Chinese firm clinches deal to develop steel plant in Kenya

Kenya: Kenya has signed an agreement with a Chinese firm, Sinosteel, to develop a steel plant in the country.

Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed said Kenya had a demand of about 1.8 million metric tonnes of steel annually as at the end of 2013. This demand, he added, is forecast to grow to 2.5 million metric tonnes by 2020 and be doubled by 2030.

"The on-going real estate boom, Standard Gauge Railway project construction, Lapsset corridor and the 10,000km new road network project provides an excellent off-take for steel and steel products," he said.

The regional demand amplifies this further with expected investment in regional infrastructure projects running into billions of dollars in the next three to five years, he said in a statement released after the signing ceremony in Beijing China last week.

The Standard Gauge Railway will connect Mombasa to Malaba (with a branch line to Kisumu) onward to Kampala, Kigali and Juba.

The railway line will have a uniform design specification which will permit seamless operation across the borders.

desired outcome

Mohamed expressed confidence that Sinosteel's experience in the steel sector will yield the desired outcome for the projects. He said investment in a steel plant in Kenya will significantly improve trade balance and foreign reserve position given the significant consumption of resources in import of steel products.

"Exploration of iron ore and coal deposits (critical raw materials for steel production) are already at an advanced stage by experts through the relevant bodies in Government, and Sinosteel's expertise in the sector is expected to fast-track its implementation," he stated.

Sinosteel's Managing Director Wang Jian said increasing regional demand for steel products in light of the growing infrastructure and real estate development is making it appropriate timing for Kenya in prioritising the steel mill project.