Kenya’s National Cement to invest $36 million in ARM assets

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The Chairman of the National Cement Company, Narendra Raval said the company, which recently signed a deal to buy the Kenyan assets of ARM Cement from its administrator, plans to invest $36 million to modernise ARM’s production plants.

ARM, which was once the second biggest cement maker in Kenya behind LafargeHolcim’s Bamburi Cement, was put under administration last August by some of its creditors over debts totalling $190 million. Its shares were then suspended from the Nairobi bourse.

ARM’s administrator PWC revealed that National Cement emerged as the winner of a bidding round to buy the company’s Kenyan assets, including land and plants, agreeing to pay $50 million.

National Cement, which holds 11 percent of the Kenyan cement market with its Simba Cement brand, wanted to raise its production capacity in the East African nation, where cement consumption has been rising in recent years due to a construction boom.

Raval said the cement firm, which has been in business for eight years, was especially keen to have an extra production plant on the Kenyan coast, where it does not have a presence. He told Reuters that a total of $29 million of the new investment will go towards modernising the “rundown” production plant at the coast and noted that the balance will be invested in a second plant situated near Nairobi.

The Chairman said the acquisition of ARM’s plants will initially increase National Cement’s 1 million tonne annual capacity by 400,000 tonnes. ARM Cement has an installed annual production capacity at its two plants in Kenya of 1 million tonnes.

Raval said National Cement is also interested in buying ARM’s assets in Tanzania and Rwanda. One of ARM Cement’s administrators, George Weru told Reuters it is still considering what to do with those units, with its options including capital injection, a sale of shares or a sale of the assets.

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