Devki Group’s National Cement Company (NCC) on Tuesday launched a new factory in Nakuru County, lifting the company’s annual consolidated production capacity to two million tonnes.
The Sh6 billion plant, with an annual capacity of 750,000 tonnes, is located in the Salgaa area on the Nakuru-Eldoret highway. It is expected to generate 700 direct jobs.
Devki Group chairman Narendra Raval said NCC’s overall production capacity would hit 3.5 million tonnes by July following ongoing expansion projects, including phase two of the Salgaa plant that is expected to add another 750,000 tonnes.
“We are adding more investment to deliver more capacity in the market,” he told the Business Daily.
NCC has been on an aggressive expansion drive, buoyed by demand from huge infrastructure and real estate projects across the country.
Last year, NCC bought the assets of rival Athi River Mining (ARM Cement) — beating Rai Cement Company to the deal.
The new Nakuru plant is expected to increase competition in the cement market, which has recently witnessed price wars due to expansion and entry of new players.
Mr Raval urged the government to impose a duty of at least 25 percent on importation of raw materials for cement production to protect local producers.
He said Kenya has enough clinker to meet local demand and imposing duty or a total ban on clinker importation would elbow “unfair competition” by imports and help create more jobs for Kenyans.
“We urge the government to impose duty, 25 percent or more, on clinker importation from September 2020, or ban clinker importation like the Tanzania government to protect local industries and create more jobs for the Kenyan people,” said Mr Raval.
Kenya imports approximately two million tonnes of clinker annually, costing the country over Sh10 billion ($100 million) in foreign exchange every year.
Devki Group is also constructing a second clinker line in Emali, Kajiado County, for production of raw materials for cement that will increase the group’s total capacity to three million tonnes of clinker annually, which is the total requirement for Kenya.
“We are gearing towards fixing the country’s clinkers gap and making Kenya a regional market for raw material in cement production. If we add clinker produced by other companies, Kenya and East Africa has sufficient surplus capacity of raw material for cement production that will contribute to further reduction in cement prices,” said Mr Raval.
Devki Group of Companies owns Simba Cement Limited (Simba Cement). Simba Cement trades under the brand name National Cement while Cemtech Limited, is a subsidiary of Sanghi Group of India. Sanghi Group is one of the world’s largest cement manufacturers.
Cement production decreased by 2.4 percent while consumption grew marginally by 0.18 percent in the half-year of 2019, according to the Kenya National Bureau of Statistics (KNBS).
KNBS data indicates that cement production dropped by 8.2 per cent from 6.7 million tonnes in 2016 to 6.2 million tonnes in 2017. Similarly, cement consumption and stocks fell from 6.3 million tonnes in 2016 to 5.8 million tonnes in 2017 owing to reduced demand in the construction sector.
These market dynamics, coupled with competitive players, have resulted in a decrease in cement prices over recent years. In 2018, the average price of a 50kg bag of cement was Sh605 from an average of Sh 687 two years ago.