Africa’s richest man Aliko Dangote has reignited the battle for Kitui County’s limestone mines with local cement firms with his plan to open a Sh34.8 billion ($400 million) plant in Kenya.
Local firms led by East Africa Portland Cement Company (EAPCC) are racing to strike deals with Kitui County to secure the coveted raw material.
Now, Dangote Group has re-ignited cement makers’ interest in the semi-arid zone as Africa’s biggest cement maker seeks a presence in Kenya in a $5 billion (Sh435 billion) plan to build cement plants in the continent.
“It was reported that a Nigerian billionaire had visited Kitui with a view to secure raw materials for cement manufacturing,” said EAPCC’S board minutes seen by theBusiness Daily.
“It was agreed that the board would take urgent steps to get in touch with the Kitui County officials and ensure that the raw materials reserves are secured and purchased by EAPCC.”
The top cement firms including Bamburi Cement, ARM and Portland Cement have come under pressure from new entrants National Cement, makers of Simba brand, and to a larger extent Mombasa Cement who supply the Nyumba brand.
The new entrants have been encouraged by the growing demand for cement in East Africa on the back of a construction boom.
Kenya produced 4.7 million tonnes of cement last year, up from 2.8 tonnes in 2008, according to the Kenya National Bureau of Statistics and players expect double digit growth in coming years.
These are the numbers that have caught the eye of Dangote Cement and plans to build a two million tonne-capacity cement factory in Kenya is expected to deepen competition and price war.
As a result, management of production cost is dominating the cement makers’ strategy sessions in an environment where rising competition has seen prices remain unchanged over the past two years.
This is expected to turn Kitui into a battle ground due to its huge limestone deposits and proximity to the Mui basin, which has large coal reserves.
The manufacture of cement involves mixing of clinker, a key raw material and limestone or coral rock mainly from the Coast with pozzolana, an ash based product mainly found in the Rift Valley.
Most cement firms are also turning to coal to power their machines as opposed to oil fuel, which is expensive and prone to price volatility. Kenya imports bulk of its coal from South Africa.