Kenya cement companies

KENYA - CEMENT COMPANIES KENYA CEMENT COMPANIESDemand for cement, a key economic indicator, is expected to remain strong throughout this year as a result of infrastructure projects and home building currently underway in the country, industry players say. Athi River Mining’s deputy managing director Surendra Bhatia said the cement market in this quarter continues to be strong and has maintained its growth trend. “In terms of ARM cement business – as compared to the same period last year - the trend has been positive. The cement market continues to grow and is operating to capacity in this business segment,” he said. Cement firms, Bamburi - who welcome competition as good for consumers as it is important in terms of product quality - East African Portland Cement Company (EAPCC) and Athi River Mining have been cranking up capacity. Cemtech Ltd, Devki and the Mehta Group are making new investments hot on the heels of those of Mombasa Cement. According to the Central Bank’s Monthly Economic Review for February 2010, total cement production rose by 18.1 per cent in January 2010 compared with January 2009 to reach 292,769 metric tonnes. “Growth in cement production has been gradual but steady through the years, reflecting increased economic activity,” the review says. Cement consumption increased by 4.8 per cent from 200,840 metric tonnes in January 2009 to 210,486 metric tonnes in January 2010, reflecting increased economic activity in the industry, the bank’s estimates show. With the anticipated new entries and new capacity, Mr Bhatia said the cement market is growing, and so is competition. The per capita cement consumption in Kenya is increasing due to a rise in the middle class. This group is building homes and driving up demand for cement. Bamburi marketing chief Bob Nyangaya says competition has been a factor in the current advertising campaigns that have seen his company and EAPCC carry out sustained above-the-line initiatives. “It is true new entrants have contributed to the competition. But for us this brand of communication has been part of our marketing tradition,” he said. Mr Nyangaya says the firm had been running a campaign with masons in Kenya and Uganda well before the new advertising campaigns. Global cement consumption averages 389 kilogrammes per household. Kenyans consume a paltry 57 kilogrammes each, for instance, compared to 420 in Egypt and 600 for Turkey. The rest of East Africa ranges from 42 in Tanzania to 20 in Burundi. Mr Bhatia says that it takes a minimum of three to four years to build a green field cement plant and expects the competition to add capacity in the next three to four years by which time the market would have grown to the same extent. “Therefore over the short term we could not expect any overcapacity in the industry. In the medium term, we expect capacity and demand to balance. In the long term we expect that new capacity will again have to come up to meet the increasing cement demand in Kenya and in the region,” he said. Kenya has a capacity of 3.5 million tonnes against demand of 3 million. Uganda is self-sufficient while Tanzania, now soaking up Pakistani imports, has excess production. Generally, cement exports to Africa have been insignificant because of the growth in Asia. But Indians are building mega plants with Reliance Group putting up four plants with capacity of five million each - in other words, each is equal to the capacity of the EAC producers combined. Industry players estimate that a tonne of cement produced in Kenya sells at $125 (Sh9,625) the same as a tonne in South Africa where electricity is much cheaper. The price caps have been compounded further by the fact that there is an overcapacity in the Far East nations that is flooding the market. Imported cement lands in Mombasa or Dar es Salaam at $115 (Sh8,855) per tonne, according to industry players. The product of a similar weight leaves the gates of local manufacturers at $120 (Sh9,240) without considering other costs like transport and taxes. A tough local market has made it even harder for other new players to set up operations in East Africa despite the interest shown in the reent past. Asian countries have been eyeing the potential in the region. Pakistan-based Atif Zafar, a research analyst at JS Research, said early this month that East Africa is a region of great potential for cement exports. There has been a construction boom in East Africa as well as in Mozambique and Madagascar, partly thanks to the foreign aid given to this egion for infrastructure development, he said. Demand is expected to grow by 33 per cent to 8 million tonnes in 2011, from 6 million tonnes in 2009. Moreover, the global financial crisis has acted as a break in the commissioning of new capacities, providing a window of 1-2 years for Pakistani cement exporters. Contact TINSEL CARGO & OIL COMPANY COMMERCE HOUSE 3RD FLOOR, SUITE 311, MOI AVENUE, NAIROBI. P.O. BOX 79456-00200 NAIROBI, KENYA TELE FAX: +254-20-2229781, Cellphone: +254-722-761587, +254-734-939308 Website: www.tinselcargo.com EMAIL: info@tinselcargo.com

Kenya cement companies

by Tinsel Cargo and Oil company on May 22, 2011

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