“We still do not have readily available limestone deposits while putting up more capacity is an expensive venture,” Paunranha said.
ARM plans to increase clinker capacity over the next five years from the current position where it imports about 40 percent of what the plants need.
“Although we had initial bottlenecks when the housing industry recorded a boom, new players have since entered the cement industry while those already in the sector have boosted their capacity. One can now order for 1,000 bags of cement and obtain prompt delivery,” Daniel Ojijo, Chief Executive Officer, Villa Care Limited, a Nairobi-based real estate company told AFK Insider.
The industry has seen the entry of several new players into the Kenyan market including National Cement and Savannah Cement.
But it is Savannah Cement, a state of the art cement grinding plant with a capacity of 1.5 million tons a year, which is getting all of the attention. It is located in Athi-River, 19 miles from Nairobi. Savannah Cement is the 6th and newest entrant into Kenya’s cement market.
Savannah Cement targets regional markets in Rwanda, Burundi, Tanzania, Uganda, Democratic Republic of Congo and South Sudan.
“We [Kenya] have an installed capacity of 7.5 million metric tons against an annual consumption of just under 4 million metric tons. This means there is excess capacity [in Kenya] and any new entrant is likely to have a challenge in securing market share,” said Kepha Tande, Managing Director of East Africa Portland Cement Company and also chairman of East Africa Cement Producers Association.
“However, opportunities still exist in clinker manufacturing where more than half of the 4 million tons used locally is made from imported clinker.”
While production of clinker is dependent on availability of limestone deposits, which are spread out into remote parts of the country, players such as Cemtech have taken up the challenge.
Cemtech, a subsidiary of India’s Sanghi Industries, plans to construct a $120 million, 1.2 million ton-a-year plant in Kenya’s remote West Pokot area. Sanghi Group is the world’s largest cement manufacturer with capacity of over 20 million tons.
The factory was commissioned in July 2010 by then-Prime Minister Raila Odinga but since then construction has not commenced.
Cemtech has contracted a Chinese consortium, made up of several engineering firms, to build the cement plant at a cost of about $141.2 million. The first phase of the West Pokot Cement project will provide 600,000 tons of cement annually and is set for completion in 2015. The second phase, which will bring capacity to 1.2 million tons per year, will be completed two years later.
Cement sales for local and regional markets are dispatched mainly as bagged cement, although specialized customers (contractors) may order delivery of bulk cement. When speaking of opportunities, industry players seem to be reading off of the same script.
“There are opportunities in infrastructure, especially within Nairobi as well as projects within the devolved units of county governments. There is also the Konza City project which provides enormous opportunities for us. Growth in the cement industry is robust and this is what is attracting new entries as well as expansion in capacity of already existing players,” Tande said.
