Jordanian cement focus
Written by Dr Peter Edwards, Global Cement Magazine
Thursday 17 November 2011
Jordan, officially the Hashemite Kingdom of Jordan, is a constitutional monarchy located on the Arabian Peninsular. It is sandwiched between Saudi Arabia to its south east, Israel to the west and Syria to the north. It also shares a short border with Iraq to the north east. It covers an area of 89,342km2, around half of which is covered by the Arabian Desert.1 In the west, however, the land is fertile and is used for farming, with some forested areas.
Jordan gained its full independence from the United Kingdom on 25 May 1946. In 1955 it became a member of the United Nations and in March 1957 it severed ties with the UK completely when King Hussein prematurely ended the 1948 Anglo-Jordanian Treaty. Popular protests in the capital, Amman, had called for the King to act against the treaty, with many saying that it was an insult to Jordanian independence.2
In the second half of the 20th century, Jordan was involved in two international conflicts, both with its immediate neighbour, Israel. In 1967, Jordan and Egypt went to war with Israel in the Six Day War.3 The confrontation was reignited in 1973 during the Yom Kippur War4 in which Jordan acted as part of the Arab League, of which it is a founder member.5 In 1994 Jordan and Israel signed a peace treaty after a series of protracted discussions that were overseen by US President Bill Clinton.6
Recently, Jordan has retained peaceful relationships with all of its immediate neighbours. This is not entirely unrelated to its dependence on other countries for the supply of oil and water, both of which it lacks. Indeed, Jordan is one of the most water-poor nations in the world.7
Unlike many of the surrounding nations, Jordan's oil production is very low, producing an average of only 88 barrels a day in 2010.8 This places it third from bottom in a list of countries that produced any oil at all in that year.
Current economic situation
The result of Jordan's lack of natural resources is that it has traditionally found it hard to earn foreign currency. This means that its GDP, estimated at US$34.5bn (US$4500/capita) in 2010, is one of the lowest in the Middle East.1 Its economy is substantially smaller than those of Qatar, the UAE, Israel, Bahrain, Saudi Arabia, Iran and Oman.1
Despite this, a broad policy of trade liberalisation, adopted by King Abdullah II at the start of his reign in 1999, helped the country to achieve significant economic development in the 2000s. The past decade has seen an explosion in Jordan's GDP/capita figures, albeit from a low base.9 Figure 1 shows how the rate has more than doubled since 2000 despite the global economic downturn.
By 2009 Jordan had more free-trade agreements than any other Middle Eastern country, including with the US, EU, Canada, Singapore and Malaysia, as well as other Arab League nations and Turkey.11 By the late 2000s Amman had been converted into a significant regional business hub at the centre of one of the most stable real-estate sectors in the region. Its relative stability in the region was highlighted in 2003, when it became the destination of choice for well-connected Iraqis fleeing the allied invasion across the border.
Jordan's IT and communications sector is one of its most competitive exports and its tourism market has improved in recent years.
However, the current economic crisis (2008-201?) has left its mark on Jordan. Although the country has not formally entered recession, its growth has slowed and it has been accruing massive foreign debts, totalling US$17bn as of the first half of 2011.12 Increasingly stringent taxes imposed by the government in an attempt to reduce this and increasing inflation led to resentment among the population by the end of 2010.
In 2011, following similar events in Egypt, Tunisia and Libya (and a raft of other Arab states), there were public demonstrations in Jordan, which have broadly been due to economic concerns. In response, King Abdullah II sacked his government on 1 February 2011 and again on 16 October 2011 following a demand from the country's legal professionals.
Cement Industry - Overview
Jordan's first cement company was Jordan Cement Factories, which was founded in Amman in 1951.14 It commissioned plants in Fuhais and Rashadiya and soon set up a terminal at the Red Sea port of Aqaba.
The recent history of the cement industry in Jordan starts in 1998, with the sale of 33% of the shares of Jordan Cement Factories (JCF) to Lafarge. The transaction was part of a far larger privatisation scheme started by the Jordanian government in 1996, which has seen a large scale privatisation of major state-owned companies. Since 1998 Lafarge has gradually increased its stake to a majority holding and the renamed Jordan Cement Company now operates as a subsidiary of Lafarge.15
|GCP (2010 est.) (1)||US$34.5bn|
|GDP/capita (2010 est.) (1)||US$4500|
|Integrated plants (13)
|Cement capacity (13)
|Average plant capacity (13)||1.66Mt/yr|
Figure 3: Summary statistics for Jordan and its cement industry.1, 13
Consumption growth in 2000s
Between 1998 to 2000, Jordan consumed approximately 2.25Mt/yr of cement.16 In 2001 this value was up to 2.4Mt/yr, with approximately 69% used for private housing construction, 20% for commercial building construction and 11% for industrial uses.16 In that year Jordanian cement was exported to an increasing number of countries including Bangladesh, Egypt, Eritrea, Palestine, Saudi Arabia, Sudan and Yemen. The bulk of this cement was produced by Jordan Cement Company, which was still the country's sole producer of grey cement at that time.
