Displaying items by tag: Saudi Arabia
Saudi Arabia: Saudi Arabia has lifted a ban on exporting cement, the chief executive of Yanbu Cement has said to local press. Ahmed bin Abduh Zugail, who is also the deputy head of the Saudi national committee of cement companies, added that cement companies have welcomed the relaxation of the ban. However, full details of the new regulations are yet to be released by the Ministry of Commerce.
Local press reported in late November 2015 that government bodies were considering cutting the ban on cement exports. The ban was originally introduced in Saudi Arabia to keep prices down and production flowing for large infrastructure projects built using oil revenue.
Saudi Arabia: Yanbu Cement Company has reported an 11.1% year-on-year fall in its net profit to US$49m in the first quarter of 2016 from US$55m in the same period in 2015. The cement producer has blamed the profit loss on a fall in sales and a rise in fuel prices.
South Korea/Saudi Arabia/Morocco: LafargeHolcim has confirmed plans to divest its assets in South Korea and Saudi Arabia and to enlarge its presence its Morocco. The announcement was made as part of the release of its annual results 2015. The sales form part of the group’s Euro3.2bn divestment program
In Morocco, the group signed an agreement with SNI, its partner in the country, at the same time as the Lafarge-Holcim merger to enlarge its joint-venture by merging Lafarge Ciments Maroc and Holcim Maroc to create LafargeHolcim Maroc. LafargeHolcim and SNI would own a 64.7% stake in the new company once the merger is complete. The group expects to gain a synergy savings of Euro41m over two years from the merger.
LafargeHolcim and SNI also agreed to create a common platform in French-speaking Sub-Saharan Africa. The merger is expected to close in the third quarter of 2016 subject to regulatory authorities’ approval, customary closing conditions and the approval of the shareholders of Lafarge Ciments Maroc and Holcim Maroc.
In South Korea, the group has confirmed that it has signed an agreement with a consortium of private equity funds - Glenwood and Baring Asia - for the divestment of Lafarge Halla Cement in South Korea for Euro427m. The sale is expected to complete in the second quarter of 2016. Lafarge Halla Cement runs one 8.3Mt/yr integrated cement plant, a distribution network across the country and has around 500 employees.
In Saudi Arabia the group has signed an agreement for the sale of the Group’s 25% stake in Al Safwa Cement Company to El-Khayyat Group for total proceeds of Euro120m. This transaction is expected to close in the course of the third quarter of 2016.
Saudi Arabia: Eastern Province Cement has started the trial operation of its new cement mill, which is expected to continue for three months until mid-June 2016. Commercial operation of the new mill will begin in the second quarter of 2016, the company said in a bourse statement. It added that the relevant financial impact is difficult to determine at this stage as it depends on market supply and demand.
The Saudi Cement Company has been complaining in recent weeks about market conditions in Saudi Arabia. Following a meeting of its board of directors in early February 2016, it decided to temporally a 3500t/day production line and halt further upgrades. At the meeting it blamed the local market and the country’s export ban.
In January 2016, the cement producer reported that its net profit had fallen by 35% year-on-year to US$49m in the fourth quarter of 2015 from US$76m in the same period in 2014. The trend for the year as a whole was less pronounced but still downward. Its net profit fell by 14% to US$257m.
Saudi Cement’s experience may be indicative if one looks at wider figures for the industry. Cement output is high, inventory is piling up and government infrastructure spending is falling. If the country’s industry isn’t feeling the pain right now surely it must be wondering what might happen next.
Figure 1 – Saudi Arabian cement production and inventory, 2011 – 2015
As Figure 1 shows data from Yamama Cement for the industry as a whole. Cement output has been steadily growing over the last five years since 2011 to the current declared level of 61.5Mt. However, in the background, cement inventory has also been growing. The particular jump appears to be between 2012 and 2014 when the stock grew from 6.4Mt to 21.5Mt. In mid-2013 King Abdullah bin Abdulaziz Al Saud issued an urgent command ordering 10Mt of cement to cope with a local shortage at that time. Subsequently cement producers were asked to build a 'strategic' reserve of two months inventory at each plant. It looks like they took that message to heart.
Alongside this the Saudi Ministry of Finance slashed its Infrastructure and Transportation budget down to more than half to US$6.37bn in 2016 from US$16.8bn in 2015. Local media reported that value of new contracts won by the Saudi contractor Abdullah A M Al Khodari & Sons in 2015 fell by nearly 50% in the lead-up to the 2016 budget announcement in December 2015. Previously, Al Khodari had typically earned about 95% of its revenue from government-related contracts.
It should be noted that Saudi Cement is based in the east of the country and some regional variation is possible here. The country’s other major cement producers - Yamama Cement, Yanbu Cement and Southern Province Cement have all reported that their net profits rose in 2015. Yet the inventory keeps piling up.
The other reason than Saudi Cement pointed out for its woes was the country’s cement export ban. The government introduced an export ban on cement exports in February 2012. Since then local cement producers have asked on several occasions to have the ban repealed. Most recently the chairman of Saudi Arabia's Cement Association asked in March 2015 to lift the ban so that his producers could supply Egypt with 6Mt of cement. At the time, as now, the chairman would have been well aware of all the cement lying around.
