http://www.constructionkenya.

com/2431/the-bright-future-of-east-african-cementindustry/

Cement maker to start production mid this year Thu, 01 Mar 2012 11:22

Kenya's sixth cement manufacturing company, Savannah Cement, is set to start production in the second quarter of this year, its chairman, Benson Ndeta, announced Wednesday. The cement plant, which cost a consortium of Chinese and local investors Ksh8billion, is set to compete with established companies such as Bamburi, East African Portland Cement, Athi River Mining, National Cement and Mombasa Cement. Savannah Cement's plant in Athi River will use state of the art machines that include an ultra-modern equipment, which is able to cut power consumption between 20-30%. Kenya has a capacity of 3.5 million tons against demand of 3 million per year. Most of the local companies also export their cement to Somalia, South Sudan and Tanzania. Bamburi Cement is currently the leading producer in East Africa, with an annual capacity of 2.5 million tons for export and local consumption. Ndeta said his firm is keen on satisfying supply shortfalls, and would sell 30% of the output in countries outside East Africa. The demand for cement is projected to overtake the installed supply within the next two years. Savannah Cement plans to invest an additional Ksh 15-billion (U$150m) in a clinker plant. Athi River Mining says jobs at risk after Nema closes plant 13-Mar-2012: KENYA
Analysts tip Uganda market to drive Bamburi Cement top line 06-Mar-2012: KENYA

Ugandas cement market is expected to be the main revenue driver for Bamburi Cement as competition in the Kenyan market intensifies. A Standard Investment Bank (SIB) research note on Bamburi says its subsidiary, Hima Cement, by reducing excess capacity will see the plant become the main revenue driver for Kenyas largest cement- maker. We expect Hima to remain the main revenue driver in 2012 supported by further volume growth (estimated capacity utilisation of 89 per cent in 2012 up from 83 per cent in 2011), says the note.

Kasese-based Hima Cement has a capacity of 850,000 metric tonnes per annum and is second to Tororo Cement which is expected to have a 2.2 million capacity after expansion. Uganda is a net importer of cement, meaning that extra production can easily be gobbled up in the domestic market with surplus exported to Rwanda and Democratic Republic of Congo. Major government-sponsored infrastructure projects and a vibrant real-estate market are the main drivers of cement consumption in the region which is growing at 13 per cent per year. Kenyas consumption growth rate is however higher than the regional rate, standing at 15 per cent. Francis Mwangi, a research analyst at SIB, said t poor domestic infrastructure means that a plant located in one part of Uganda will protect its market share since the poor road network makes competitors access difficult. The market in Uganda is less competitive because it is highly segmented, said Francis Mwangi, a research analyst. Despite the presence of Hima plant, the Lafarge-owned Bamburi still exports cement to serve the western Uganda market. The SIB note estimates Hima contributed Sh2.06 billion in profit after tax in Bamburi, a 194 per cent increase from the Sh800 million posted a year before. The firm reported a Sh5.24 billion net profit for the year ended December 31, 2011, on a turnover of Sh35.8 billion. The cement maker said the rise in turnover was driven by higher domestic and export sales, higher production and better domestic and export prices. Market share Bamburi has an estimated market share of 40 per cent but analysts said as competition expands, the market share is bound to decline. Athi River Mining is the second biggest player with a 20 per cent market share, East Africa Portland Cement (16 per cent), Mombasa Cement and National Cement each a 10 per cent share with the four per cent balance going to other players. Margins from Uganda are however vulnerable due to the governments plan to remove subsidies on electricity, a major cost factor in cement production. Growth in the Ugandan market is equally vulnerable to competition. Bamburi might have to discount its prices in order to favourably compete with the new capacities from Tororo which plans to more than double its capacity to 2.2 million tonnes and other regional players, said analysts at Sterling Capital.

