Kenyan cement company Athi River Mining plans to grow its production capacity to five-million tons a year by 2016, deputy MD Surendra Bhatia said on Monday.
Athi River expects significant growth in the demand for cement in East Africa, on the back of anticipated expansion in the construction sector.
Demand for cement in East Africa stood at about 6,85-million tons a year in 2009. Cement consumption in East Africa was growing at about 14% a year and generally grew at 2,5 times that of the region's gross domestic product, Bhatia noted.
The company, which has recently upgraded a cement plant in Kenya to 650 000 t/y, would develop a new 1,5-million ton a year cement plant in Tanzania, at a cost of about $125-million, by 2012.
Bhatia highlighted that while most cement manufacturers developed new plants at more than $200/t of installed capacity, Athi River could develop plants at a cost of less than $100/t.
He noted that South Africa's Pretoria Portland Cement's now cancelled 1,2-million ton a year Se Kika plant would have cost about $500/t of installed capacity to develop.
Athi River's Kenya plant, however, had cost about $77/t of installed capacity to develop, while the new Tanzania plant would cost about $84/t of installed capacity to develop.
This was owing to the fact that the NSE-listed company had developed a "boon" of engineering, manufacturing and construction capabilities, allowing it to reduce costs.
Further, the company also developed its own clinker plants to supply its cement plants, also reducing costs.
Bhatia noted that the Tanzania plant was being fully funded by development finance institutions.
By 2016, Athi River would aim to develop two further greenfield cement projects in two more African countries where it had mining rights for resources such as limestone, which was integral to the cement-making process.
It would also aim to have two more potential cement plant projects in its pipeline for development beyond 2016.
Bhatia said that Athi River was aiming to become a pan-African cement company.
With an increased focus on its cement business, Athi River was planning to hive off its noncement businesses.
It would do this, either, by listing the noncement businesses as a separate entity on the NSE, to raise funds to further develop these businesses, which still had plenty of growth potential, or to sell these assets.
Athi River's noncement business included the production of fertilisers, sodium silicate and a number of other industrial minerals.
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