National Cement Company Ltd

completed

IFC proposes to invest up to US$74 million in National Cement Company Limited (“NCCL” or the “Company”) to support: 1) the completion of the Company’s cement grinding plant near Nairobi; and 2) the construction and operation of a greenfield clinker manufacturing unit and limestone quarry near Merrueshi in southeastern Kenya. Together, these two components are referred to as the “Project”. NCCL is part of the Devki Group which owns five Kenya-based companies operating in the steel, cement and service sectors. NCCL cement trades under the brand “Simba Cement” and currently produces 0.35 million tons per annum (Mtpa) of blended Portland cement at its Lukenya plant, near Athi River, using clinker imported from abroad. NCCL is nearing completion of two additional cement grinding lines on the same site, which will increase Company’s installed capacity to 1.7 Mtpa. The development of captive limestone resources and clinker production at Merrueshi will significantly reduce NCCL’s dependence on imported clinker.Clinker is an essential ingredient for the manufacture of cement. It is made by heating a homogeneous mixture of raw materials, principally limestone and clay, in a rotary kiln at high temperature. NCCL’s proposed clinker unit is expected to produce up to 3,300 tons per day or 1.1 Mtpa from 2016 onwards to supply the Company’s Lukenya grinding plant. The Company has acquired 2,200 acres/890 ha of land between Merrueshi and Mbirikani with limestone and clay deposits and on which it will build and operate the clinker production facility. The area is estimated to have up to 60 million tons of limestone reserves, according to NCCL, or sufficient reserves for up to 45 years of production. The clinker production component of the Project is situated approximately 169 km south of Nairobi on the Emali-Oloitoktok spur of the Nairobi-Mombasa Highway. The area is sparsely inhabited grass and scrubland (averaging 26 persons per km2) used by the resident Maasai population for cattle grazing. The Company has purchased 600 acres/243 ha of land from seven private owners approximately 2 km south of the Merrueshi trading post – the only permanent human settlement within a 30 km radius of the proposed clinker production facility. All clinker processing works will be constructed within the perimeter of the land now owned by the Company. The Company has leased another 1,600 acres/648 ha encompassing a number of limestone deposits from the Mbirikani Group Ranch (MGR), one of the six large Maasai land holdings in southeastern Kenya. The entire MGR holding is reported to amount to 300,000 acres/1214 km2. As such, the land leased by the Company represents approximately 0.08% of the entire MGR holding.The preparation of clinker involves: the mining of limestone and other materials; transport of materials to a crushing facility via conveyor belt or truck; the crushing and storage of materials for processing; the processing of materials in a coal-fired rotary kiln; the delivery and storage of coal (imported through Mombasa port) to fire the rotary kiln; the storage of processed clinker for transport approximately 120 km to Lukenya; the storage of waste rock and other materials (including coal fly ash to be transported and blended with clinker at Lukenya) to be used in the reclamation of mined limestone deposits. The clinker plant will operate 24 hours a day but limestone mining will be restricted to daylight hours.Cement grinding at Lukenya involves the stockpiling of clinker and other additives (including fly ash, clays and gypsum), the grinding of clinker and blending with additives, and the bagging or bulk loading of cement for delivery to the market.