Kenya's ARM to Build Cement Plant in South Africa in Continental Expansion

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Athi River Mining (NBO:ARM) (ARM) (Nairobi, Kenya), a cement and minerals company, is one of a growing number of Africa-based companies that are looking to expand operations on the continent as growth potential in infrastructure development demonstrates a strong upward trajectory.

The company has announced plans to set up a cement production plant in South Africa in its latest move on the continent. Chief Executive Pradeep Paunrana said that this project is part of the company's drive to increase revenues by up to 20%. The company has acquired limestone fields in South Africa to feed the plant, which is scheduled to begin operations in 2013. ARM is setting up two cement plants in Tanzania. Currently, ARM produces 650,000 tons annually. The new plants should boost this number to approximately 1.5 million tons. The bulk of the cement will be supplied to Tanzania.

The Tanzanian projects will be completed and operational in 2012, after which the company will begin work on the South African project.

Paunrana said that the company was very bullish about the cement sector. ARM's growth strategy is to boost cement products from the current 64% of its revenue to 85% by the end of 2013.

Cement sales were $25.5 million (64%) in the first six months of 2011 out of total revenue of $40 million. In the same period, silica accounted for 12%, minerals 9%, fertilizer 8%, and other products 2% of revenue in the six-month period.

ARM has invested heavily in production capacity with a view to expanding beyond Africa's Great Lakes region (Kenya, Uganda, and Tanzania) and sees larger budget allocations to infrastructure projects favoring the prospects for cement.

In its various divisions, the company produces cement, sodium silicate, lime, industrial minerals, fertilizer and special building products.

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