Savanna Cement, a consortium of Chinese and Kenyan investors, is putting up a Sh8 billion cement grinding factory in Athi River, in a bid to tap growing demand for the product.
The new cement factory, scheduled to be operational early next year, will intensify the battle for margins by existing players in the highly competitive regional cement sector.
The sector has seen the entry of two new cement manufacturers in the past three years – Mombasa Cement and Simba Cement – and the expansion of existing firms to increase production capacity. Indian Sanghi Cement is also planning to set up a plant in West Pokot.
“Our firm is keen on satisfying supply shortfall since demand for cement is projected to overtake supply in the next two years,” says Savanna Cement’s chairman Benson Ndeta.
Savannah Cement is a joint venture comprising Savannah Heights—a consortium of Kenyan investors, Wan-Ho, a Chinese investment firm and Catic Cement (Kenya) sharing the stakes at 40 per cent, 40 per cent and 20 per cent respectively.
The factory was initially planned to be built in Kitengela but it was relocated to the current location in Athi River (within the Export Processing Zone- EPZ) when residents objected its establishment.
Savannah Cement is planning to invest an additional Sh15 billion in a clinker in the second phase of the project (within three years depending on the market).
According to analysts, year-on-year cement demand growth in East Africa will exceed 14 per cent which means that the installed capacity will fall below demand in the next two years.