Lukenya-based National Cement has announced plans to set up a Sh10 billion clinker plant in Kajiado district.
The factory, which will process limestone, is expected to be commissioned by the end of 2012.
The project financed through a KCB and Standard Chartered syndicated loan is expected boost the newest cement maker’s capacity and cut reliance on imported clinker.
Its management expects that the clinker plant will cut the company’s cement production costs and give it a competitive edge in the market dominated by Bamburi and East African Portland Cement.
National Cement also projects that the plant, by eliminating the need to import limestone — a core input in the manufacture of cement — will lower its input costs while saving the country up to Sh14 billion ($150 million) in foreign exchange.
The company has invited the public to give views on the proposed limestone mining site at Merruishi Location next week, a statutory requirement before actual mining activity is approved by the environmental watchdog, NEMA.
National Cement, owned by the Devki Group, seeks to cut reliance on imported clinker for its newly-commissioned grinding plant which will also raise its cement output to a million metric tonnes per year, up from 400,000 MT.
Narendra Raval, the managing director at National Cement, said that his company had invested in a Sh10 billion clinker plant within the quarry site in Kajiado-— which will feed the cement factory in Athi River besides raising its production capacity.
“We expect that the clinker plant within the Merruishi mines will be in operation by the end of next year but the finished clinker will be used in the cement factory in Athi River,” said Mr Narendra.
The Environment al Impact Assessment report on the proposed mineral exploitation puts the limestone estimates at about 300 million metric tonne and can sustain a large clinker production plant (with a daily production capacity of up to 7000 metric tons) for over 100 years.
Upon the of the limestone processing plant, National Cement will stop importation of clinker-—a roasted mixture of limestone and other minerals forming a key component in the manufacture of cement.
Players expect that the excess clinker production plant will be sold to other cement makers before National Cement doubles its cement grinding capacity, scheduled in the coming two years, pending growth of its market share.
The commissioning of the clinker plant is expected to raise the stakes in the cement market, where National Cement trading as Simba entered the crowded market on a pricing strategy- and relying on local clinker will give it further legroom to lower its prices.
In its application to NEMA, the company said the community had approved the lease of 1,500 acres of the limestone-rich land, and did not anticipate resistance from the members as had been the case in a prior attempt earlier this year.
So far, the firm has been importing about 35,000 tonnes per month since the cement grinding plant was commissioned early this year at $70 per ton (about Sh6,800), translating into Sh2.8 billion per year.
Clinker is the biggest single commodity cost in the manufacture of cement, accounting for up to 50 per cent of the production expenses, especially in this era of sharp declines in the value of the shilling against the World major currencies— which imports are paid in.
The input cost for clinker has precipitated heightened interest in establishment of clinkering plants by the different players in the local scene.
Limestone mines
East Africa Portland Cement Company (EAPCC) has become the latest cement maker to announce that it was also seeking to acquire limestone mines in Kitui County upon the disposal of 1000-acre parcel of land in Athi River, also in a bid to stop relying on imports.
Lafarge-owned Bamburi Cement has also announced plans to cut clinker importation, but is currently up to 80 per cent reliant from its local plant.
So far, only Athi River Mining has been able to produce enough clinker for its cement plant-a factor that helped it put a lid on its production costs and offer competitive prices on the commodity while ensuring larger-than-average margins.