An order by the environment watchdog for closure of Athi River Mining (ARM) Kaloleni plant could see the firm lose hundreds of millions of shillings and put a thousand jobs in jeopardy, officials said on Monday. Listed ARMs management said that if the National Environment Management Authority (NEMA) does not lift its closure order the firm will be forced to let employees go home. The plant employs 1,103 staff and supports another 10,000, according to the management. Chief executive Pradeep Paunrana, however, said the directive was yet to affect operations since the plant is temporarily shut down for preplanned regular maintenance. The exercise is however expected to end on March 20. Right now we are under maintenance, but we do not know about next month and we may have to let people go, said Mr Paunrana. The plant is one of the few manufacturing clinker, a key ingredient in the manufacture of cement. If Nemas order is not lifted soon, it will put pressure on ARMs costs besides the countrys imports bill. Kenya is a net clinker importer and only two other companies currently manufacture it locally. Francis Mwangi, a research analyst at Standard Investment Bank, said that in the absence of locally produced clinker ARM would have to join importers. The Kaloleni-based plant has a 1,500 tonne clinker daily capacity and a 300,000 tonne annual cement grinding capacity. Freight charges, prices on the international and source markets make pricing of imported clinker difficult. But on average it costs between 40 and 50 per cent more than the locally produced stuff. Mr Mwangi said that like other manufacturers, ARM has clinker reserves and Nemas orders will begin to hurt once they are exhausted. ARM has reserves of clinker and it comes down to how long it will last, said Mr Mwangi. The Nema said that it gave the order due to materials used in manufacturing affecting neighbouring communities and the ecosystem but ARM accuse them of inconsistency. The closure was occasioned by poor operations at the company that were resulting in air pollution as the plant undertook operations in an open area as opposed to an enclosed one, said regulator in a statement last week. But Mr Paunrana said that the Nema was going back on an agreement which had given them up to September 2013 to solve the problem which both parties realised and accepted would take about 24 months. The agreement, he said, was arrived at in June 2011 with the alleged pollution being one of the items on a long list of Nema demands some of which go beyond ARMs realm. For instance, Nema required that ARM tarmac or cabro tile a six kilometre road from the quarry to the factory but the road, said ARMs management, is classified under the Kenya Rural Roads Authority. ARM also sprinkles the road using a 20,000 litre water tanker, up from 10,000 and Mr Paunrana said that while the firm is trying to comply with the rules, the ad hoc manner in which they are popping is a concern. http://www.sbainteractive.com/news/ke/MTMxOTM=

Africa's cement producers take off

by Neil Ford

1 2 Next

More Articles of Interest

America's most wanted j-o-b-s - 10 hottest employment opportunities The dropout dilemma: One in four college freshmen drop out. What is going on here? What does it take to stay in? 7 tips for effective listening: productive listening does not occur naturally. It requires hard work and practice - Back To Basics - effective listening is a crucial skill for internal auditors Culture, leadership, and power: the keys to organizational change - includes bibliography Effective organizational communication: a competitive advantage

The most obvious sign of Africa's construction boom is in the expansion of the continent's cement production capacity. Foreign and domestic companies are pouring money into new production lines in markets as diverse as Angola, Tanzania and South Africa, sometimes in competition with each other but often in the form of foreignAfrican partnerships. Several of the biggest players are seeking to roll out continent-wide operations in order to make the most of economies of scale. However, with limited options to export concrete over large distances, comprehensive geographical coverage is likely to become the name of the game. Almost all of Africa's large cement producers forecast rapid growth in the next few years as a result of continued strong economic growth and a greater public and private emphasis on the provision of infrastructure. The group executive director of the Nigerian Dangote Group, Devakumar Edwin, said: "Globally, growth in the cement industry in recent years has been largely driven by activities in emerging economies, as the need for housing has continued to grow and government investments in infrastructure have increased. Africa remains the only region in the world with a cement deficit. Demand is expected to be sustained by strong population growth and further investment in infrastructure." While Chinese companies are becoming increasingly involved in the African construction industry, a range of African cement producers is also growing rapidly. Mombasa Cement is investing Kshsoom ($3.9rn) in a new grinding plant to boost output to 1.5m tonnes a year (t/y) from 700,000 tonnes last year, while also increasing its market share to 33% by the end of next year. According to the Kenya National Bureau of Statistics, cement consumption of 327,504 tonnes in January exceeded

