Expansion by cement company to accelerate production


Updated Fri, 11 Mar 2016 10:12:40 GMT

Mombasa Cement has unveiled plans to build two new cement factories and triple its output at a cost of Sh7.3 billion in what is likely to see developers continue enjoying stable prices as competition hots up.Regulatory filings show that the factories will be set up in in Vipingo, Kilifi County, where it already has a plant.“The objective of the proposed expansion of Mombasa Cement Vipingo factory is to increase the current clinker production capacity from 3,000 tonnes to 9,000 tonnes per day and that of cement,” anenvironmental audit report says. “This, if achieved, will effectively contribute to a significant increase in cement production in Kenya,”The report quotes the International Finance Corporation’s (a member of the World Bank group) environmental measurements for risks and impact, but does not indicate whether it will be providing the fundsfor the expansion.

Mombasa Cement produces the Nyumba brand, while the new plants will produce two types of cement known as Portland Pozzolana Cement (PPC) and Ordinary Portland Cement (OPC). The company nowjoins other large cement producers that have been expanding their operations in the last several years.Other cement manufacturers in Kenya include Athi River Mining, Bamburi Cement, East African Portland Cement, National Cement, Ndovu Cement and Savannah Cement.

In addition to the expansion by the existing producers, other firms are looking to start production in Kenya, further flooding the market. The construction of the Sh10 billion Indian-owned cement processingfactory, Cemtech Ltd, is set to begin this year in West Pokot County.

Nigeria’s Dangote Cement has also announced plans to enter the local market in the near future, setting the stage for increased competition. 

In the last several years, cement production has growntremendously, with t fierce competition leading to a drop in prices.Data from the Kenya National Bureau of Statistics shows that cement manufacturers produced 6.3 million tonnes, up from 5.8 million tonnes in 2014.

Statistics further show that production has risen by 1.3 million tonnes in the last two years, a 25 per cent increase. But consumption grew even faster at 1.4 million tonnes (33 per cent) during the sameperiod, reflecting the growth of the real estate sector and the government’s infrastructure projects.The increase in production has seen the prices come down steadily to the current average of Sh650 per 50kg bag.

In 2014, the average price was about Sh700 per bag, having fallen progressively from about Sh750 in 2009 due to increased competition in pricing among the producers in Kenya. The expansion plans byMombasa Cement and other manufacturers look set to accelerate production and keep prices down in the medium-term, to the benefit of developers.

Kenya has seven major cement manufacturers and the competition between them saw the price of a bag of cement drop to an average Sh650 for a 50kg bag by the end of 2015.