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Update on Saudi Arabia: March 2021
Written by David Perilli, Global Cement
10 March 2021
Many Saudi Arabian cement producers have reported increased annual sales and profits in recent weeks. Southern Province Cement’s sales revenue rose by 27% year-on-year to US$440m in 2020 from US$347m in 2019. Net Profit after zakat and tax increased to US$162m from US$123m. Other producers enjoyed similar boosts. The reason can be seen in the country’s domestic cement sales. They rose by 21% year-on-year to 51Mt in 2020 from 42Mt in 2019. After a promising start to the year the coronavirus pandemic hit local production hard in the second quarter of 2020. However, it nearly doubled year-on-year in June 2020 and kept up the pace thereafter.
Graph 1: Domestic cement sales in Saudi Arabia, 2010 – 2020. Source: Yamama Cement.
Graph 1 above puts the cement sales in 2020 into context over the last decade. Sales hit a high in 2015 but then started to wane as infrastructure spending dried up due to lower oil prices and decreased government spending. A ban on exporting cement was subsequently relaxed but the general market appeared to adapt to the new situation. This changed significantly in 2020 with analysts attributing the turnaround to programs organised by the Ministry of Housing. This growth has carried into 2021 with NCB Capital forecasting an increase of 3.5% in local cement sales in 2021 due to the ongoing housing programs, the country’s so-called ‘Giga’ projects and investment by its sovereign wealth fund, the Public Investment Fund (PIF), as part of its 2021 - 2025 strategy. They reported that demand created by the country’s large-scale projects began to be felt along the supply chain in the fourth quarter of 2020 and associated contracts have started to be issued.
To give an example of the scale of some of these schemes, one of the proposed giga projects is to build a new city called Neom from scratch near the Red Sea coast. The resulting conurbation is intended to showcase new technologies and diversify the Saudi Arabian economy away from hydrocarbons. It has a price tag of US$500bn. An airport was built in 2019 and a next step was announced in January 2021, introducing a 160km linear city without roads called ‘The Line.’ Doubtless it will require lots of cement to realise the dream in whatever forms it happens to end up taking.
The wider picture here is that global oil prices hit a low in April 2020 as coronavirus lockdowns triggered a worldwide drop in demand although they then started to recover. The International Monetary Fund (IMF) estimates that Saudi Arabia’s gross domestic product fell by just under 4% in 2020. In response the PIF has upped its investment in the local economy including in the ‘Giga’ projects like Neom. There has been scepticism internationally about whether these projects will progress any further beyond press releases and actually get built. However, the cement producers’ financial results, cement sales figures and reporting from analysts like NCB Capital show that some investment is happening and it’s having results. The sector still faces a battle against overcapacity. It had a production utilisation rate of just under 70% despite the increase in cement production in 2020. Yet cement producers in Saudi Arabia have done well. While the Saudi Arabian government continues to spend on infrastructure in order to rebalance its economy this looks set to continue.
Michael Wildmore appointed as Hanson’s technical development manager for cement
Written by Global Cement staff
10 March 2021
UK: HeidelbergCement subsidiary Hanson has appointed Michael Wildmore as the technical development manager for its cement business. He holds over 30 years’ experience in senior technical and quality management roles in the building materials industry, according to Construction Index.
Wildmore joined Hanson UK, part of the HeidelbergCement, as a technical sales advisor in January 2020 having previously spent five years with Tarmac, latterly as technical manager at Tarmac Building Products. Before that, he worked for 20 years with Redland and subsequently Lafarge and LafargeHolcim after acquisitions and mergers. He is an associate member of the Institute of Concrete Technology and is on technical committees of the Mineral Products Association (MPA).
Andrey Rubtsov appointed as marketing director of SibCem
Written by Global Cement staff
10 March 2021
Russia: Siberian Cement Holding Company (SibCem) has appointed Andrey Rubtsov as its marketing director. He was previously the general director of Iskitimcement, a subsidiary of SibCem. Rubtsov holds a degree in management from the Novosibirsk State University of Economics and Management and a Master of Business Administration (MBA) from the Management College of Southern Africa (MANCOSA). He has worked in the cement industry since 2001.
Chile: Melón’s new 0.25Mt/yr grinding plant that it is building at Punta Arenas is scheduled to start operation by the end of the first half of 2021. The unit is forecast to produce around 80,000t of cement in its 12 months, according to the La Prensa Austral newspaper. It has had an investment of US$30m and will create around 50 jobs. Spain-based Cemengal was previously reported as the supplier of the mill. It is intended to supply the Magallanes Region including Tierra del Fuego. The cement producer is also considering doubling the production capacity of the grinding plant to 0.5Mt/yr if the market supports it.
East African Holding partners with West China Cement for Lemmi National Cement industrial complex 10 March 2021
Ethiopia: East African Holding and China-based West China Cement have formed a joint venture. The Xinhua News Agency has reported that the partners plan to establish a multi-industrial complex in Ensaro Woreda district, Amhara regional state. Called Lemmi National Cement complex, the facility will house a 10,000t/day cement plant in addition to other industrial plants. The partners say that the facility will create 5000 jobs.
The first phase of the project will establish the cement plant and reach completion in late 2022.