Savannah Cement Ltd. raised $500 million to build a clinker plant, according to Chairman Benson Ndeta, as the Kenyan company moves to ramp up supplies across East Africa, where demand for construction material is poised to surge.
(Bloomberg) — Savannah Cement Ltd. raised $500 million to build a clinker plant, according to Chairman Benson Ndeta, as the Kenyan company moves to ramp up supplies across East Africa, where demand for construction material is poised to surge.
Ndeta on Monday confirmed the fund-raising for the project that’s expected to meet all of the company’s demand for clinker, a key ingredient in manufacturing cement, and sell to rivals too. The facility is expected to be complete in 30 months.
The funds were secured through a privately placed debt arrangement, closely held Savannah said in a separate statement emailed by Longevity Development, a business advisory firm that helped secure the deal. Part of the plan is to have the debt listed on a regulated international market within the next three months, the company said without giving details.
Cement consumption in Kenya climbed 4% to a record 9.45 million tons in 2022 compared with a year earlier, according to data from nation’s statistics bureau. Demand for the material is expected to increase as President William Ruto advances multibillion-dollar plans to build 250,000 affordable-housing units annually, construct at least 100 dams and expand the roads network.
Holcim-backed Bamburi Cement is Kenya’s biggest maker of the building material followed by closely held National Cement Company, according to data from regional antitrust agency, Comesa Competition Commission. Savannah is ranked fifth behind Mombasa Cement and state-backed East African Portland Cement.
Savannah’s new facility will be constructed by Sinoma International Engineering next to the company’s cement plant that’s located near the capital, Nairobi. The plant, at full capacity, will account for more than 30% of Kenya’s domestically produced clinker.
Savannah joins other Kenyan companies that have plans to start or increase clinker production after the government in 2021 granted local companies a four-year grace period to boost its manufacturing capacity before it considers increasing import duty on the material to 25% from 10%, according to the Kenya Association of Manufacturers. Locally produced clinker is cheaper than imported product by as much as 30%, the lobby said.
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