Displaying items by tag: East African Portland Cement Company

Kenya: The East Africa Portland Cement Company (EAPCC) made a loss of US$12m in the half-year to 31 December 2018 compared to a loss of US$9.7m in the same period in 2017. It blamed the loss on a ‘difficult’ market and production issues, according to the Standard newspaper.

Kenya: A government audit has recommended that the Mining Minister suspend the operating licences for Athi River Mining and the East African Portland Cement (EAPCC). The report to the Public Accounts Committee was in response to the companies not paying taxes, according to the Business Daily newspaper. Both cement producers have faced financial difficulties recently.

Kenya: The East Africa Portland Cement Company (EAPCC) has received backing from the Ministry of Trade to sell unused land to pay off debts and commitments of nearly US$150m. The ministry said that a cabinet memorandum is ready to grant the company approval to sell off its assets, according to the Business Daily newspaper. The cement producer says it needs the funds to pay employee benefits, pay suppliers, pay off debts to companies including the Kenya Commercial Bank and the Japanese International Cooperation Agency and refurbish its plant. The cement producer says it wants to spend US$19.5m towards refurbishing its plant in a one-to-two month shutdown. At present the unit is operating at a 50% capacity utilisation rate.

Kenya: Edward Ouko, the Auditor-General, has described the East Africa Portland Cement Company (EAPCC) as insolvent because it cannot pay its debts. The cement producer made an operating loss of US$34m in its financial year that ended on 30 June 2018, according to the Standard newspaper. Its revenue fell by 25% year-on-year to US$50m. The company said it devised a new strategy to focus distribution on it own depots and to compete on pricing to counteract a lack of distribution of its products in common retail stores.

Kenya: Simon Ole Nkeri, the managing director of East African Portland Cement (EAPC), has been questioned by the National Assembly Trade, Industry and Cooperative committee of the Parliament of Kenya. He told the committee that the company has considered the almost US$14m it owes it workers but he was unable to provide a payment schedule, according to the Business Daily newspaper. In August 2018 the Labour Court allowed the Kenya Chemical and Allied Workers Union to recover the money owed to over 400 workers. In late September 2018 the Court of Appeal gave the EAPC 30 days to make a deposit of the owed funds. However, the cement producer resorted to legal means to delay paying the deposit, as it would ‘cripple’ its business operations.

Congratulations are due to Bamburi Cement this week after the completion of a new production line at its Nairobi grinding plant. The new US$40m line will add 0.9Mt/yr of cement production capacity to the unit, bringing its total to 2.4Mt/yr when it is commissioned towards the end of 2018. Together with the subsidiary of LafargeHolcim’s integrated plant at Mombasa the company will have a production capacity of 3.2Mt/yr.

Graph 1: Cement production and consumption in Kenya 1999 - 2017. Source: Kenya National Bureau of Statistics.

As Graph 1 shows above it is an interesting time to open new production capacity in the country. Both production and consumption fell for the first time since 2000 in 2017. Production fell by 8.2% year-on-year to 6.2Mt in 2017 from 6.7Mt in 2016 and consumption fell by a similar amount. The change was blamed on reduced demand for building materials in the construction sector occurring at the same time as a fall in the value of building plans approved in 2017. The country also suffered political uncertainty as its general election in August 2017 was subsequently annulled and repeated in October 2017.

With Global Cement Directory 2018 data giving Kenya a cement production capacity of 5.2Mt/yr from five producers and at least four grinding plants with a capacity of 4.6Mt/yr it looks like the country is in an overcapacity phase. The question for producers like Bamburi Cement is whether 2017 is just a temporary blip or not. After all, as per usual for many African countries, the demographic pressure for development to happen and per capita cement consumption to grow seems ineveitable.

Bamburi Cement is not alone in betting on growth. Also this week the Kenya Port Authority recevied four hoppers from the UK’s Samson for the Port of Mombasa. The hoppers will be used to import clinker, coal and gypsum at the site. Earlier in February 2018, National Cement opened a 1.2Mt/yr integrated plant in Kajiado County. On the larger scale Nigeria’s Dangote Cement has been preparing to open two cement plants, near Nairobi and Mombasa respetively. However, these project were reported delayed to 2021 in its annual report for 2016 around the time the company faced problems at home due to a local financial recession.

Meanwhile local producers have faced pressure so far in 2018. Bamburi Cement reported a 6% fall in turnover to US$357m in 2017 that it blamed on the weather, the elections and lower construction activity. Other producers have had a harder time of it with the East African Portland Cement (EAPC) reportedly having to rely on a land sale to remain solvent in April 2018. ARM Cement has also been forced to sell assets to remain operational. Its loss for 2017 more than doubled to US$55m. Amid the problems the UK-government investor CDC Group, which holds a 41% stake in the company, replaced board members of the company in a likely bid to shore up the situation.

It’s into this kind of situation that Bamburi Cement has opened its new plant. On the plus side though it is a grinding plant so it should be able to maximise the company’s use of clinker from either within the country or from imports from other LafargeHolcim operations elsewhere. In its press release for the new unit the company pinned its hopes on anticipated growth in domestic housing and infrastructure projects, backed by government schemes for affordable housing and roads. With the rating agency Moody’s having issued a report this week about the relative reslilence of the Kenyan economy despite recent shocks such as last year’s elections, Bamburi Cement may yet have the last laugh.

Kenya: East African Portland Cement (EAPC) is relying on a US$100m land sale to the government to remain solvent. The company is in discussions to sell over 14,000 acres of land to the newly established Special Economy Zones Authority funds, according to the East African newspaper. The cement producer has seen its production halted, cement stocks depleted and staff salaries delayed over the last two months. It reported a loss of US$9.58m in the second half of 2017 from a loss of US$2.45m in the same period in 2016.

Kenya: East African Portland Cement plans to build a railway terminal at Athi River near its integrated cement plant. The depot will be used to help deliver raw materials by train on the Standard Gauge Railway to the plant, according to the Business Daily newspaper. Managing director Simon Peter ole Nkeri said that his company relies ‘heavily’ on imported clinker. The cement producer is holding discussions with the government about the project.

Kenya: East African Portland Cement’s loss grew to US$9.58m in the second half of 2017 from US$2.45m in the same period in 2016. Its sales revenue fell by 17% year-on-year to US$30.2m from US$36.6m, according to the Standard newspaper. It has blamed the falling sales on ‘prolonged’ political unrest connected to the two elections the country held in 2017.

Kenya: East Africa Portland Cement has gained re-certification for ISO 14001 on environmental management system, and OHSAS 18001 for occupational health and safety. Company official Simon Peter ole Nkeri said that the achievement was part of the company’s around strategy, according to the Business Daily newspaper. He added that the adoption of an environmental quality management system was a strategic decision to improve the company’s performance.