Nigeria-based Dangote Cement is planning to enter the Kenyan market .The company wants to buy a cement firm in Kenya and has already sent emissaries to look at Mombasa Cement and the National Cement Company owned by Devki Group. This comes barely a month after the firm began building a cement plant at Mtware in southern Tanzania.
Going by Dangote Cement’s financial muscle and aggressiveness, an unprecedented battle could be in the offing.
The firm’s entry into the Kenyan market is likely to shake up the market, especially since the country’s production capacity has been running ahead of consumption for over a decade with the excess supply sold in the regional markets.
[quote_box_center] If Dangote cement project goes through, it will mean a powerful new competitor will be present in the Kenyan market; enough to send shivers down the spines of the country’s other cement companies[/quote_box_center]
Bamburi Cement is currently the Kenya’s biggest producer with a production capacity of 1.1 million tonnes per annum. Other major local producers include ARM Cement and East African Portland Cement Company.
Dangote’s Mtware cement plant, whose construction began last month, is expected to increase Tanzania’s cement capacity by 1.5mn tonnes by the second quarter of 2015.
Old Mutual projects that the East African region will experience an over-supply of cement by 2015, with the entry of new players and a further capacity enhancement by existing cement firms. This is expected to result in downward pricing pressures more likely to benefit consumers in the East African community, simultaneously raising concerns about the long-term profitability of the industry.
Cement prices in Kenya currently range between Ksh700 (US$8) and Ksh750 (US$8.5) per 50kg bag while in Uganda, the average price is Ush32, 000 (US$12).