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

The acquisition will boost its market share to about 15%.

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National Cement Company, which this week signed a deal to buy the Kenyan assets of ARM Cement from its administrator, plans to invest $36 million to modernise the production plants it is acquiring, its chairman said on Friday.

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.

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, ARM’s administrator PWC said on Tuesday.

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.

The eight-year old cement firm was especially keen to have an extra production plant on the Kenyan coast, where it does not have a presence, said National Cement chairman and founder Narendra Raval.

A total of $29 million of the new investment will go towards modernising the “rundown” production plant at the coast, Raval told Reuters.

“It is in pathetic condition,” he said. The balance will be invested in a second plant situated near Nairobi, he said.

The acquisition of ARM’s plants will initially increase National Cement’s 1 million tonne annual capacity by 400,000 tonnes, Raval said.

ARM Cement has an installed annual production capacity at its two plants in Kenya of 1 million tonnes.

The acquisition will boost its market share to about 15%.

National Cement is also interested in buying ARM’s assets in Tanzania and Rwanda, Raval said, without giving details.

George Weru, one of ARM Cement’s administrators, 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.

“It’s still a very flexible kind of process,” Weru said, adding that they aim to complete the administration by the August deadline.

ARM Cement slid into losses after investing heavily in its Tanzanian business in 2014, which did not generate a return.

In Tanzania, ARM has a 1.6 million tonnes in annual production capacity at two plants of equal size. Its Rwanda plant produces 100,000 tonnes a year.

Weru said the settlement of ARM’s liabilities will take longer: “We need to get the proceeds and also complete the adjudication of the claims”.

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Ethiopian Airlines rejects ‘pilot error’ claim by US politician

The 737 MAX 8 is currently grounded worldwide after the March crash of Ethiopian Airlines Flight 302

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CEO of Ethiopian Airlines Tewolde Gebremariam

A US politician who blamed pilot error for contributing to the deadly crash of a Boeing 737 Max flown by Ethiopian Airlines was “seriously misinformed”, the carrier’s boss has said.

Republican Sam Graves told a House of Representatives hearing last month that “facts” in investigations after crashes in both Ethiopia and Indonesia “reveal pilot error as a factor in these tragically fatal accidents”. 

He also said “pilots trained in the United States would have successfully handled the situation” in both incidents.

But in a BBC interview aired Monday, Ethiopian Airlines chief executive Tewolde GebreMariam said criticisms of his crew’s actions were “seriously misinformed”, and that Graves did not “have the facts in his hands”.

“People who’ve made those comments should ask themselves, ‘Why on earth have they grounded 380 airplanes over the world?’ The facts speak for themselves,” he said. 

The 737 MAX 8 is currently grounded worldwide after the March crash of Ethiopian Airlines Flight 302, which killed all 157 people onboard and drew scrutiny to the new Boeing model’s anti-stall system.

Pilots were already worried about the safety of the model following the October 2018 crash in Indonesia of a Lion Air 737 MAX 8 that killed 189 people.

Boeing is working to submit a modified version of the aircraft’s software and hopes to get the approval of the US Federal Aviation Administration (FAA) and its counterparts throughout the world.

But aviation regulators meeting last month were unable to determine when the popular jet might again be allowed to fly, causing costly headaches for airlines worldwide.

Revelations of close ties between Boeing and the FAA in testing the MAX led to a crisis of confidence among the public and airline pilots, as well as some of the other agencies that regulate civil aviation.

“We have work to do to win and regain the trust of the public,” Boeing CEO Dennis Muilenburg conceded at the Paris Air Show on Sunday.

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Africa News & Updates

Sand Miners threaten Morocco’s coastline

The looters come in the middle of the night, mainly in the low season

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an Abandonned sand miners village

Beneath an apartment block that looms over Monica beach in the western coastal city of Mohammedia, a sole sand dune has escaped the clutches of Morocco’s insatiable construction contractors. Here, like elsewhere across the North African tourist magnet, sand has been stolen to help feed an industry that is growing at full tilt.

A report last month by the UN Environment Programme (UNEP) on the global over-exploitation of this resource accuses “sand mafias” of destroying Morocco’s beaches and over-urbanising its coastline. “The dunes have disappeared along the entire city’s coastline,” lamented environmental activist Jawad, referring to Mohammedia, on the Atlantic between Rabat and Casablanca.

The 33-year-old environmental activist leads Anpel, a local NGO dedicated to coastal protection. “At this rate, we’ll soon only have rocks” left, chipped in Adnane, a member of the same group. More than half the sand consumed each year by Morocco’s construction industry – some 10 million cubic metres – is extracted illegally, according to UNEP.

“The looters come in the middle of the night, mainly in the low season,” said a local resident in front of his grand home on the Monica seafront. “But they do it less often now because the area is full of people. In any case, there is nothing more to take,” added the affable resident.

Sand accounts for four fifths of the makeup of concrete and – after water – is the world’s second most consumed resource. Beaches and rivers are heavily exploited across the planet, legally and illegally, according to UNEP.

Official complicity

In Morocco, “sand is often removed from beaches to build hotels, roads and other tourism-related infrastructure”, according to UNEP. Beaches are therefore shrinking, resulting in coastal erosion.

