New Devki steel factory in Kwale begins operations
The modern steel mill owned by Devki Group in Samburu, Kwale County.
The Devki Group will open a modern steel mill in Samburu, Kwale County.
The Sh5 billion plant will generate its own electricity to run its operations, thus cutting production costs.
It will have the capacity to produce half a million tonnes of steel annually and will be connected to the metre-gauge railway, lowering transport costs to other parts of Kenya and the region.
Group chairman Narendra Raval said the mill will be fully operational next February.
“We will manufacture steel from iron ore. The plant will also cut its cost of production by producing 55 megawatts of clean energy by tapping heat released from kilns,” Mr Raval explained.
The factory is expected to generate 1,500 direct and 9,000 indirect jobs.
Demand for steel and iron products has increased in the East African region, as evidenced by data on such commodities handled through the port of Mombasa.
Imports of iron and steel have risen steadily in the past five years, with a compounded annual growth rate of 10.9 percent from 1.63 million metric tonnes in 2017 to 2.47 million in 2021, according to data from Kenya Ports Authority (KPA).
In 2021, Kenya imported iron and steel worth Sh341.6 billion from China alone, attributed to an increasing number of massive infrastructure developments undertaken by Chinese contractors.
Other East African states import iron and steel from South Africa, Japan and India through the Mombasa port.
KPA data shows that the port handles different types of steel, ranging from steel billets, coils, wire rods, steel plates, sheets and pig iron.
In Kenya, some of the projects that have led to an increase in demand for steel are the Lamu Port-South Sudan-Ethiopia-Transport, Lake
Turkana Wind Power, the expansion of Nairobi’s Outer Ring Road, the Standard Gauge Railway (SGR) and the metre-gauge railway.
Steel companies have also benefited from the wider East African Community (EAC) and Comesa markets.
Steel made by Kenyan companies is sold in Rwanda, Tanzania, Uganda and the Democratic Republic of Congo.
Top Kenyan steel dealers include Athi River Steel Ltd, Brollo Kenya Ltd, Devki Steel Mills Ltd, Accurate Steel Mills Ltd, Elgo Steel Fabricators Ltd, Iron Africa Ltd and Simba Products Ltd.
Though steel is a major import item at the Mombasa port, it is heavily taxed to spur development of iron industries, said Dr Kevit Desai, principal secretary in the Ministry of EAC and Regional Development.
“We hope steel dealers will take advantage [of the legal regime to meet] the demand for the commodity as the law now allows any imports to be charged higher taxes,” said Mr Desai this month when he met port stakeholders.
This is happening as the prices of such commodities are reported to have increased significantly in the past two years.
The integral part of beams used to reinforce frames for tall buildings has increased by 25 per cent from Sh1,200 to Sh1,500 a kilo.
Rising demand for steel products has also led to huge investments in the sector as firms position themselves to profit from the burgeoning local and regional markets, which include investments by the Kenyan government and the private sector.
The local steel industry relies heavily on imported raw materials – iron ore and coal – due to a lack of investment locally.
Local deposits of such minerals are yet to attract commercial interest, the Trade ministry says.
Iron ore also exists in the Taita, Meru, Kilifi and Samia regions of Kenya. The government has encouraged industrialists to tap into this readily available raw material.
