The project, which will take three years to complete, paves the way for Lucky Cement to enter a country whose cement industry is dominated by Germany's HeidelbergCement and The Forrest Group.
Other new cement plants with smaller capacities are under way as many African nations experience an increase in public expenditure in infrastructure development, discovery of oil and coal, and the increasing role played by China in the exploitation of the region's resources.
“The demand side is looking positive,” says a cement market analysis for 2011 by Imara, an investment banking and asset management group. “Improved political stability, fiscal management and lower sovereign debt levels have availed funds for capital investment, and [despite] the post-2008 commodity price shock, economic fundamentals, for the larger part, are improving.”
In East Africa, Kenya's construction industry attracted 60% of the total investments in the first quarter of this year, according to the Kenya National Bureau of Statistics. Public spending in road construction there rose by 33%, to $935 million, over the past year.
The region's construction industry is expected to grow to $9.4 billion by 2016, up from $6 billion today, according to business research firm Frost & Sullivan.
South Africa, whose construction sector slipped to 1.5% last year from 7.4% in 2009, expects a rebound of the sector's performance. A $116-billion infrastructure plan unveiled this year by President Jacob Zuma targets expansion of roads, energy and freight transport.
West Africa, with production capacity of 21 million tons per year against a demand of 33 million tons per year, holds major potential for cement companies willing to ramp up their capacities. Nigeria, one of Africa's major oil producers and the largest cement market in the region, produces 16 million tons per year, with an average annual cement demand growth of 10%.