02-03 Oct, 2012 - Muscat, OMAN
Crowne Plaza Hotel Muscat
Crowne Plaza Hotel Muscat
Ahead of the official commissioning by President Kibaki, Savannah Cement, the sixth cement maker in Kenya has started production at its Athi River EPZ-based Sh8.5 billion plant. The factory has an annual production capacity of 1.5 million tonnes. Savannah is a joint venture between Savannah Heights - a consortium of local investors, Wan-Ho, a Chinese investment firm, and Acme Cement, also from China.
It has already received export orders to Tanzania, Uganda, Burundi and South Sudan, said an official. It is expected that 80% of the production will go to regional sales since the firm is based in an Export Processing Zone. Savannah Cement’s chairman, Benson Ndeta said, “Production at the plant is already ongoing and we will be servicing regional orders beginning next week.”
Mr. Ndeta pointed out that local demand for cement continues to outstrip supply and the scenario is even worse in the regional market. “That is why we have invested heavily in this plant as we seek to secure a sizeable share in both markets.”
A recent report by Standard Investment Bank read, “Over the next five years we expect market share to shift from multinationals to new, more aggressive, non-listed players. While multinationals accounted for 86.5% of total capacity in 2005, this is expected to dip to 52.2% by 2015.”
According to Timothy Wambu, an analyst with African Alliance, Savannah’s plan to set up a one million per year clinker plant beginning 2013 will go a long way in helping the firm improve on market share. Regarding prices he said, “The ability to produce raw material gives a firm the leeway to price its products cheaper than that of its competitors.” Although prices have remained relatively stable despite the escalating input costs, the rising competition could add pressure on the prices.
In the last five years, the government has been investing heavily in road infrastructure and Constituency Development Fund projects, thus opening new venues for development which also supports the demand for cement. Regardless of high interest rates, other demand-driving factors are housing shortage and attractive rents.
Mr. Timothy Wambu, Research Analyst at African Alliance Kenya Securities will share more information on the industry competition, demand, drivers and growth outlook on Kenya and the region in a talk entitled “East Africa Cement Outlook” at the 7th Middle East CemenTrade. The conference will be held on 02-03 October in Muscat. Register now to attend or contact Ms. Grace at grace@cmtsp.com.sg for further enquiries and registrations.
Excerpt from Businessdailyafrica.com
