Savannah inks Sh65 billion deal to build giant clinker plant
Savannah Cement has secured Kes65 billion ($0.5 billion) in financing for the construction of a clinker plant in Kenya, the largest single-site facility for the output of the product in East Africa.
The firm said the move will help reduce the cost of production while also providing stability to the supply of cement in the local market.
The financing deal is a privately placed debt arrangement, Savannah Cement noted adding that it will be listed on a regulated international exchange.
Board Chairman Benson Ndeta lauded the fresh injection of capital adding that the push will see the company “deliver the growth and development of our key infrastructure and affordable housing.”
President William Ruto’s administration has set out to deliver 200,000 housing units annually in various projects spread across the counties.
Clinker is a material that is produced in the kilning stage during the manufacture of cement and is used as the binder in an array of cement products.
Economic data from the Central Bank of Kenya (CBK) shows that the production and use of cement have been on the decline coinciding with the completion of mega projects such as the 27-Km Nairobi Expressway. Other big road projects have slowed or stalled completely.
Read: Stalled Uhuru megaprojects damper cement and construction sector
According to the 2022 Economic Survey, the quantity of imported cement clinker in Kenya declined by 46.9 percent to 1.1 million metric tonnes valued at Kes6.7 billion in 2021. In 2020, Kenya spent Kes8.6 billion to import 2.0 million metric tonnes of cement clinker.
Kenya’s construction sector registered a 6.6 percent growth in 2021, a reduction from the 10.1 percent expansion realized in 2020. As President Uhuru Kenyatta’s administration went into overdrive on infrastructure spending, cement consumption went up to 9.1 million tonnes in 2021 representing an increase of 23.0 percent from 7.4 million tonnes used in 2020.
Savannah Cement remains optimistic that the Kes65 billion plant will be a critical investment that will help usher in Kenya’s dream of self-sufficiency in cement products.
The firm says its clinker plant model won the funding partly because it has been modeled to include aspects of carbon capture and the generation of clean power.
In December 2022, Savannah Cement announced the signing of a Kes38 billion deal with Chinese company Simona to build a clinker and cement plant in Mwingi North, Kitui County.