The battle for a share of the local cement industry is underway as manufacturers relocate grinding plants to cheaper destinations to expand existing capacities, according to Kenyan newspaper, The Standard.
Athi River Mining Group (ARM), a key player in the East African cement industry, is investing heavily in an aggressive expansion plan, which is expected to push up its production capacity beyond that of existing players now dominating the market.
"Once the expansion is complete, the Kaloleni plant will have a production capacity of 650,000 tonnes," says ARM Managing Director Pradeep Paunrana. Combined with 1.5 million tonnes annually expected to be online once the Tanzanian plant, located in Tanga is complete by 2011, will push capacity of ARM to more than 2.1 million tonnes per year, significantly increasing its market strength. "We expect the Kaloleni plant to be operational by September/October this year," says Paunrana.
With the entire East African region facing a severe shortfall in cement production capacity, a deficit in infrastructure and housing is expected to keep demand high. Close to one million tonnes were imported last year even as local production went up to 2.8 million tonnes, the market growing by an estimated 33 per cent.
While Tororo Cement is the only firm that announced an additional 350,000 tonnes per year in new capacity in 2008/09 periods, it is only ARM, which has given indications of adding new capacity.
With the local cement industry growing at a rate of 16 per cent per year, cement consumption is expected to double in the next five years.
A spot check by The Standard found a 50 kg bag of cement selling at between Sh720 and Sh750 at most stockists, who said supplies are tight.