Indian firm Maknan Consulting wins steel plant study deal

Numerical Machining Complex (NMC) has contracted an Indian firm to conduct a feasibility study for setting up an integrated steel plant, marking an upscale from the previous plan to put up a smaller plant.

NMC has contracted Maknan Consulting PVT, which was ranked top in the tendering process, to carry out the study in the next three months.

This marks an about-turn from the initial plan of setting up a mini steel-plant relying on scrap metal as a stepping stone to larger production.

The government has now opted for an integrated steel plant but whether there is enough raw material to sustain it will only be clear in the coming weeks.

“The government wants an integrated plant which is large and can spur economic growth,” said NMC’s acting managing director Gordon Onjore. An integrated plant uses iron ore as its raw material and produces the metal in different shapes.

Iron ore deposits have been confirmed in Meru, Kitui, Taita Taveta, Homa Bay and Kakamega; while coal, required to heat the ore so as to remove impurities, has been discovered in Ukambani region.

A vibrant steel industry is one of the foundations of an industrialised nation. Former President Mwai Kibaki confirmed of the viability of the deposits in 2010.

The change of plan follows South Korean steel producing company Posco Limited’s pulling out of an agreement with the Kenyan government on setting up a mini-steel plant in Athi River.

READ: Kenya seeks partner in steel mill venture

The company, associated with American billionaire Warren Buffet, is said to have exited due to lack of commitment by the State in offering information necessary for decision making.

Correspondence seen by the Business Daily shows that Posco, which is the third largest steel producer in the world, had planned to buy a plant in Japan following the Fukushima Nucleur disaster for use in Kenya.

Lack of data

However, lack of data from NMC and delays in getting a letter of guarantee from the government saw it pull out.

The feasibility study will look into the quality and quantity of iron ore in the country, advise on the best location of the plant and the technology to be used.

The study will cost Sh9 million, while construction of the plant is expected to run into billions of shillings as the mini steel plant alone had been budgeted to cost Sh13 billion.

Proceeds and experience from the small plant were expected to help the country set up infrastructure needed to transport heavy raw materials and set up a larger production unit.