NAIROBI, Kenya, May 30 – Tata Chemicals Magadi Limited (TCML) has announced plans to stop production at its Premium Ash Manufacturing (PAM) plant located in Magadi which was established in 2006 owing to unsustainable energy costs.
Speaking to journalists in Nairobi, TCML Managing Director Jack Mbui said this is in bid to stem losses made by the firm and enable them focus on other profit operating areas.
“The proposal to mothball TCML’s PAM production plant was a painful one, precipitated by the high energy costs that have overwhelmed the viability of this plant. Despite exploring various other options over the last eight years, it is regrettable that TCML has been unable to mitigate sufficiently the serious impact of the energy costs on its business.
Mbui says since its inception the company has lost about Sh15 billion owing to the plant.
“PAM accounts for about 70 percent of the overall TCML’s energy consumption which amounts to Sh300 million a week. The steep rise in global energy prices primarily factored into the decision to secure the future of TCML’s remaining soda ash and salt business and associated jobs,” he said.
He says the decision will affect about 200 employees working at the plant with the company offering a voluntary retirement programme for its employees.
“TCML will in this process fulfil its legal and contractual obligations to the impacted employees and intends to commence consultations with the affected employees and the union towards ensuring that the employees who may be potentially impacted are prepared for the eventuality of this process and that they receive due compensation for valuable services rendered with the organisation.”
He says the mothball will happen by mid July, and has plans to maintain the plant for future use as the company seeks other energy alternatives.
He also says the economy will lose about Sh4.3 billion a year owing to the plant closure.
The Sh9 billion PAM plant brings in 40 percent of revenue to the company with the company now focusing on its Standard Ash Manufacturing (SAM) plant, which contributes 60 percent of revenue of the company, as well as a salt plant.
Formerly known as Magadi Soda Company, the company was acquired by Tata Chemicals in 2006.
The company is Kenya’s sole manufacturer and exporter of soda ash a well as one of the leading manufacturers and suppliers of cattle and Industrial salt.
TCML operates from three sites in Magadi, Kajiado and Mombasa.
Energy costs have been a big expense to the industrial sectors with government planning to generate 5000 Megawatts (MW) power output by 2017 expected to reduce energy costs.