Kenya’s Mombasa Cement to double its capacity with new plant

After entering Kenya’s cement market two years ago, Mombasa Cement has now commenced the construction of a new grinding plant, designed to double its production capacity next year. This should assist the eager manufacturer in pushing for a larger market share.

The Sh.500 million plant in Athi River, scheduled for completion at the end of 2012, will take the company’s production to 1.5 million tpa, and hopefully secure a third of the local market.

According to market research conducted earlier this year by the African Alliance, Mombasa Cement’s flagship brand Nyumba cement gained more than 10% of the market share by last December due to a successful pricing strategy, making the company the fastest growing player.

“There is a huge potential in this market and we will continue to offer the lowest prices to grow our market share,” said Harish Patel, the director in charge of the Kenya operations at Mombasa. He added that the additional production is meant for the local market.

For future profit and revenue growth, the cement maker is keen to tap into the increased construction sector activity moving forward through real estate and infrastructure development.

The company is also seeking to plug the deficit in the market following increased demand, as data from the Kenya national Bureau of Statistics indicates surplus production scattered earlier this year.

Heightened construction in the residential sub-sector has left developers rushing to bridge a housing deficit that currently stands at about two million units, resulting in the country’s cement consumption exceeding production for the first time in more than five years at 327 504 t in January.

Last year, Mombasa Cement produced 700 000 t of cement, placing it in direct competition with Athi River Mining (ARM), which has since opened a Sh.8.6 billion plant in Tanzania.

ARM’s managing director, Pradeep Paunrana, notes the Tanzanian market provides significant growth potential, as the country’s economy shows a strong expansion trend, whilst it is not yet self-sufficient in its cement needs.

“We expect a strong economic growth in Tanzania with our projections placing cement consumption to double in the next five years,” said Mr Paunrana.

Mr Patel said the new grinding technology at Mombasa’s Athi River plant would ensure that cement is more efficiently produced, as well as adding between 2000 – 4000 tpd to its current capacity.

Currently, the Nyumba brand is the cheapest on the market, retailing at Sh.670 — the same price as cement produced by another new entrant, Devki Group.

These two companies have both built their market shares from strong, established distribution networks in other building materials, such as nails and steel.

Read the article online at: https://www.worldcement.com/africa-middle-east/18052011/kenya%E2%80%99s_mombasa_cement_to_double_its_capacity_with_new_plant/