Troubled Savannah Cement blames clinker shortage for woes

Savannah Cement managers have rejected claims that the company is facing financial problems, saying a shortage of clinker had slowed down production in the third quarter of 2021.

The company sent all employees on a 10-day break on December 23 to pave the way for "plant maintenance".

The memo from Managing Director Samson Shivina said operations were to resume on January 3. “For those whose services shall be required, your supervisors will liaise with you to ensure there is a seamless operation," the memo said.

In an exclusive interview with Nation.Africa yesterday, Mr Shivina said the company is financially stable.

He said the break extended to employees in December was meant to allow for routine annual maintenance of the plant and that cement production had resumed.

Mr Shivina took over from former CEO Ronald Ndegwa in July 2020. He said the company relies on imported clinker for cement production but supply was disrupted in 2021 due to a shortage of vessels as the global economy suffered from a Covid-19-related supply chain backlog.

"The challenge led to a slight disruption in clinker supply in quarter three of 2021. However, the situation has now normalised, and the company has secured enough stocks for the first quarter of 2022. It is already sourcing for quarter two of 2022,” he said.

Employee lay-offs

As part of its expansion plans, Savannah plans to invest in a clinker plant to end reliance on imports. The project is slated to start in the first quarter 2022 and will take two and a half years.

"To ensure our customers a constant cement supply we have invested heavily on a multimillion-shilling clinker plant. We are eyeing double-digit production growth," Mr Shivina added.

He sought to allay fears about more employee lay-offs, saying the company's workforce grew in 2021 in line with the business growth and is expected to grow further in 2022.

In 2020, the company invested in a vertical roller mill, the latest technology in cement manufacturing globally.

"This state-of-the-art technology allows the company the advantage of savings on both power consumption and better optimisation of the cement recipes, allowing for a variety of segregated cement brands," Mr Shivina said.

Savannah said a court had ruled on a shareholder dispute on September 10, 2021. Seruji Ltd, with a 60 percent stake in the cement maker, brought its directors on board.

"The board of directors is, therefore, fully constituted and carrying out its mandate. No more wrangles," he said.

The Sh8.5 billion Savannah began operations in 2012 as the sixth cement processor based in Athi River, Machakos County, with annual production capacity of 1.5 million tonnes. It claims a 15 percent share of the local market.