Companies

Simba Cement bags Sh28bn contracts to export clinker

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Devki Group of Companies chairman, Narendra Raval. FILE PHOTO | JEFF ANGOTE | NMG

Simba Cement, part of the businessman Narendra Raval’s empire, has inked long-term contracts that will see it export up to Sh27.7 billion worth of clinker to the neighbouring countries annually.

The move comes ahead of the opening of the firm's West Pokot plant in August. The company has targeted regional markets of Rwanda, Uganda, and Burundi given the proximity of the new plant to these countries.

Mr Raval told the Business Daily that the signing of the long supply deal has started with the neighbouring countries with the supply of 6,000 tonnes of clinker a day.

Read: State shields cement firms with clinker tax

The West Pokot plant, said Mr Raval, will export 80 percent of the total production to the regional market.

“Currently we are exporting 20 percent of our production to these countries but we are now signing long-term contracts that will see us supply clinker worth $200 million dollars (Sh27.7 billion) a year,” he said.

He said these countries are already making orders because the West Pokot plant is closer to them and it will make the cost of the commodity cheaper as compared to other markets where they are acquiring it currently.

The new plant will pump into the country an additional 2.5 million tonnes of clinker, a key raw material in the manufacture of cement.

The commissioning of the plant will make Mr Raval the largest producer of clinker in East Africa with the production of 7.5 million tonnes from his three factories.

The businessman has other cement operations through National Cement Company Limited.

The West Pokot plant will be the second largest in Kenya after his Emali plant, which currently produces 3.5 million tonnes of clinker annually.

Mr Raval said the additional capacity in Kenya has the potential to cut the cost of cement from the current Sh650 for a 50-kilo bag to Sh500.

The plant, said Mr Raval, would also contribute to job creation with at least 2,000 people to be employed directly at the facility.

In the 2023/2024 budget to be read next month, Treasury has proposed a 10 percent tax on imported clinker, resulting in an outcry from small players who have opposed the move through the Kenya Association of Manufacturers (KAM).

KAM issued a statement calling on the government to reconsider the proposal, saying it poses serious negative economic and social ramifications including a possible loss of more than 100,000 jobs.

The billionaire, who also has an interest in steel, has been pushing for an increase in duty levied on imported clinker to protect the local industry.

Also read: Competition regulator fights tycoon in cement price war

He has been pushing for enhanced import duty on clinker, the main ingredient for the manufacture of cement, as the steel magnate eyes some Sh8.3 billion that factories without grinders pay to import the crucial raw material. Import levy on clinker stands at 25 percent currently.

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