How Narendra Raval quietly secured exclusive iron ore deal in Uganda
Devki Group CEO Narendra Raval at his steel smelting plant in Samburu, Kwale County on September 11, 2022.
What you need to know:
- Raval quietly secured an exclusive deal in Uganda to export iron ore worth Sh15 billion every year.
- President Museveni had since February 2015 imposed a moratorium or freeze on the export of unprocessed iron ore and other minerals.
- Raval is now eyeing the virgin production of steel, the first in Kenya and one of the few in the continent where the bulk of firms use scrap metal to produce the commodity.
Playing politics is becoming a second successful game for steel tycoon and fortune reader Narendra Raval.
Days after declaring President William Ruto should serve for 25 years, it has emerged Mr Raval quietly secured an exclusive deal in Uganda to export iron ore worth KSh15 billion (about UGX430 Billion) every year after the Kenyan leader broke bread with his Ugandan counterpart Yoweri Museveni.
The deal will see Mr Raval, popularly known as Guru due to his priestly background, tighten his grip on the region's cement and steel industries.
Before closing the Uganda deal, Kampala changed the law to accommodate Mr Raval and end a five-year freeze on exports of raw and semi-processed iron ore.
It is yet another win for Mr Raval, who has boasted of having the ears of four of Kenya’s five heads of State and the powerful Indian Prime Minister Narendra Modi.
Uganda’s Minister of Energy and Mineral Development Ruth Nankabirwa Ssentamu has published regulations that have seen Narendra’s Devki Group of Companies given the exclusive permit for the export of raw and semi-processed iron ore from Uganda in a deal brokered by President Ruto.
The Mining and Minerals (Export of Raw and Semi-Processed Iron ore) 2023, which has recently been made public, will allow Mr Raval to export from Uganda up to one million tonnes of raw or semi-processed iron ore in a year to feed its Kenya operations.
Regulations giving Narendra Raval exclusive rights to export iron ore from Uganda.
Iron ore is a key input for the manufacture of cement and steel, which are critical for the building and construction industry.
“These regulations apply only to Devki Group of Companies (Devki Steel Mills Limited),” reads part of the regulations that demanded State ownership in the firm given the exclusive deal.
The Ugandan unit of Devki Steel Mills, where Kampala has an undisclosed stake, will pay a royalty of five percent of the gross value, notes the regulations.
Mr Raval did not respond to requests for comment.
Moratorium lifted
With a tonne of iron ore going at an average of $115, it means Mr Raval will ship out of Uganda iron ore valued at KSh15 billion (UGX430 Billion) annually.
President Museveni had since February 2015 imposed a moratorium or freeze on the export of unprocessed iron ore and other minerals to protect the country’s local industries.
But the moratorium was lifted in the wake of a meeting of Mr Raval with Presidents Museveni and Dr Ruto.
Mr Raval says he grew up dirt poor in India and arrived in Kenya over four decades ago to serve as a priest before planting the seeds of his steel empire through a hardware store in Nairobi’s Gikomba Market.
Since then, Mr Raval has put together a regional business empire that straddles the steel, cement, infrastructure and aviation sectors.
President William Ruto with Devki Group Chairman Narendra Raval (left) during the official opening of Devki Steel Mills Factory in Samburu, Kwale County on November 18, 2022.
But it is in the cement and steel industries that he has maintained a stranglehold on the back of multibillion-shilling buyouts.
His stable includes Devki Steel Mills, roofing sheets maker Maisha Mabati Mills, National Cement, which makes ‘Simba Cement’, and Northwood Agencies Ltd, a helicopter charter company.
The group has been on a multibillion-shilling expansion in recent years, including the construction of a KSh11.9 billion new roofing sheet manufacturing plant in Lukenya, outside Nairobi.
In 2018, his National Cement with its Simba Cement brand launched a KSh30.3 billion cement clinker plant in Merrueshi/Mbirikani in Kajiado County.
The following year, he acquired the Kenyan assets of bankrupt cement manufacturer Athi River Mining (ARM) for KSh5 billion and constructed two new cement factories in Njoro, Nakuru and Mariakani in Mombasa.
He recently bought Rwanda’s oldest cement manufacturer, Cimerwa Plc.
The investments are the product of Devki’s internal resources and bank loans.
In 1992, he took out a loan and started a roofing and fencing materials business while developing a small steel rolling mill near Athi River on the outskirts of Nairobi. That business morphed into the behemoth that is Devki Group.
Devki recently sold back a majority stake in a geothermal power plant, Sosian Menengai Geothermal Power, to Gideon Moi, son of Kenya’s second President and former Baringo Senator for an undisclosed sum.
Mr Raval had bought the majority stake in the geothermal venture through an entity called Sosian Energy in 2017.
His entry into the power-generating business underlined the lucrative nature of Kenya’s energy sector, which continues to attract deep-pocketed investors.
Mr Raval is now eyeing the virgin production of steel, the first in Kenya and one of the few in the continent where the bulk of firms use scrap metal to produce the commodity.
The iron ore from Uganda is expected to feed Mr Raval’s new factory in Kwale County, billed to be the second such plant in Africa.
The KSh45 billion plant was unveiled by President Ruto in late 2022 in his first major public assignment after clinching the presidency, underlining Mr Raval’s proximity to the head of State, who April 10 graced the opening of the tycoon’s clinker plant in West Pokot.
"I was with him (Raval) in Uganda during my recent travel to the country, and I talked to President Museveni for him to give us raw materials, and he accepted to give us five million tonnes of iron ore to be brought yearly to the Kwale factory," said Dr Ruto on November 18 when he presided the launch of Devki Steel Plant in Kwale.
In an earlier interview, Mr Raval said the Kwale plant would utilise locally sourced iron ore.
Export ban
Kenya in 2022 introduced an export levy of $175 per tonne of the raw and semi-processed iron ores in what was aimed at protecting the local industry.
This has made it almost impossible for companies to export iron ore mined from Kenya, a big blow to companies that had started mining and exporting the commodity.
The tax has technically banned the export of iron ore from Kenya given the global price of $115 a tonne.
In the deal between Devki and the Ugandan government, the iron ore imported to Kenya from the neighbouring country cannot be re-exported.
Virgin production of steel, however, requires a lot of power, which is why both cement and steel firms import a lot of coal.
To deal with the high cost of electricity, however, Mr Raval said in an earlier interview that the Kwale plant had begun to produce its own power.
Mr Raval through his Devki Steel Mills, which operates in Kenya, Uganda and Rwanda, is the dominant player in the steel industry.
Devki, which was among the nine companies that were penalised by the competition watchdog for engaging in cartel-like behaviour, says on its website that it enjoys over 50 percent of the steel market.
Despite the introduction of the export levy on iron ore, Kenya has continued to import iron ore from countries such as South Africa, India, the United Kingdom and China, mostly the less dense Hermetite that is used mostly by local cement manufacturers.
In 2023, Kenya’s imports of iron ore increased, reflecting increased demand for the commodity, which is also key for cement production.
According to the Kenya Ports Authority (KPA) database, iron ore imports were approximately 418,500 metric tonnes (excluding Uganda’s) between March 13, 2023, and March 3, 2024, valued at approximately KSh6.4 billion.
The KPA database further shows that there has been a significant increase in the import of steel coils between December 2023 and March 2024.
Last Monday, Mr Raval unveiled a KSh150 billion clinker plant in West Pokot as part of his plans to be the major supplier of local cement manufacturers with this raw material.
The plant will most likely rely on iron ore from Uganda, as it is the less dense type that is used by cement manufacturers to produce clinker.