“Continued construction is likely to lead to destruction of the main natural attraction for visitors – beaches themselves,” the report warned. Theft of sand from beaches or coastal dunes in Morocco is punishable by five years in prison. Siphoned away by donkey, delivery bike and large trucks, the beaches are being stripped from north to south, along a coastline that runs from the Mediterranean Sea to the Atlantic.

“On some beaches, the sand has nearly disappeared” in parts of the north, said an ecological activist in Tangiers.  “There has been enormous pressure on the beaches of Tangiers because of real estate projects,” he continued.

To the south, the UNEP report noted, “sand smugglers have transformed a large beach into a rocky landscape” between Safi and Essaouira. Activist Jawad points to “small scale looting, like here in Mohammedia”. But, “then there is the intensive and structured trafficking by organised networks, operating with the complicity of some officials”.

While the sand mafias operate as smugglers, “key personalities – lawmakers or retired soldiers – hand out permits allowing them to over-exploit deposits, without respect for quotas”, he added.

Organised mafia

A licensed sand dredger spoke of “a very organised mafia that pays no taxes” selling sand that is “neither washed nor desalinated”, and falls short of basic building regulations. These mafia outfits have “protection at all levels… they pay nothing at all because they do everything in cash”, this operator added, on condition of anonymity.

“A lot of money is laundered through this trade”. A simple smartphone helps visualise the extent of the disaster. Via a Google Earth map, activist Adnane showed a razed coastal forest, where dunes have given way to a lunar landscape, some 200 kilometres south of Casablanca.  

Eyes fixed on the screen, he carefully scrutinised each parcel of land. “Here, near Safi, they have taken the sand over (a stretch of) seven kilometres. It was an area exploited by a retired general, but there is nothing left to take,” he alleged. Adnane pointed to another area – exploited, he said, by a politician who had a permit for “an area of two hectares”.

But instead, he “took kilometres” of sand. Environmental protection was earmarked as a priority by Morocco, in a grandiose statement after the country hosted the 2016 COP22 international climate conference. Asked about measures to fight uncontrolled sand extraction, secretary of state for energy Nezha El Ouafi pointed to “a national coastal protection plan (that) is in the process of being validated”.

The plan promises “evaluation mechanisms, with protection programmes and (a) high status”, she said. Meanwhile, environmental activists are pleading against the “head in the sand approach” over the scale of coastal devastation.

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DR Congo’s government move to reform the economy as Cobalt prices dip

DR Congo is the world’s top producer of cobalt, a key component for rechargeable batteries needed for smartphones and electric cars

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The Democratic Republic of Congo’s new leadership is under mounting pressure to diversify the country’s economy from its dependence on raw materials following the plunge in the price of cobalt. Economic experts currently visiting the country have a sobering figure on which to base their work: over the past year, the price of cobalt on the London Metal Exchange has tumbled from $80,000 to $28,000.

DR Congo is the world’s top producer of cobalt, a key component for rechargeable batteries needed for smartphones and electric cars. But economic growth in Sub-Saharan Africa’s largest country is on the same roller coaster as the global cobalt price.

“GDP growth increased to 5.8 per cent from 3.7 per cent in 2017, driven by a sharp increase in cobalt prices,” the International Monetary Fund said earlier this month in a report of DR Congo’s economy. “GDP growth is projected to decelerate to 4.3 per cent in 2019 based on the assumption of a slowdown in mining activity in the context of lower cobalt prices,” it added.

In another sign of DR Congo’s heavy reliance on mining and metals exports, that deceleration comes amid growth more than doubling in the rest of the economy thanks to public investment and post-election optimism. Either way, DR Congo’s GDP is small when compared to the size of the country and its population.

At less than $40 billion for 81 million inhabitants in 2017, according to World Bank figures, that translates into less than $2 per day per person on average. The IMF mission “focused on policies that would lead to diversifying the economy and tackling high levels of poverty and unemployment in the context of a rapidly expanding population,” according to the report.

Diversification and transformation of the nation’s economy is also the theme of the sixth French Kinshasa week organised by the Franco-Congolese Chamber of Commerce and Industry. With 80 per cent of DR Congo’s export revenues generated by the mining sector, this “creates a vulnerability due to the volatility in the prices of its main raw material exports” noted the organisers.

Liberalisation amidst cobalt price dip

They said possibilities in numerous other sectors needed to be explored for growth opportunities: agriculture and food, textiles, tourism, communications, transportation services, forestry, energy, pharmaceuticals and recycling.

France is keen to promote an initiative recently unveiled by President Emmanuel Macron to provide 2.5 billion euros in financing to 100,000 African startups as well as small and medium-sized companies by 2022. But the best intentions in business development must confront the problems of doing business in a country still trying to fix its patchy tax revenue collection amidst corruption.

One economic analyst, who spoke on condition of anonymity said: “fifty per cent of the containers that enter the Matadi river port don’t pay customs duties”. The IMF urged the new president Felix Tshisekedi “to expedite the adoption of the proposed anti-corruption law” and the creation of an independent anti-corruption commission.

The IMF also expressed concern about low tax collection. Reforms in some areas are moving ahead, albeit slowly. The insurance sector has been liberalised with three operators licensed to take over from the former state monopoly Sonas. And mining multinationals will be meeting in Lubumbashi to discuss the plunge in cobalt prices and the impact last year’s reform of the mining code has had.

Mining expert Chantelle Kotze said the reform increased taxes and royalties paid on strategic minerals such as cobalt and coltan, an ore that is another crucial element for the production of electric car batteries.

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