National Cement continues to plot a successful course in east Africa

This week, China’s Sinoma Energy Conservation announced that it has a contract with National Cement Co Ltd (Devki Group) to build a new waste-heat power project at its Athi River cement plant.

The leading east African cement producer will provide a KES25.5bn (US$251m) investment for Sinoma to provide power for its Athi cement plant as well as a power unit for its raw steel processing factory in Mombasa. “The total installed capacity of the two projects is 53.5MW… The project (over a period of 20 months) is to provide residual heat for these two production lines,” said Devki Chairman, Narenda Raval.

Forbes reported that Raval had invested US$100m of his own funds in National Cement’s expansion plan. In addition, IFC is lending US$90m and providing US$7m in equity for the expansion projects. Raval and his family own 85% of National Cement and IFC own a 15% stake in the 10-year-old company.

National Cement’s Kenyan expansion 

The company is also erecting a second 1.8Mta clinker line for the Merrueshi/Mbirikani clinker plant in Kajiado County, Kenya, which began production from its 1.2Mta kiln line last February.

A further 0.75Mta kiln line is being built at Mariakani, Kilifi County, and a second 0.88Mta plant is planned for Njoro, Nakuru. Each project is said to cost KES3bn. Construction of the Nakuru plant began in mid-2018 and is scheduled for commissioning in mid-2020.

Ugandan operations

National Cement is also expanding in Uganda via its subsidiary, National Cement Uganda (Simba Cement brand). In August 2018 President Yower Museveni opened the Tororo grinding plant of Simba Cement. A second grinding plant in Tororo is envisaged under Simba Cement’s expansion plans.

Other Kenyan players

National Cement’s expansion sits contrary to the financial instability of many of its Kenyan competitors. East African Portland Cement has had to fend off remarks about talks with LafargeHolcim over being fully acquired following a 25% fall in revenue in the fiscal year ending June 2018.

The Ravi Sanghi Group, owners of Cemtech Ltd, is only now about to restart work on the completion of the West Pokot cement plant following years of delay. 

The big story of the Kenyan sector for the past six months has been the demise of ARM and its fall into administration. While potential buyers include Dangote Cement and Oman Cement, it may be a few months before the buyer can start to put the company’s operations on a firmer footing.

The prospects for a fast recovery of profits in the Kenyan market are far from certain. Cement demand in 9M18 in the country fell by 113,096t to 4.13Mt.