In 2002 cement consumption was up to around 2.5Mt/yr and 2003 saw consumption of 2.7Mt/yr.14 In 2004 consumption shot up by 28% to nearly 3.5Mt/yr on the back of home-construction initiatives, major redevelopment in central Amman and the development of a new city as part of the Zarqa New Garden City project. By 2008 Jordan's cement production was 3.66Mt/yr, which was supported mainly by utilisation of Jordan Cement Company's previously unused 4.5Mt/yr cement production capacity.17
Recent new market entrants
Between 2007 and 2011, a further three new market entrants commissioned either integrated or grinding plants at Al Mafraq, El Muaqqar and Karak.13 A further plant, currently being constructed for Modern Cement and Mining Co, will begin full production in 2012.18 All of these plants are in the more fertile and integrated western part of the country.
Combined, the new entrants mean that Jordan now has five integrated cement plants with a total combined capacity of 8.32Mt/yr (and a total cement capacity of 9.32Mt/yr).13 This will jump to 9.4Mt/yr (10.4Mt/yr total) in 2012, when Modern Cement comes online. Aside from the Lafarge-controlled plants at Fuhais and Rashadiya, the plants remain under local control.
Recent cement projects
Northern Cement: A new Christian Pfeiffer (CPB) clinker grinding plant was commissioned in the summer of 2009 at Northern Cement Company's cement grinding plant to the north of the capital Amman.19 The plant, which produces OPC, pozzolana cement and cement with high sulphate-resistance, receives material in four hoppers, from which it is extracted by means of weigh feeders. A two-compartment ball mill with a diameter of 4.8m and a grinding path length of 15m is supported on slide shoe bearings.
The mill is driven by a lateral drive designed for 5700kW. In the first compartment a CPB activating lining was installed. A lifting and classifying lining is used in the second compartment. The compartments are separated by a fourth-generation Monobloc®-design diaphragm with adjustable flow control.
A QDK-36 high efficiency separator and two cyclones for product collection were also installed. The separator is designed for an air flow of 220,000m3/hr. The mill circuit, the feed bins and the separator circuit are dedusted by individual jet pulse filters. Commissioning started at the end of August 2009, with the equipment running smoothly. After the successful start-up, CPB held a training course in February-March 2010 for the new crew that would use the plant.
Northern Cement is based in the Kingdom of Saudi Arabia, where it has one integrated cement plant.
Jordan Cement Company: The majority Lafarge-owned Fuhais cement plant had been experiencing unscheduled downtime due to kiln support bearings overheating. The existing lubricant had been causing the bearings to reach temperatures of 65°C, leading to not only unscheduled downtime but also increased bearing wear, maintenance bills and oil costs.20
To rectify this problem Lafarge was advised to switch to Mobil SHC 639 by Exxon Mobil. After changing four support bearings in the middle section to Mobil SHC 639, the company has experienced significant benefits. Over a 17-month period bearing overheating that had previously been experienced was totally prevented, resulting in a revenue increase of US$1.66m.
Ongoing project - Modern Cement
In 2007 it was announced that Modern Cement and Mining Company would set up a new greenfield cement plant in the vicinity of Siwaqa in central western Jordan. The semi-turnkey plant will have a design capacity of 3500t/day (~1.1Mt/yr) and has been constructed to designs prepared by Denmark's FLSmidth, with FLSmidth, Cement Project Services Management Consulting and Jordan-based Arab Towers Contracting Company (ATCCO) as the main contractors.18 FLSmidth has designed the new production line and supplied all of the equipment, including crushers, an ATOX raw mill, a pyroprocessing line (complete with SF Cross-Bar cooler) as well as a UMS cement grinding mill and a packing plant. In addition to providing technical equipment and assistance, FLSmidth also helped to secure financial backing for Modern Cement from the official Danish export credit agency, EKF.21
FLSmidth and the other contractor companies are operating alongside Switzerland's PEG Engineering, which has carried out a feasibility study, project management, tendering and tender evaluation, detailed engineering studies and a pre-shipment equipment inspection. Construction and erection, which PEG is managing, is ongoing and commissioning, which will also be supervised by PEG, will start shortly.18
Once fully commissioned in 2012, the plant will supply Jordan as well as the Syrian, Iraqi and Palestinian markets. Modern Cement will produce three types of cement; Portland cement, pozzolanic cement and sulphate-resistant cement. It is expected to significantly boost Jordan's construction sector.18
Cement industry - Forecast
Jordan is expected to experience an economic growth of 'not less than 3.5%' in 2012, according to its finance minister, Mohammad Abu Hammour,22 despite the regional uncertainty following protests and revolutions across the Middle East and North Africa during 2011. Despite being relatively unaffected, tourism in Jordan is expected to take a hit in 2012 due to the risks associated with the region, both real and perceived.23
High oil prices are expected to weigh heavily on the manufacturing sector, even though Jordan can source fuel from its neighbours at favourable rates.24 If realised, this will become a key problem for the cement industry in 2012. Another problem for the cement industry is that Jordan's private construction sector looks likely to suffer a continued battering from fuel and material cost increases along with increased taxes and inflation. The government's own infrastructure projects are thought to be insufficient to fill the expected drop in private construction. In addition, imports are expected to increase more rapidly than exports, exacerbating an existing trade deficit.
