Forum Moderator
39492 posts
TimePosted 28/01/2019 09:34:08

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, in April last year, that Mr 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. Mr Raval and his family own 85 per cent of National Cement and IFC own a 15 per cent stake in the company, which was only created a decade ago.


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. The plant is already equipped with a 15MW power plant. The second line will see construction start this year and  is due for start-up in mid-2020.



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. The Nakuru plant will serve western Kenya and will receive clinker from Kajiado. The construction of the Nakuru plant began in mid-2018 and is scheduled for commissioning in mid-2020.

Ugandan operations
Meanwhile, 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 with 1Mta capacity, directly employing 300 staff. A second grinding plant in Tororo is also envisaged under Simba Cement’s expansion plans. Simba Cement currently sources clinker from National Cement’s Kenyan operations, while additives are sourced locally.

Other Kenyan players
The expansion mode of National Cement sits contrary to the financial instability of many of its Kenyan competitors. This week, East African Portland Cement has had to fend off remarks about talks with LafargeHolcim over being fully acquired following a 25 per cent fall in revenue in the fiscal year ending June 2018.

Moreover, 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. There may be time for companies such as National Cement to selectively invest and look at the long-term opportunities, but further restructuring of the Kenyan cement market is likely if cement demand continues to decline.

Reply


Know the answer to this question? Join the community and register for a free guest account to post a reply.