production for the first time in five years, as the rate of residential construction continued to pick up. A similar story is being played out in Ethiopia, where national cement production capacity is set to almost double by the start of next year. Shimeles Wolde, the head of the chemical and allied industries directorate in the Ministry of Trade and Industry says that the country should not need to import cement next year. Ethiopia currently produces 7m t/y but consumes 8m t/y and demand is growing because of double-digit economic growth and the country's remarkable dam construction programme. The completion of new production lines will boost output to 13.5m t/y early in 2012 but the Ministry has set a target of increasing national production capacity to 27m t/y by the end of 2015. Addis Ababa appears to be banking on the provision of new transport infrastructure and plentiful power supplies to attract industrial investment that will absorb much greater concrete capacity. Existing investors such as Lafarge and Messebo Building Materials Production plc are set to increase output, while Saudi firm Derba Midroc Cement is expected to produce first cement at its 2.5m t/y factory in September. Shimeles said: "We plan to encourage the private sector. If there is a gap and the new investment does not come, we will invest; otherwise it's open to the private sector." The hydro sector aside, the government's ambitious plans for new social housing projects and surfaced roads should see cement consumption continue to rise by up to 25% a year. Angola's Sociedade de Gestao de Partticipacoes Financeiras e Gestao de Empreendimentos (GEMA) is developing a cement factory at the port of Lobito, in Angola's Benguela Province at a cost of $400m. Due for completion in 2014, it will help supply a variety of construction projects across Angola's booming economy. Investment is currently concentrated in the country's ports but the rehabilitation of the Benguela Railway could enable some cement to be transported into provinces further east. Energy costs The success of African cement producers is largely dependent on access to cheap feedstock, as energy supplies account for 35-40% of total production costs. Most companies have traditionally relied on oil, but high international oil prices have persuaded many to opt for imported coal. Natural gas is perhaps the best option, but it is only available in a limited, although increasing, number of African markets. However, gas from Tanzania's offshore Songo Songo project is now being piped into Dar es Salaam for use by cement plants as well as in power generation. Cement producers in the city report a massive improvement in the cost of their energy bills. South Africa has long enjoyed some of the lowest power tariffs in the world, so South African cement producers have relied on Eskom to provide energy to their businesses. However, the chief executive of Pretoria Portland Cement (PPC), Paul Stuiver, says: "In previous years, the price of electricity contributed about 5% of our costs, and has now crept up to about 8%, but we expect, once Eskom looks into price increases, that this cost will climb up to about 10%. "The pricing of liquid fuels and electricity remains a significant challenge. We have looked at alternative energy prices and need suppliers. But such efforts continue to be hindered by uncertainty around the renewable energy

feed-in tariff rates. "

COPYRIGHT 2011 IC Publications Ltd. COPYRIGHT 2011 Gale, Cengage Learning

Friday, March 2, 2012

Savannah Cement Stores Controller Job in Kenya

Savannah Cement is the newest cement player to get into the Kenyan market and is currently about to complete a state-of the-art greenfield cement grinding plant in Athi River Kenya. The plant will employ the latest cement technology in the market to produce 1.5 million tonnes of various cement types per annum for the Kenyan and regional market.

Savannah Cement is seeking to recruit highly motivated, dynamic, innovative and result oriented professionals, seeking a thrilling and fulfilling experience, to join the company in the following Stores positions: Controller

Reporting to the Business Performance Analyst, the Stores Controller is charged with inventory control and ensuring both internal & external user requests are properly serviced, maintaining optimal stocks while enhancing best practice controls and procedures.

http://www.slideshare.net/FrostandSullivan/infrastructure-investment-drives-cementdemand-in-east-africa

Kenya's Athi River to grow cement output to 5Mt/y by 2016

COMMENT PRINT

EMAIL

By: Chanel de Bruyn

4th October 2010

TEXT SIZE

Kenyan cement company Athi River Mining plans to grow its production capacity to five-million tons a year by 2016, deputy MD Surendra Bhatia said on Monday. Athi River expects significant growth in the demand for cement in East Africa, on the back of anticipated expansion in the construction sector. Demand for cement in East Africa stood at about 6,85-million tons a year in 2009. Cement consumption in East Africa was growing at about 14% a year and generally grew at 2,5 times that of the region's gross domestic product, Bhatia noted. The company, which has recently upgraded a cement plant in Kenya to 650 000 t/y, would develop a new 1,5-million ton a year cement plant in Tanzania, at a cost of about $125-million, by 2012. Bhatia highlighted that while most cement manufacturers developed new plants at more than $200/t of installed capacity, Athi River could develop plants at a cost of less than $100/t. He noted that South Africa's Pretoria Portland Cement's now cancelled 1,2-million ton a year Se Kika plant would have cost about $500/t of installed capacity to develop. Athi River's Kenya plant, however, had cost about $77/t of installed capacity to develop, while the new Tanzania plant would cost about $84/t of installed capacity to develop. This was owing to the fact that the NSE-listed company had developed a "boon" of engineering, manufacturing and construction capabilities, allowing it to reduce costs. Further, the company also developed its own clinker plants to supply its cement plants, also reducing costs. Bhatia noted that the Tanzania plant was being fully funded by development finance institutions. By 2016, Athi River would aim to develop two further greenfield cement projects in two more African countries where it had mining rights for resources such as limestone, which was integral to the cementmaking process. It would also aim to have two more potential cement plant projects in its pipeline for development beyond 2016. Bhatia said that Athi River was aiming to become a pan-African cement company. With an increased focus on its cement business, Athi River was planning to hive off its noncement businesses.

It would do this, either, by listing the noncement businesses as a separate entity on the NSE, to raise funds to further develop these businesses, which still had plenty of growth potential, or to sell these assets. Athi River's noncement business included the production of fertilisers, sodium silicate and a number of other industrial minerals.

http://www.constructionkenya.com/2330/chinese-investors-to-build-sh8bn-cement-plantin-athi-river/