Despite these problems, Jordan is currently one of the more stable countries in the Middle East, with increasing political reform undertaken in the past 15 years.23 Despite volatile situations in its neighbour Iraq and the West Bank, it has so far weathered the economic storm and Arab Spring.
1. CIA World Factbook, 'Middle East - Jordan.' https://www.cia.gov/library/publications/the-world-factbook/geos/jo.html.
2. Palestine: Information with Provenance website, 'Anglo-Jordanian Treaty of 1948,' http://cosmos.ucc.ie/cs1064/jabowen/IPSC/php/event.php?eid=3698.
3. Six Day War website, http://www.sixdaywar.co.uk.
4. Bard, M. The Jewish Virtual Library website, 'The Yom Kippur War,' http://www.jewishvirtuallibrary.org/jsource/History/73_War.html.
5. The Jewish Virtual Library website, 'The Arab League,' http://www.jewishvirtuallibrary.org/jsource/Peace/arableg.html.
6. Israel Ministry of Foreign Affairs, 'Israel-Jordan Peace Treaty,' http://www.mfa.gov.il/MFA/Peace%20Process/Guide%20to%20the%20Peace%20Process/Israel-Jordan%20Peace%20Treaty.
7. The Hashemite Kingdom of Jordan website, 'Jordan's water shortage,' http://www.kinghussein.gov.jo/geo_env4.html.
8. CIA World Factbook, 'Country comparison - Oil production,' https://www.cia.gov/library/publications/the-world-factbook/rankorder/2173rank.html.
9. The World Bank website, 'GDP per capita (current US$),' http://data.worldbank.org/indicator/NY.GDP.PCAP.CD.
10. Bank of Jordan website, http://www.cbj.gov.jo.
11. Jordanian Ministry of Trade and Finance website, 'Jordan free trade agreements,' http://www.mit.gov.jo/Default.aspx?tabid=695.
12. ANSAmed website, 'Jordan's foreign debt reaches USD 17 billion,' http://ansamed.info/en/news/ME.XAM95224.html.
13. Edwards, P. (Ed.) 'Global Cement Directory 2010,' PRo Publications International Ltd, Epsom, UK, 2010.
14. Zawya website, 'Jordan Cement Factories (JOCM) Equity Report,' http://ae.zawya.com/researchreports/jnb/20070814_JNB_120306.pdf & Businessweek website, 'Jordan Cement Factories (JOCM:Amman),' http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=JOCM:JR.
15. Embassy of Jordan (in US) website, 'Economic reforms - Privatization,' http://www.jordanembassyus.org/new/aboutjordan/er5.shtml.
16. Yager, T.R. on US Geological Survey website, 'The mineral industries of Jordan, Lebanon and Syria,' 2001.
17. AUCBM website, 'Jordan - AUCBM member,' http://www.aucbm.org/english/memclck/target/jo.htm.
18. PEG Engineering, '3,500tpd Greenfield Cement Plant - Jordan,' http://www.pegeng.ch/pdfs/MCM%20Jordan.
19. Christian Pfeiffer website, 'Newsletter II - 2010,' http://www.christianpfeiffer.net/en/newsletter/newsletter-ii-2010/new-grinding-plant-in-jordan.html.
20. Exxon Mobil Lubricants and Petroleum Specialties Company, 'Mobil SHC lubricants help Lafarge in UK and Jordan,' within Global Cement Magazine, September 2011, PRo Publications International Ltd., Epsom, UK, September 2011.
21. FLSmidth A/S, 'Opening doors to international credit markets for customers,' http://www.flsmidth.com/~/media/Brochures/Brochures%20for%20FInancing/Opening_doors_to_international_credit_markets.ashx, 2011.
22. AME info website, 'Jordan 2012 GDP growth seen at 3.5%,' http://www.ameinfo.com/274336.html.
23. BizReport Shop, 'Jordan, Lebanon and Syria Business Forecast Report Q4 2011' http://www.bizreportshop.com/product/bmi/Jordan-Lebanon-and-Syria-Business-Forecast-Report-Q2-2011_180748.html.
24. Market Research website, 'Jordan Country Economic Forecast: 15 Jul 2011,' http://www.marketresearch.com/Oxford-Economics-v3791/Jordan-Country-Economic-Forecast-Jul-6454498.
Note: Websites accessed 3 - 8 November 2011.