Karsan to build $4.9m cement plant in Nairobi

Karsan Ramji Sons, a firm that supplies construction materials in Kenya, plans to set up a cement manufacturing plant in Nairobi.

The Ksh426 million ($4.9 million) plant is expected to produce an average of 700 tonnes of cement daily for sale both locally and within the regional market. This plant and several others lined up for construction in the region are expected to raise production capacity, potentially pushing down cement prices.

Imara Africa Securities, a stockbroker, said new and old players are jostling for a share of the market as East Africa’s cement demand is expected to reach 14.4 million metric tonnes by 2017.

Kenya’s per capita consumption of cement averages 55kg, Tanzania 45 and Uganda 40kg compared with Egypt’s 506kg, South Africa’s 230kg and Angola which stands at 80kg.

READ: Dilemma for EA cement firms: production set to pass consumption

Karsan’s factory will be located in Athi River near ARM Cement Ltd, Savanna Cement Ltd, East Africa Portland Cement Company and Bamburi Cement Ltd.

Envasses Environmental Consultants Ltd said in environmental impact assessment report that Karsan will produce ordinary portland cement manufactured by intergrinding clinker, pozzolona and gypsum.

Simon Nzuki, the lead consultant of Envasses, said the government will earn revenue from levies on importation of machines, operational licences and increased tax remittances when cement production starts.

A bag of cement in Kenya goes for between Ksh700 ($8) and Ksh750 ($8.5). The price in Tanzania is $5.3 to $6 plus 18 per cent value added tax and the cost of transport, depending on destination, from Dar es Salaam. Uganda’s average price was Ush32,000 ($12) in December.

Customers expect to benefit from lower prices as new players enter the region including a firm owned by Nigerian millionaire Aliko Dangote.

READ: Dangote cement plant excites market

Cemtech, a subsidiary of Sanghi Group of India is building a $137.2 million cement factory in Kenya. Lake Cement Ltd in which Banco of India acquired 51 per cent equity is investing $12.5 million at Lindi in Tanzania.

Lake’s Cement is expected to produce 500,000 tonnes of cement per annum.

SOURCE: The East African