ARM takes fight for cement market a notch higher

By JECKONIA OTIENO

Kenya: As the war for the cement market rages, what is billed to be the biggest cement plant in East and Central Africa is being constructed in Tanga, Tanzania.

It is anticipated that the plant will not only change the face of cement production, but also increase ARM Cement’s market share across the region.

The cement and lime production plant is expected to produce 5,000 tonnes of clinker — which is made from burning limestone at very high temperatures — a day. Clinker is then mixed with gypsum to produce cement.

And as the construction industry grows in East Africa, and the region’s countries increase their investment in infrastructure, the demand for cement can only go up.

The ARM plant will be strategically situated along the Tanga-Dar-es-Salaam Highway and is a few months away from being fully operational. The manufacturer is also planning to set up a Sh34 billion cement plant in Kitui County. It already has five plants in Kenya, Rwanda and Tanzania.

“By the end of 2015, and with all our plants operational, ARM will be the largest cement and clinker manufacturer in [East Africa],” ARM Managing Director Pradeep Paunran told Business Beat.

But cement or lime production will not be the only thing that will mark the new plant in Maweni, Tanga; it will also host one of Tanzania’s tallest structures. The pre-heater, with a total quantity of 9,200 cubic metres, will stand 125 metres tall. This is just higher than Kenya’s second-tallest building, Nairobi’s Teleposta Towers, that is 120m high, with 27 floors.

The plant’s rotary kiln is also being billed as the biggest in East Africa, with a mechanical capacity of 670 metric tonnes. The kiln will be commissioned later this month.

Major player

The Tanga plant is being financed by the Africa Finance Corporation (AFC) due to ARM’s “strong entrepreneurship spirit and carefully designed internal development plan.”

Dr Ini Arua, AFC’s senior vice president for heavy Industries, said the corporation is willing to work with other firms that encourage local expansion and use of locally available materials.

ARM seems to be bracing itself for the entry of Nigeria’s Aliko Dangote, who is also Africa’s richest man. In September last year, he announced plans to set up a Sh34 billion cement plant in Kitui. Mr Dangote enjoys a near monopoly in the cement business in Nigeria.

To explain ARM’s investment in the sector, the company’s deputy managing director, Mr Surendra Bhatia, said: “The infrastructure industry is still growing in the region and ARM Cement’s bid is to be a major player in the industry whose growth is still below the market in South Africa or even Egypt.”

The growth of cement consumption in Kenya is below several other countries in Africa. Per capita consumption is at about 86 kilos per person. This is way below Egypt’s 500kg per person and South Africa’s 300kg. But in the East African region, cement consumption is highest in Kenya.

ARM currently produces about 1.85 million tonnes of cement per annum, but this is expected to jump to 2.6 million tonnes with the commissioning of the Tanga plant set for May this year. Kenya produced 4.63 million tonnes of cement in 2012.

Founded in 1994, ARM was once a “little horse” among cement manufacturers. But its ambition has seen it overtake East Africa Portland Cement, the oldest cement manufacturer in Kenya, to become the second-largest cement player in terms of the value of its shares at the Nairobi Securities Exchange. The largest is Bamburi Cement.

Its turnover has increased from Sh4.6 billion in 2008 to Sh65 billion last year.

Allegations

The firm, however, has been dogged by claims of pollution, which it has refuted, saying its systems of operation are above board and it monitors every detail of production to ensure compliance with environment management regulations.

Human Rights Agenda (Huria) published a report last year, demanding that ARM compensate families for damages caused to their health as a result of pollution from the firm’s cement plant in Kaloleni.

But in a strong rebuttal presented to MPs on the natural resources and environment committee, ARM termed Huria’s allegations “vexatious, non-scientific, frivolous, based on fabricated data, aired for personal gain and geared towards promoting the selfish interests of our business rivals.”