Local press reported in late November 2015 that government bodies were considering cutting the ban on cement exports. The ban was originally introduced in Saudi Arabia to keep prices down and production flowing for large infrastructure projects built using oil revenue. These same projects were designed to wean the economy off its reliance oil revenue. With investment falling as the price of oil stays low the cement industry is in a tight spot. The government and cement producers will need to think very carefully what the consequences are of opening the gates for Saudi cement exports.
Saudi Arabia: Halla Waleed Al-Juffali has been appointed as a member of the Board of Directors (independent director) of the Saudi Cement Company. Her appointment is subject to shareholder approval. She replaces Waleed Ahmed Al-Juffali, who resigned with effect from 4 February 2016 due to health reasons.
Halla holds a Bachelor’s degree in Business administration degree, majoring in International Business, from the International University of America in London. She has been a director with Ebrahim Al-Juffali and Brothers and Walid Juaffali & Partners. Halla has previously worked as a business analyst for British, European and Chinese investment markets.
Saudi Arabia: The Saudi Cement Company has decided to temporarily stop producing clinker on one of its production lines and postpone replacing three cement mills due to poor market conditions and a cement export ban. The company will stop its 3500t/day clinker kiln 6 until market conditions improve. The stoppage is not expected to affect the cement producer's financial results as its inventory currently stands at 4Mt. A plan to replace three 360t/hr cement mills with two 440t/hr mills has also been delayed due to market conditions. The upgrade was expected to add 0.6Mt/yr cement grinding capacity to the plant.
Saudi Arabia: Qassim Cement Co's quarterly net profit during the fourth quarter of 2015 amounted to US$37.4m, up by 4.69% from US$35.7m for the same quarter of 2014.
The main reasons for the net profit increase were higher sales volume and value, lower general and administrative expenses and higher other income. Gross profit during the fourth quarter of 2015 was US$42.3m, some 0.83% higher than the US$41.8m in the same period of 2014. Its operating profit increased by 7.96% to US$40.6m during the fourth quarter of 2015 compared to US$37.6m in the same quarter of 2014.
The company's net profit in 2015 grew by 4.05% year-on-year to US$156m and its gross profit grew by 2.33% to US$168m. Its operating profit grew by 4.49% to US$160m during 2015.
Saudi Arabia: Estanda has successfully completed the commissioning of a cement ball mill for a cement manufacturing company in Saudi Arabia.
The project was carried out on cement mill line 2, which operates in parallel with the cement mill line 1, which had already been renovated and updated by Estanda in 2013.
The renovation of the cement mill affected all interior steel components of the mill involved in the grinding process; inlet headwall liners, lifting liners of the 1st ball mill chamber, the intermediate diaphragm, the 2nd chamber classifying liners and the outlet diaphragm. The designs and materials were according to Estanda technical specifications. An improvement in productivity of more than 15%, wearing reduction on the steel components prompting less maintenance and greater profitability were achieved.
Saudi Arabia: Germany's thyssenkrupp has won a contract from Yamama Saudi Cement Company, one of Saudi Arabia's biggest cement producers, to build two turnkey cement clinker production lines. The two lines with an overall cement capacity of 20,000t/day will be built at a new site around 80km east of the capital Riyadh. The value of the contract is in the high three-digit million Euro range. It is the largest cement contract ever secured by thyssenkrupp.
Jens Michael Wegmann, CEO of the Industrial Solutions business area of thyssenkrupp said, "Our partnership with Yamama is built on a longstanding tradition and dates back many decades. We are delighted that Yamama is once again putting its faith in our comprehensive experience in the turnkey construction of complete cement plants worldwide."
The main components include two mobile primary crushers for limestone (each 1800t/hr throughput), three crushers for additives (each 500t/hr), two crushers for correctives (each 100t/hr) as well as two circular blending beds for limestone, each with a capacity of 80,000t and various additive storage facilities. Four QUADROPOL QMR2 roller mills with a throughput of 425t/hr and two 35,000t capacity homogenizing silos will be used to grind and store the raw material.
The kiln lines comprise six-stage and two-string preheaters with PREPOL AS-MSC calciner, rotary kilns with POLFLAME-VN clinkering zone burners, and POLYTRACK clinker coolers. The clinker will be stored in three 10,000t capacity clinker silos and two 100,000t capacity clinker storage facilities. Four combi grinding units consisting of POLYCOM high-pressure grinding rolls, ball mills and SEPOL separators as well as downstream cement coolers will each produce 300t/hr of cement.
The cement will be stored in six cement silos each with a capacity of up to 25,000t. The line will also feature six cement packing and loading stations. Quality control and monitoring will be handled by a POLCID process control system and POLAB laboratory automation system.
Yamama Saudi Cement and thyssenkrupp have been working together since the 1960s when the company placed an order for an initial 300t/day rotary kiln. Six larger cement production lines have since been added.