity to 3.5Mt/yr in July 2020, in a speech in which he lobbied the government to ban clinker imports. “We are gearing towards fixing the country’s clinker gap and making Kenya a regional market for raw material in cement production,” said Raval. The group also produces its Simba brand cement in Uganda.

US: Ragland Town and St. Clair County administrators have approved France-based Vicat’s US subsidiary National Cement’s plans for a second kiln at its 1.9Mt/yr Ragland cement plant in Alabama, construction of which will begin in early 2020. Birmingham Business Journal has reported that National Cement, which has had legal permission to build a second line since 2006, has announced that the new kiln will enter clinker production in 2022 following a total investment of US$250. National Cement is Ragland’s largest employer, with a staff of 132 at the 111-year-old Ragland plant.

Kenya: The new owners of Athi River Mining Cement entered the company’s 0.7Mt/yr integrated Kaloleni cement plant on 14 October 2019. The Standard has reported that Narendra Raval, chairman of Devki Group, which also owns National Cement, was held up for some time at the entrance, because security guards had not received orders to let him in. Raval spoke to employees, promising that all 1100 would keep their jobs following completion of the takeover, whereupon all salaries would be harmonised with those of their National Cement colleagues.

Pradeep Paunrana’s latest attempt to wrest back control of ARM Cement was dismissed this week in Kenya. Administrators PricewaterhouseCoopers rejected a US$12.5m guarantee to stop the sale to a rival, according to Business Daily newspaper. Paunrana, the former managing director and majority shareholder of ARM Cement, had teamed up with Rai Group to thwart a rival bid for his company from National Cement.

The guarantee was a 20% portion of a full bid of US$63m by Paunrana and Rai Group but the administrators rejected it on the grounds that it had a nine-month time limit. They were reportedly concerned that legal proceedings over ownership of the cement producer could last beyond this. A deal to sell ARM Cement to National Cement for US$50m was agreed in May 2019. However, Paunrana fought back and the courts are expected to deliberate over the issue for some time.

ARM Cement entered administration in August 2018 following a growing loss in 2017 and poor markets in Kenya and Tanzania. At the time the cement producer blamed its poor performance on elections in Kenya causing reduced cement demand, a coal import ban in Tanzania causing production issues at its Tanga cement plant and increased competition in both countries.

The implications of National Cement actually succeeding in its bid for ARM Cement would mean a realignment of the local industry. LafargeHolcim’s subsidiary Bamburi Cement leads the sector by production capacity and market share. It operates one integrated and one grinding plant. Mombassa Cement and then a variety of smaller companies, trail it.

The Devki Group-backed National Cement has steadily been expanding in recent years. In April 2018 it was announced that the International Finance Corporation (IFC) was going to invest US$96m in National Cement and that Devki Group chairman Narendra Raval was going to commit a similar sum towards a new integrated line in Kenya and two new grinding plants in Kenya and Tanzania. More recently it acquired the long-running Cemtech plant project in West Pokot, along with its mineral deposits and licences. If it were able to successfully buy ARM Cement it would become Kenya’s second largest cement producer by market share.

ARM Cement is not the only Kenyan cement producer facing these kinds of problems. The Kenyan government is the majority shareholder East Africa Portland Cement Company (EAPCC) and it has been working on a rescue package for it since early 2019. The local market had similarly negatively affected the EAPCC’s financial performance and it has been attempting to cut its debts. In its case, it has been trying to sell land to pay off its debts but it has faced disputes with local residents. It has also tried reducing its workforce, with varying degrees of success. Its integrated plant at Athi River near Nairobi was reported to be operating at a 50% capacity utilisation rate in late 2018.

Table 1: Cement production in Kenya, 2015 – 2019. Source: Kenya National Bureau of Statistics (KNBS).

Overall cement production in Kenya peaked at 6.7Mt in 2016 and has fallen since. It fell by 2.8% year-on-year to 2.9Mt in the first half of 2019 from 3Mt in the same period in 2018. Consumption fell by a similar amount to production in the first quarter of 2019. Analysts like Knight Frank have blamed this on a slowdown in the real estate market, although it holds up hope for government house building scheme to rescue the situation.

In this kind of market it is understandable that the cement market is rationalising. The World Bank has forecast gross domestic product (GDP) growth of 5.8% in 2019 and better in the years ahead. Whoever is left in the cement business once the corporate dust settles stands to benefit.

UAE: Al Ain Cement and National Cement have signed a clinker offtake deal. Al Ain Cement, a subsidiary of Arkan Building Materials, will supply clinker to National Cement’s grinding plant in Abu Dabi, according to Gulf Today. The agreement is also intended to help both companies reduce production and logistics costs. The two companies have a combined production capacity of 3.1Mt/yr of clinker and 6.6Mt/yr of cement.

Kenya: Pradeep Paunrana, the former chief executive officer (CEO) of ARM Cement, has challenged the sale of his former company’s assets in Kenya to National Cement. Lawyers acting on behalf of Paunrana, who remains a major shareholder, have filed a petition at the Kenyan High Court, according to the Business Daily newspaper.

ARM Cement was place in administration in mid-2018. Administrator PricewaterhouseCoopers (PwC) later decided to sell the cement producer’s assets in Kenya to National Cement for US$48m. However, a consortium of investors led by Paunrana offered US$63m for the assets but this bid was declined due to a lack of proof of funds and its late submission.

Kenya: ARM Cement has signed a deal to sell its business in Kenya to the National Cement Company for US$50m. The transaction is subject to customary regulatory approvals, according to the Business Standard newspaper. ARM Cement also has operations in Tanzania, Rwanda and some interests, in the form of unexploited mineral deposits, in South Africa.

“This transaction is in line with National Cement’s growth strategy in Kenya to position itself as the leading cement manufacturer in the region. The industry is poised for growth and we are excited about the prospects for this next chapter of our business. We will endeavor to safeguard the interests of all stakeholders including the employees, customers, and suppliers in the overall interest of Kenya,” said Narendra Raval, chairman of National Cement.

The cement producer was placed under administration in August 2018. In late 2018 Oman’s Raysut Cement said it planned to buy ARM Cement as part of its expansion plans. Nigeria’s Dangote Cement was also linked to a potential purchase of the company.