ARM Cement releases new Cement Industry Report

Kenya’s ARM Cement has published its new Cement Industry Report, which provides information on the East African economy and the region’s cement and construction sectors.

Economy and construction

The East African region includes Kenya, Rwanda Burundi, Uganda and Tanzania. The area houses a population of 148 million, which is growing at a rate of 3% per annum, and has a GDP of US$93 billion (the construction industry accounts for US$10.5 billion of the region’s GDP). According to the report, 70% of the population are under 30 years of age. There is increasing migration from rural areas to urban centres throughout the region and a huge demand for housing and various other resources, such as power, water, sanitation, healthcare, schools, roads and other infrastructure.

Infrastructure deficit is the most significant barrier to sustaining growth. ARM predicts that around US$93 billion needs to be spent over the next decade the bridge the deficit in East Africa.

Cement industry

Demand

The demand for cement in East Africa is expected to grow to approximately 20 million t in the next few years. This has led to a number of investments in the region’s cement industry.

Production capacity

Clinker capacity is currently 5.98 million tpa in East Africa (3.18 million in Kenya, 1.87 million in Tanzania, 860 000 t in Uganda and 70 000 t in Rwanda) and cement capacity is 15.6 milion tpa (8.6 million in Kenya, 4.9 million in Tanzania, 1.95 million t in Uganda and 150 000 t in Rwanda). Capacity additions from 2014 – 2018 are expected to increase the region’s clinker capacity to some 12 million tpa and cement capacity to approximately 13.45 million tpa.

Competitive forces

According to the report, cement grinding units are ‘mushrooming’, especially in Tanzania. At least six new plants have been set up with capacities of between 100 000 – 300 000 tpa. The increase of mobile grinding units has made it very easy for cement grinding units to be set up; however, according to ARM, such plants will not have any lasting impact on the economy (in terms of environmental sustainability, energy efficiency, job stability for employees and contributing to the local community).

Imports

The demand for cement in the region has resulted in an increase in imports. Cement is imported duty free for infrastructural projects and finds its way into the local market or directly onto sites via contractors. The report notes that there is a lack of appropriate quality control measures at the port of entry. With more grinding units being established in the region, ARM predicts that the region’s dependence on imported clinker will increase. Furthermore, the demand for imported clinker and cement is forecast to increase the foreign exchange demand on the exchequer and result in currency depreciation.

Outlook

ARM Cement believes that imported cement should be subjected to the same quality control measures as the local manufacturers. Testing should be mandatory for all imported cement before it is released into the market. For construction projects, local manufacturers should be preferred suppliers and, if cement is imported, a tariff structure should create a level playing field for the domestic producers. The report additionally highlights the need for reliable and cost effective resources such as power, fuel and transport.

Read the full Cement Industry Report here.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldcement.com/africa-middle-east/03072014/arm_cement_releases_new_cement_industry_report_26/